To operate as a buy-to-let landlord in the UK, you will need to follow the guidelines and regulations for the private rented sector, and this may include obtaining a landlord licence.
Importantly, not all landlords will need to obtain a landlord licence. Whether you do will depend on the type of property you are renting out, as well as the location of the property.
However, the number of locations across the UK where you need a landlord licence in order to rent out property continues to rise, with 25 new schemes and consultations launched so far in 2024. In 2023, 32 new additional and selective licensing schemes were introduced, according to Kamma, so we are already on track to exceed that.
Keeping up to speed on the various rules and regulations is vital for all landlords operating within the UK housing market. Failure to do so can lead to prosecution or hefty fines, with some landlords even being banned or jailed for breaking the law around renting.
Who needs a landlord licence?
Regardless of location, anyone operating a property classed as a “large HMO” – which is a house in multiple occupation that houses five or more tenants from more than one household (ie. unrelated people on separate tenancy agreements), with shared facilities.
Large HMOs are also subject to additional rules, such as minimum room sizes, and you can learn more about this here.
Since 2006, councils have been able to apply selective licensing to a particular area, which makes it compulsory for the owner of every privately rented property in the area to have a landlord licence. If this is the case, the landlord must apply for and pay for a licence in order to operate legally.
When they apply, they may be required to provide things such as a valid gas safety certificate, an electrical installation condition report, or a copy of the tenancy agreement.
A landlord licence typically lasts five years, and costs vary depending on where you are. Unfortunately, there is not currently a central database or list of the places in the country where you need to have a landlord licence – instead, landlords must check with their local council whether they fall under a licensed area.
Why are licences introduced?
The aim of licensing is to uphold standards and improve the quality of private rented sector property in a particular area. They tend to be brought in where there are issues with low housing demand, anti-social behaviour, poor housing conditions, high levels of migration, deprivation and crime.
The idea behind making it compulsory for a landlord licence to be obtained is that it will “weed out” rogue or illegal landlords, or those who do not offer a high enough standard of property.
However, the schemes have also been met with a high level of backlash among landlords and others operating in the industry, some of whom claim it is being used as an additional tax on landlords, and does not achieve what it claims to.
For and against
Propertymark states: “We believe councils who are pursuing the implementation of licensing schemes are being socially irresponsible as it needlessly puts vulnerable people at risk of being infected.
“In this unprecedented situation, landlords and agents are not able to comply with the requirements of the scheme and council resources are unlikely to be able to effectively enforce them.”
Manchester is one of the cities where a number of new additional licensing schemes have been brought in recently. Landlords operating in the city have been urged to respond to a consultation on the latest proposed landlord licence schemes.
Councillor Gavin White, executive member for housing and development, said the council has uncovered more than 1,700 hazards in Manchester homes following nearly 900 property inspections, which would have gone unchallenged without the licensing schemes in place. It has also handed out 21 civil penalty notices and 250 legal notices.
White added: “Selective licensing is a necessary tool to help us support residents living in private rented sector properties as there are fewer regulations in place nationally to hold property owners to account and ensure the homes they are renting are safe and provide quality accommodation for their tenants.
“If you live in one of the proposed selective licensing areas – or you own a property in the area – we are looking for your feedback. Your thoughts will be invaluable as we look to expand licensing to more of Manchester’s private rented sector homes.”
