In an increasing number of areas in the UK, landlords require licences to operate their rental properties. The scheme for Liverpool landlords ended this year, so what’s the situation now?
There are currently at least 50 councils across England that operate licensing schemes in the buy-to-let sector. While certain rental property types always require a licence to operate, other areas fall under selective or additional licensing programmes.
Liverpool council had been running a pioneering selective landlord licensing scheme since 2005. According to them, the scheme had seen a total of 37,000 compliance actions, more than 2,500 legal and fixed penalty notices and 250 landlords prosecuted since its introduction.
For “rogue” landlords, Liverpool may have become a place to avoid. However, for good landlords and property investors, it has become an area with a reputation for high standards in the private rented sector. And those landlords who were already members of an accredited or council-approved co-regulation scheme got a discount on their licences.
The end of landlord licensing in Liverpool
The scheme in Liverpool ran out on 31st March after running successfully for five years. At the time of its expiry, there were 10,000 landlords holding licences in the city with around 52,000 rental properties.
While the council had applied for a five-year extension, the government rejected it. According to them, there was not enough evidence to back up the application and prove the need for a licensing scheme.
With the scheme no longer active, landlords in Liverpool are now operating without licences. So if you own a buy-to-let property there, or are considering investing in one, that is the current situation. The exception is for large HMOs (houses in multiple occupation), which still require a mandatory licence to operate.
The council has criticised the rejection, though, and is going to challenge the government’s decision. It has now filed a High Court action to seek a judicial review of the decision.
Eradicating rogue landlords
Mayor of Liverpool Joe Anderson said: “It defied logic and has put the lives of some of our most vulnerable tenants at risk. As a result of the scheme, the safety conditions of 3,570 properties were improved but the scale of the issues we found is frightening and that’s why we produced the evidence to show why we need to continue the scheme.
“The council has a moral obligation to protect people from rogue landlords. Many in the private rented sector are good landlords but unfortunately there is a sizeable minority that need to be tackled.”
In response, a spokesperson for the Ministry of Housing, Communities and Local Government said: “Liverpool City Council was one of more than 130 local councils to recently receive a share of £4.3m funding from government to tackle rogue landlords.
“We will continue to support Liverpool City Council and other local authorities in taking effective enforcement action as part of our commitment to securing a better deal for tenants across the country.”
The pros and cons of landlord licensing
Councils often bring in selective licensing in areas where there is a low demand for houses, high levels of crime, homes in poor condition, or major anti-social behaviour issues.
The aim of licensing is to improve the management and condition of rental properties. This in turn increases demand, making more people want to live there. It can also boost house prices in the area and reduce crime.
Landlords who want a licence in an area where selective licensing operates must carry out safety checks on their properties. They must also register their details with the council. The council can carry out inspections, raise issues and enforce action and penalties if necessary.
According to Liverpool, and many other councils across the country, the schemes help to “weed out” bad landlords. By setting minimum standards, the rental market becomes safer for tenants. For good landlords willing to invest in their businesses, getting a licence shouldn’t be an issue.
However, some have criticised licensing schemes as being too harsh. Others believe they penalise good landlords, and the licence fee is an added expense. They think the burden of the fees is taken on by reputable landlords who stick to the rules, while rogue landlords simply move elsewhere.
Regardless of the licensing situation in Liverpool, and how it resolves, it is one of the most attractive cities in the UK to be a landlord. Property there is much more affordable than many other areas of the country. As such, it repeatedly comes out as one of the highest-yielding property investment locations. There are also plenty of investment projects and developments in the pipeline in the city.