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

I became a landlord about 10 years ago, as a pension investment. At that time, returns in my local area were relatively poor. I bought in an area that had 8-8.5% returns and had my properties managed locally.

I am a Chartered Surveyor with significant property management experience, so I believed that I came into the business with my eyes open. It was nevertheless a steep learning curve. After a few years I had to intervene to protect my tenants and my investments, and I now manage these properties myself. I am always at the end of the phone, even on holiday; most of the work on my properties is arranged as planned improvements or maintenance, usually following on from an inspection; and I hope that I provide as good a service as any managing agent (and I acknowledge that there are excellent agents out there; sadly, mine was not one of them!).

The local council has introduced selective licensing. I must make clear that I am not submitting this article in order to complain; whatever I feel about the policy is quite irrelevant. Most of the requirements are clear, and are either already in place, or easily achievable.

However there are several points that I find troubling, and suspect that other smaller investors like myself will have problems with the same issues. These are the problems I foresee, and my proposed solutions:

1) Requirement for monthly inspections. It would be inconvenient to carry these out personally, so I would contract out interim inspections. I will provide a suitable proforma to be completed, with photographic evidence, by an experienced contractor.

2) Antisocial behavior action plan. I take the view that, as a small investor, I have no choice but to issue warnings and if necessary refuse to renew the tenancy on expiry. Of course, if something serious happens long before expiry I would commence possession proceedings. My action plan will set out the behaviour I regard as sufficiently serious for these two options.

3) The requirement to notify tenants of their obligations. All of this is within the tenancy agreement, so I would propose to write to the tenants restating these terms.

4) There is a requirement for emergency and other arrangements in the event of the holder’s absence. In practice, I have always been at the end of the phone, wherever I am, and able to arrange repairs as normal. However, I propose to “nominate” an alternative contact, who will be another landlord like myself.

5) If I am unable to satisfy the Conditions, then it will be necessary to appoint a managing agent. I expect that I would still be required to submit the application in my own name, but with reference to the managing agent in the relevant sections of the form. I would presumably still be liable for any breaches, my only defence being to prove that I took steps to ensure that said agent were fulfilling their responsibilities under the conditions. In my opinion, it would be better to take full and direct responsibility, contracting others in to carry out parts of the requirement as necessary, so I will seek to obtain a licence on this basis.

I am very concerned that the impact of this new control would be to reject any landlord who does not live in the same town, or nearby, as unsuitable for three reasons:

– Sufficiently regular inspections carried out by the licence holder personally may not be practical (although, as said, I intend to arrange such inspections in a way that would satisfy the requirements)

– There would be a problem in attending a training course in the same town as my properties (although one day would not be an issue). I hope that the Council’s requirement here (which is not specified) would be reasonable.

– It might not be feasible for a landlord who does not live locally to take unspecified emergency action. Although the Conditions make no direct reference to personal availability in emergency, I suspect that this could be an implied criterion in assessing an application. I say “unspecified” because I have worked during evenings and weekends to arrange contractors for gas, electric and plumbing emergencies. However, in theory, there might be something that could require the “person in control” to attend immediately.

In summary, I am determined to personally fulfil the requirements of this licence, and would welcome a discussion on practicality for a small investor who is 1) not based locally and 2) has other employment. I am sure that other landlords like myself have successfully obtained and maintained licences, and are providing the service that the council is looking to achieve. However I have not found any discussion of this issue, and therefore hope that this article – and the responses to it! – will prove useful.

Regards

Philip Aston MRICS

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