Landlord Licensing Requirements and Costs

What is a landlord licence?

Under the Housing Act 2004, the need for landlords to have a licence to legally rent out their properties was introduced, coming into force in 2006. This doesn’t apply to all landlords, though, with the requirements changing for different property types, areas and local councils. The initial aim was to licence houses in multiple occupation (HMOs) to increase their levels of safety. Since then, the rules around rental licences have evolved, with mandatory, selective and additional licensing being brought into play. Landlord licences are usually valid for 5 years.

Mandatory licensing now applies to large HMOs, which are those that have five or more occupants from more than one household who share facilities, such as a kitchen, bathroom and toilet. For smaller HMOs and other rental properties, local councils decide where licensing applies. A smaller HMO has three or four occupants from more than one household and councils have the right to apply additional licensing requirements for this type of property. Selective licensing can be applied to all properties that are privately rented.

The level of licensing varies between councils, with some striving to ensure that licence schemes are implemented and others having a much more relaxed approach to licensing. The licence costs also differ considerably between councils, which we’ll detail later on.

Why is licensing necessary?

The rental market is becoming increasingly regulated. By insisting on licences, local councils can check the quality of rental properties, ensuring that they meet a required standard, and can keep track of the number of rentals in each area. Licensing schemes tend to be more prominent in areas where there is a low demand for housing, there are poor housing conditions and there are high levels of crime, deprivation and migration. The licensing standards help to highlight properties that are of a sub-standard quality and landlords who are not meeting the levels for a rental property to be considered habitable under these licensing rules.

To be granted a licence, a landlord must be deemed a ‘fit and proper person’ to rent out their property. The property must meet certain requirements relating to health and safety standards, such as fire and electrical safety, and in regard to property management. Doing so provides a secure environment for the tenants and a rental home that is of good quality. The licensing restrictions also help to minimise any negative impact that rental properties may have within a neighbourhood.

Do you need a landlord licence?

As a landlord of a rental property in England, whether or not you need a licence depends on the property type and size as well as the area that the property is located in. You may need to obtain a landlord licence if:

• Your property is an area where selective licensing applies
• Your property is classed as a large HMO
• You have a small HMO and the local council implements additional licensing

To check whether the area your rental property is located in is subject to selective licensing, you’ll need to contact the local council. If it is, having a landlord licence is a legal requirement before you can rent out your property.

The types of landlord licences

There are three types of property licensing for rentals in England – mandatory, selective and additional – as detailed below.

Mandatory licence

A mandatory HMO licence applies to all large HMOs, which are rental properties that have five or more occupants from more than one household and some or all of the tenants share facilities, such as a bathroom, toilet or kitchen. This licence usually lasts for 5 years and the cost can vary greatly between local councils. For example, you may pay about £500 in one area but £2,500 in another, such as certain areas within London. To be granted a licence:

• The property must be deemed suitable for the number of occupants.
• The person dealing with the property management must be ‘fit and proper’.
• A gas safety certificate must be sent to the local council each year.
• Smoke alarms must be installed and maintained.
• If requested, safety certificates for the electrical appliances must be given to the local council.

You may also have to meet other conditions stipulated by the council. For example, they may insist that you upgrade the facilities in your property before granting a licence.

Local councils have the right to limit the number of HMO licences issued for a particular area. For example, if the area has a high student population, restricting the number of HMOs ensures that more housing is available for families.

Additional licence

Whilst large HMOs require a mandatory licence, the licensing requirements for smaller HMOs are at the discretion of local councils. A small HMO is a rental property with at least three tenants from more than one household who share facilities. Some local councils require additional licensing for all small HMOs in their region. Other councils only require it in specific areas or if they are a certain type of property, such as a flat located above commercial premises. The purpose of additional licences is to ensure that small HMOs meet the right standards for safety and property management.

Selective licence

With selective licensing, any privately rented property in a specific area designated by the local council is required to have a licence. This is regardless of the type of property and number of occupants. The reason councils impose selective licensing in some areas is to counteract issues such as poor housing conditions, anti-social behaviour, a low demand for housing and high levels of poverty, crime and migration. A council can ensure that an area doesn’t become saturated with rental properties and that the properties reach a specific standard when it comes to tenants’ welfare. Government permission has to be sought if a council wishes to impose a licensing scheme for more than 20% of their area or more than 20% of the rental properties in their area.

To meet the requirements for a selective licence:

• Landlords or the managing agents they employ must be deemed ‘fit and proper’.
• Health and safety measures must be in place to safeguard tenants.
• The size of the property must be adequate for the number of occupants.

If selective licensing applies to the area that your property is located in, a licence must be obtained before you can legally rent it out. A selective licence usually lasts for 5 years and the cost depends on the council. You will need to contact the relevant council to find out if selective licensing applies and, if so, what conditions have to be met and how much the licence costs.

