Selective licensing – can a part- time investor landlord fulfil the requirements?

As a former "auditor" for the Home Office I found one LAs " ring fenced budget" for anti social behaviour looking like the tunnels Tom Dick and Harry used in the Great Escape. £1 million pounds got "lost" in the budget and ended up in other budget heads. But of course it was all a "misunderstanding" and the Director of Finance decided to take a sabbatical.

So Landlords Licensing money is not a sure fire bet to be spent on licensing!

Referring to Mary's detailed comment on accretitation and ongoing learning, I would in general agree. As a brief digression, I qualified as a Home Inspector in preparation for the doomed HIP legislation. Although the purpose of this accreditation was hopelessly flawed, the course itself was invaluable. On this basis I would not grumble at any reasonable requirement to develop my knowledge of this specialized field.

However, in this specific case, I remain sceptical, because Blackpool Council require an open ended commitment to undertake any learning they may specify. I will be seeking to get this clarified and will be quite satisfied if it is narrowed down to an accreditation/CPD system as Mary describes.

This brings me to the question of the authority's remit as designated in the Housing Act 2004.

As I see it, this is the core of the provision:

"S88:
(3)The matters are—
(a)that the proposed licence holder—
(i)is a fit and proper person to be the licence holder,

89Tests for fitness etc. and satisfactory management arrangements

(6)The considerations are—
(a)whether any person proposed to be involved in the management of the house has a sufficient level of competence to be so involved;
(b)whether any person proposed to be involved in the management of the house (other than the manager) is a fit and proper person to be so involved; and
(c)whether any proposed management structures and funding arrangements are suitable.

(d)that the proposed management arrangements for the house are otherwise satisfactory.

(Also- provisions relating to any adverse history)

I can't see that there is anything else- am I right?

As a landlord working at a distance I will be expecting to have to make a case to prove that I will satisfy 89.6d and would welcome any comments/suggestions here.

However, the specific legislative requirement makes a nonsense of some of the purported license conditions. In a nutshell, the entire point of additional licensing seems to be to ensure that landlords have the competence to manage, have a workable management setup, and do not have "form" that suggests they are unlikely to manage to an acceptable standard. Reduction of ASB is the ultimate objective,but there is nothing in the legislation empowering the designating authority to directly involve landlords in the policing process. The premise is that, by managing properly, landlords will indirectly contribute to a reduction in ASB- and that appears to be the end of it.

This is important, as it could - and, I suspect, will - form the basis for a challenge to the authority in the event that a licence is refused for reasons that are not related to the purpose of the original legislation.

Returning to my original point, I feel that I, and others like me, are particularly at risk here, as we are not investors by profession, and might be faced with the (my opinion) disgraceful accusation that, ipso facto, we will therefore not be managing to a professional standard. I would suggest that there is no inherent reason why someone holding a rented property as a long term asset, possibly as a pension provision, should not satisfy any reasonable requirement of sound management practice.

I sense I am "preaching to the converted" here and admit that, as of the last few days, I feel a little bit less "at risk" and slightly better prepared for the impending battles. However the devil will be in the detail, so any comments on the above will be invaluable.

Hi Mark,

I cannot comment on what any particular Council has done. I am aware that each Councill approaches it's various duties in the way that seems best to the elected members. I don't have a view on this at all. This is just how it is.

It isn't a secret that LA's are facing huge budget cuts and if we as a society want to see the worst rogues regulated effectively (or at all) by Councils then one way to pay for that is licensing.

I would have thought that a lot of reasonable LL who are unhappy about being undercut by the rogues are not particularly against a scheme that will help to level the playing field at the bottom of the market.

It is up to the Council to design a scheme that has an element of partnership with the PRS and keeps to a minimum the administrative and cost burdens of licensing.

Bearing in mind that Licensing legislation is intended to reduce ASB and improve the management of the PRS in the Councils area then any term that does not contribute to that should be challenged at consultation.

However, I have stated the law as it pertains to licensing fees and it would be an unwise LA who exposes their licensing scheme to challenge because they were not compliant with the Hemmings ruling. If they were challenged succesfully they would then have to repay all the fees above the amount the court set as reasonable.

Reply to the comment left by "Joe Bloggs" at "09/04/2014 - 14:23":

My "evidence" is the realities of letting a decent sized portfolio across all tenant groups for over 40 years. I have NEVER carried out regular inspections, I only inspect when I feel there is a need or in response to a call from a tenant or neighbour. I am often invited into my tenants homes to look at a repair issue or discuss something that they want to do to the property or garden, I also like to go for a chat when I am planning to increase their rent and these occasions satisfy my need to keep an eye on my properties without causing my tenants to feel that I am checking on their liefstyle. I have only had two properties returned with serious damage (a tiny % of my lettings) and the cost of repairs was more than covered by the time I have saved over these years by not invading the privacy of my tenants.

I want my tenants to "do as they please" in their own homes and that is probably why they stay for so long and treat my properties, the neighbours and me with so much respect.

