Originally introduced in 2006, selective licenses are a necessary yet complicated part of the private rental sector. Read our guide to help your agency stay compliant.
Selective licensing is a minefield for letting agents. The consequences of not having the appropriate license for their landlord’s properties can result in potential fines and possible prosecution.
To avoid this, letting agents need to be aware of the relevant selective licensing schemes specific to their local authority to ensure they remain compliant.
But what is a selective license? And how do letting agents find out whether one is needed for a property?
Find out more about selective licensing in our guide:
- What is a selective license?
- What are the consequences of not having the right license?
- How can technology help letting agents remain compliant with licenses?
- How can letting agents find out if they need a selective license?
What is a selective license?
As part of the Housing Act 2004, local authorities can create and apply any selective licensing schemes to private rental housing properties.
The purpose of these schemes allow “a local council to require all landlords of privately rented housing in a designated area to obtain a license for each individual property”.
A selective licensing scheme can only be introduced to a certain area if, as outlined on the Government website, it is experiencing one or more of the following:
- Low housing demand
- Persistent problems caused by anti-social behaviour
- Poor housing conditions
- High levels of migration
- High levels of deprivation
- High levels of crime
Selective licenses last a maximum of five years, starting from the day the license has been issued. However, any local authority has the right to issue a shorter license period if desired.
If the private rental property does not have a license, a local authority can inspect and take action against the landlord or letting agent.
What are the consequences of not having the right license?
If a property does not have the correct license, a letting agent, managing agent and the landlord can be charged penalties, and even face prosecution.
A local authority can charge a civil penalty of up to £30,000 per property. The fine amount will be determined by the local authority.
There are an increasing number of news reports of letting agents and landlords across England who have been served with fines for not having the correct license.
In May 2024, a landlord in Southwell was charged £17,500 for failing to licence two properties. Ashfield District Council also have concerns about the safety of both properties, which is being dealt with separately.
Another fine in May 2024 was given to a letting agency after they failed to secure a licence for one property in Edmonton. The company and the director of the letting agency were ordered to pay £4,450 each.
Without the proper licensing for a property, landlords and letting agents cannot serve a Section 21 notice to tenants.
Tenants can also apply for a rent repayment order during the period the tenants have lived there without the correct licenses.
Letting agents and landlords may be subject to enforcement action which could include:
- Financial penalty of up to £30,000
- The inability to add a new property licence
- Refusal to grant a property licence
- Revoking other or future property licenses and approvals
Letting agents should be aware of any new licenses that pop up in their local authorities. Not only to nurture and advise their landlords but also to avoid any fines themselves.
How can technology help letting agents remain compliant with licenses?
With the number of properties letting agents need to manage daily, integrating a tech-led solution can help manage and keep on top of every scheme all in one place.
Through Goodlord, agents no longer need to check multiple local authority websites to check licensing requirements. We offer our customers the ability to see which license is needed for all registered properties, directly in our platform. See how it works here.
🖥️ Book a demo to find out more 🖥️
How can letting agents find out if they need a selective license?
Letting agents and landlords have two possible options on how to find out if a property requires a selective license or not, depending on whether they are Goodlord customers.
⚠️ Download our info sheet to find out the steps needed to see if a property needs a selective license or not, and how much it will cost ⚠️
This article is intended as a guide only and does not constitute legal advice. For more information, visit gov.uk.