Landlord licensing costs

Landlord licences vary in cost, not only between the local councils issuing them but in the types of licences issued. For example, the costs across England may fall into the following ranges:

• Mandatory licences: £500 to £2,500
• Additional licences: £700 to £1,500
• Selective licences: £500 to over £1,000

Licensing fees tend to be higher in cities and some London boroughs. The costs for property licences in towns and rural areas are usually cheaper. Some councils charge varying fees for different selective licensing schemes within their region.

The fee for a landlord licence is split into two payments. The first one is made upfront and this covers the administration costs for the application. Once your licence application has been approved, the second part of the fee is payable. This goes towards the enforcement and management of the council’s licensing scheme.

You may be able to benefit from a discount on the cost of your landlord licence. For example, your fee may be reduced if your property has an EPC rating of C or higher. Or you may be eligible for a discount if you have more than one flat in a block. If you’re an accredited landlord, the council may give you a discount on the licence fee in recognition of this. On the other hand, some councils may charge more in some circumstances, such as if you make a paper application rather than an online one.

Licensing fees across England

To get a better idea of landlord licensing fees across England, this table details the standard fees charged for each type of licence in different areas. Please note that this list is not exhaustive and the fees can change at any time.

Council	Mandatory Licence	Additional Licence	Selective Licence
London Boroughs
Barking and Dagenham	£1,500	£1,400	£950
Barnet	£1,560	£1,560	£774
Bexley	£1,150	N/A	£800
Brent	£840	£840	£630
Bromley	£2,500	N/A	N/A
Camden	£1,300	£1,300	N/A
Croydon	£1,488	N/A	N/A
Ealing	£1,500	£1,300	£750
Enfield	£1,469	£1,276	£735
Greenwich	£2,500	£1,500	£858
Hackney	£950	£950	£500
Hammersmith and Fulham	£1,387	£597.50	£597.50
Haringey	£1,295	£1,295	£642
Harrow	£1,740	£1,475	£720
Havering	£1,219	£900	£900
Hillingdon	£1,502	N/A	N/A
Hounslow	£1,730	£1,555	N/A
Islington	£1,675	£1,300	£800
Kensington and Chelsea	£1,600	£1,290	N/A
Kingston upon Thames	£1,250	N/A	N/A
Lambeth	£2,530	£1,518	£923
Lewisham	£2,500	£1,500	£640
Merton	£1,074	£967	£692
Newham	£1,400	£1,250	£750
Redbridge	£1,884	£1,698	£860
Richmond upon Thames	£1,716	N/A	N/A
Southwark	£1,500	£1,300	£900
Sutton	£1,250	N/A	N/A
Tower Hamlets	£691.50	£669	£723
Waltham Forest	£1,650	£1,000	£700
Wandsworth	£1,716	N/A	N/A
Westminster	£1,510	£1,510	N/A
South East	Mandatory Licence	Additional Licence	Selective Licence
Brighton & Hove City Council	£845	£824	£690
Canterbury City Council	£1,441	N/A	N/A
Maidstone Borough Council	£740	N/A	N/A
Medway Council	£1,253	N/A	N/A
Milton Keynes Council	£457	N/A	N/A
Oxford City Council	Complex	Complex	£705
Portsmouth City Council	£1,100	N/A	N/A
Reading Borough Council	£950	N/A	N/A
Slough Borough Council	£800	N/A	N/A
Southampton City Council	£716	N/A	N/A
South West	Mandatory Licence	Additional Licence	Selective Licence
Bournemouth, Christchurch and Poole Council	£1,384	N/A	N/A
Bristol City Council	£1,886	£1,861	£912
Exeter City Council	£1,040	N/A	N/A
Plymouth City Council	£1,007	N/A	N/A
Swindon Borough Council	£1,404	N/A	N/A
East	Mandatory Licence	Additional Licence	Selective Licence
Bedford Borough Council	£1,097	£951	N/A
Cambridge City Council	£1,068	N/A	N/A
Ipswich Borough Council	£630	N/A	N/A
Luton Borough Council	£820	N/A	£630
Norwich City Council	£1,111	N/A	N/A
Peterborough City Council	£890	N/A	£750
East Midlands	Mandatory Licence	Additional Licence	Selective Licence
Derby City Council	£1,353	N/A	N/A
Leicester City Council	£900	N/A	£1,090
Nottingham City Council	£1,473	£755	£887
West Midlands	Mandatory Licence	Additional Licence	Selective Licence
Birmingham City Council	£1,125	£755	£700
Coventry City Council	£820	N/A	N/A
Stoke-on-Trent City Council	£873	N/A	N/A
Yorkshire and the Humber	Mandatory Licence	Additional Licence	Selective Licence
Bradford City Council	£1,446	N/A	N/A
City of York Council	£735	N/A	N/A
Doncaster Borough Council	£780	N/A	£515
Hull City Council	£910	N/A	N/A
Leeds City Council	£975	N/A	£825
Rotherham Borough Council	£911	N/A	£521
Sheffield City Council	£1,185	N/A	N/A
North West	Mandatory Licence	Additional Licence	Selective Licence
Blackpool Borough Council	£1,107	N/A	£772
Liverpool City Council	£1,283	N/A	£680
Manchester City Council	£1,321	N/A	£964 (varies)
Salford City Council	£970	£1,085	£589
Stockport Borough Council	£1,115	N/A	N/A
Wigan Borough Council	£778	N/A	N/A
Wirral Borough Council	£650	N/A	£595
North East	Mandatory Licence	Additional Licence	Selective Licence
Darlington Borough Council	£935	N/A	N/A
Durham County Council	£1,000	N/A	£555
Middlesbrough Council	£1,121	N/A	£998
Newcastle upon Tyne City Council	£1,100	£1,100	£1,100
South Tyneside Council	£1,027	N/A	£1,027
Stockton-on-Tees Borough Council	£1,250	N/A	£1,250