The law "is" and no term in a tenancy agreement can remove a tenants right to decide who can and cannot enter their home. Only a Court Order can give a landlord access even where there is a statutory obligation to be carried out. I would not be alarmed if a tenant refused entry I would assume that either a previous landlords has invaded his privacy and he is being cautious or that the time I am proposing to come does not suit his lifestyle. I have never actually been refused entry to carry our statutory obligations and therefore this is not an issue that I have had to face. Frankly I would be embarrassed inspecting another persons home, even if I do own the building.

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1) so your evidence that regular inspections dont help is based solely on your perception of your experience. that isnt very scientific and i doubt that your experience is typical. it is obvious that the carrying out of regular inspections is more likely to keep untenantlike behaviour in check than waiting for a problem to develop. reasonable proactiveness is preferable to reaction.
2) again i think you are still wrong about legal rights to refuse entry. i asked why why do you say that ‘…is his legal right…’ when tenancies usually expressly provided for this. saying 'The law “is” and no term in a tenancy agreement can remove a tenants right to decide who can and cannot enter their home.' appears rather flippant and ill considered. as you know the tenancy is governed by the law of contract and while some terms such as repairs cannot override the statutory provisions, are you seriously saying there is a statute which overrides the landlords right to inspect the property upon giving reasonable notice? if you are going to cite quiet enjoyment then it is all a question of what is reasonable, which is certainly not what your definitive statement implies.
3) your personal emotions are quite irrelevant to this important question about 'the law'.

Joe,

Mary is factually a very experienced landlord and as such her experience in terms of being scientific is partly borne out by the qualitative stats in terms of damage etc over her tenancies. If she mathematically worked out her "poor tenant" rate over the number of tenancies and the proportion of those that resulted in damaged properties then this would give a more scientific method. However this would be an individual rather than a collective data set. To be any more would need a far more detailed study over more landlords and more tenancies on the merits of regular inspections. However what she describes is her personal experience and given that it is based on a large portfolio over a number of years then it is worth considering. Personally I inspect other landlords managed properties every three months. More to satisfy due professional diligence obligations rather than objective need. On my own properties I inspect every 12 months usually alongside the gas cert to avoid inconveniencing the tenant. But also to make a physical check of sockets and visible wiring for obvious electrical defects. If I see something dodgy I get the sparky in. I also check hot water temperature settings to ensure its above the level needed to kill off legionella which is another "elf and safety" provision foisted in us by the H and S guardians. Whilst I appreciate Mary's approach is very much risk assessment based and works for her it misses the opportunity to demonstrate due diligence on other aspects of risk to landlords. She may of course have full electrical inspections every 12 months which would help to mitigate this.

Reply to the comment left by "Gary Nock" at "11/04/2014 - 22:43":

gary,
with respect i would think you know v little about my experience and my success as a landlord (agreed thats my decision but that doesnt mean you can imply what you like). Nevertheless, playing trumps over who is the more authoritative is a bit silly. better to stick to the issues which is that mary (who holds herself out to be an expert) has made IMO two very strange statements, i.e.:
‘There is no evidence to prove that regular inspections have any impact on the behaviour of tenants. If a tenant is doing something wrong in the property he will simply refuse entry to the landlord, as is his legal right.’
These two contentions dont seem to stand scrutiny and Mary hasnt as yet backed up with proper explanations.

Joe these are very strange comments. I have re-read my post to see if I have in any way shape or form disrespected or commented upon your achievements as a landlord, or implied it. I am not "playing trumps" over who is more authoritative and am certainly not "silly". Mary has given her opinion and so have I in a balanced format. To make comments such as yours in response does not help the debate or tbe forum and discourages members from posting.

I would have thought the frequency of inspections is highly dependent on the market operated in.

For example, I often rent a Marlin Apartment if I am working in London. These are serviced apartments and if somebody didn't go in once a day I would complain.

However, if I rented a home and was responsible to utility bills and Council Tax I would hate to think somebody else could let themselves in without good cause and certainly without my permission. I wouldn't refuse permission if I thought an inspection request was reasonable but if I was too often, say more that once a year for a Gas Check or more often if there was a maintenance issue I would find that intrusive.

I think one visit after say 6 to 13 weeks to a tenants home should be fine, then annually thereafter or as required based on maintenance requests, complaints from neighbours, rent arrears or other issues which are best resolved in person.

Monthly visits are way OTT in my opinion. I wouldn't want my mortgage lender to inspect my property every month, would you? In fact, if they wanted just one inspection following completion I would wonder why, especially if that was not part of the T&C's of the contract.

If I was required, as a result of selective licensing, to make monthly inspections compulsory, and put this into my contracts, I don't think my tenants would like the idea any more than I do.
.

Reply to the comment left by "Mark Alexander" at "09/04/2014 - 14:59":

I've just read the link about licensing fees being refunded in certain areas and am wondering what is considered reasonable costs for the council to process the application? We are now being asked to pay £500 (that includes our discount for being accredited landlords) for each property licence renewal. I'm wondering how they can justify that when all of the information is duplicated each time.? Do you think there is a case for refunds in Newport?
This council impose licensing on properties converted into flats as well as traditional HMOs so our bill is £3500 !