 

Source: The Independent Landlord

How to apply for a landlord licence

You can visit the website of the relevant local council to find out whether you need a landlord licence and, if so, how to apply for one. Applications can usually be submitted online and it’s important to note that each licence is issued for a specific property, not for you as a landlord. This means that you’ll need licences for all of your rental properties if they fall under a licensing scheme. Depending on the type of licence you’re applying for and the council’s requirements, you may need to provide:

• Proof of your ID and address
• Confirmation of the type of rental property
• Details of the room sizes and facilities
• A plan of the property layout
• A gas safety certificate
• An Electrical Installation Condition Report (EICR)
• A PAT certificate for the electrical appliances
• Fire safety records
• A copy of your landlord insurance policy
• A sample copy of the tenancy agreement

When applying for an HMO licence, a representative from the council may need to carry out an inspection to confirm that the property meets the necessary requirements.

The benefits of having a landlord licence

Having a licence shows that your rental property meets the required health and safety standards. Prospective tenants know that they’ll be moving into a good-quality rental home that’s managed correctly, providing a sense of security.

When your property falls under a category or is in an area where a licence is a legal requirement, having one in place ensures that you won’t be penalised with hefty fines.

The drawbacks of landlord licensing

Whilst the reasons for having landlord licences make sense, there are various drawbacks for landlords. Not least of these is the cost, from the initial fee to paying for additional requirements and the risk of fines. There’s also a lack of consistency with licensing schemes across the UK. This makes it very hard for landlords to know what licensing regulations they need to comply with.

Costs

The costs for landlord licences vary significantly between councils. This not only applies to the types of licences but the areas where licences are required. For example, a mandatory licence can cost you under £500 in one area but you’ll have to pay £2,500 for the same licence in other areas. Likewise, you may have to pay about £500 for a selective licence in some areas but will be faced with a fee of £1,000 or more for a selective licence in other parts of the country.

Aside from the cost of the licence, you may be required to meet additional requirements to bring your property up to the required standards. This can include safety measures, such as testing the electrical wiring and portable appliances, providing adequate fire protection and installing mains-powered smoke alarms. You may need to make improvements to upgrade the facilities in your rental property. You may need to take out landlord insurance, which isn’t a legal requirement but may be required by the relevant council before they grant you a licence.

Then there are the potential fines to consider for non-compliance. When the rules surrounding the licensing requirements change so often and differ between councils, it can be easy to get caught out.

Lack of consistency

The rules surrounding landlord licensing are constantly changing, with no consistency between councils. The exception to this is the mandatory licensing of large HMOs in all regions. This lack of consistency can make it extremely difficult to keep up with any updates and changes. However, as a landlord, it is your responsibility to ensure compliance with the law.

Unfortunately, there is no central database for councils that operate licensing schemes with details of which areas those schemes apply to. You’ll need to keep checking the relevant council’s website or keep in regular contact with their housing department. The more you stay informed, the less likely you are to risk a fine for non-compliance. One option is to use the services of a property management company. They should be aware of any new regulations that are coming into force and ensure that your rental property is ready to meet the requirements.

It’s also advisable to seek legal advice to ensure that you’re aware of your obligations and take the right steps to protect your rental investment. Another option is to become a member of a property association, such as the National Residential Landlords Association (NRLA). As a member, you should be notified of any legislation changes. If you own a rental property in London, London Property Licensing provides free updated information on property licensing across the boroughs.

You can also join the relevant council’s landlord accreditation scheme if they have one. This demonstrates your awareness of your legal responsibilities and the council will keep you informed of any upcoming changes. As an accredited landlord, you may even receive a discount from the council on the cost of your licence.

What happens if you don’t have a landlord licence?

If you’re required to obtain a landlord licence, either because of the type of rental property you own or the area that it’s located in, there are serious consequences for not having one. These consequences also apply if you let your current licence expire or breach the conditions of your licence. Penalties can include:

• A fine of up to £30,000. A civil penalty of up to £30,000 can be issued by the council for each offence.
• A rent repayment order. In addition to a fine, you may be charged with a rent repayment order (RRO). This is when you are obligated to repay your tenants up to 12 months’ rent.
• Inability to serve a Section 21 notice. This notice allows you to formally end the tenancy and gain possession of your rental property. However, if you haven’t applied for the correct licence, a Section 21 notice will be invalid.
• A property rental ban. You may be issued with a banning order, preventing you from renting out property in the future.
• In some cases, such as if your property is unlicensed and you are found to be in breach of safety regulations, you may even face being jailed.

It’s essential to stay up to date with new landlord licensing rules or changes to existing rules in the relevant area. Even if you don’t need a licence now, this may change at any time and you don’t want to risk the repercussions for not having one.

The financial impact of landlord licensing

All-in-all, the licensing requirements put a further financial strain on landlords. It can be hard to absorb the costs, especially for smaller landlords. This can have a knock-on effect on the rental market in general. Landlords may have no choice but to increase the rents on their properties to absorb the high licensing costs. This, in turn, puts a financial strain on tenants.

As licences are granted per property, landlords with more than one may have no option but to sell properties where upgrading or other costs significantly reduce their profit margin. Other landlords may decide to pull out of the rental market entirely and potential landlords may decide against investing in rental properties. These scenarios lead to a diminished supply of properties for rent, reducing the housing options for tenants.

Get expert help navigating landlord licensing requirements

Whether you’re a new landlord or have a portfolio of rental properties, we can help you navigate the complex requirements for licensing. Our mortgage brokers – located in Kent, London and Edinburgh – are well-versed in dealing with rental properties. This includes having a full understanding of landlord licensing requirements. They can ensure that you’re aware of your obligations for your standard buy-to-let or HMO property and understand the relevant local council’s current rules on property licensing. When applying for an HMO licence, there are strict criteria to adhere to. Our specialist brokers will ensure that you are fully informed of these to increase your chances of a successful licence application.

At Trinity Finance, as well as advising you on landlord licensing requirements, we can arrange your buy-to-let or HMO mortgage. We can also put the correct landlord insurance cover in place for your property and recommend property management agents. Just give us a call on 01322 907 000 for help with your rental property needs. If you prefer, send an email to us at info@trinityfinance.co.uk or an enquiry via our contact form. One of our mortgage specialists will reply to you as quickly as possible.

Having a rental property can be a lucrative investment but the rules and regulations for landlords can sometimes make this feel daunting. We strive to make this as easy as possible for you by guiding you on the requirements and breaking them down to remove any complexity.

Eligibility criteria for the Right to Build

To register for the Right to Build, you need to be over 18 and a British citizen, an EEA national or a Swiss national. The home you’re going to build must be used as your main residence. This means you can’t register if you want to build a property as a buy-to-let investment, to sell on or as a holiday home.

How to register for the Right to Build

Each local council maintains its own Right to Build register and you can register with one or more local councils. You can join as an individual or as part of a group. As an individual, you’re registering for a separate serviced plot. When you register as a community group, this is for a plot that can accommodate the relevant number of homes. You can either search for the Right to Build register on each local council’s website or apply online at https://www.righttobuildregister.co.uk/.

Each local council has its own requirements for the information you need to provide. You may just need to give them your name, address and confirmation of eligibility. Some local councils ask for copies of ID, some charge fees and others expect you to have a connection to the area. For example, you may need to already live or work in the area. You generally need to confirm the size and type of home you intend to build, your preferred area, the proposed time frame to complete the build and how you’re going to fund the self-build or custom-build project. The more information you can provide, the better your chances of being offered a plot that closely meets your requirements.

The next stage of the application process

You should receive confirmation from the relevant council within 28 days as to whether or not you’ve been accepted on their register. You may need to provide them with more information at this stage. If you haven’t been accepted on their Right to Build register, they will detail the reasons. Depending on what these are, you may be able to submit a new application.

Register your need for a plot of land with the Right to Build

The government Right to Build scheme puts you one step closer to building your own home. So too does the Help to Build: Equity Loan scheme if you need a financial boost for your self-build project. Our mortgage brokers can help you to prepare the correct information for each scheme to increase your chances of success. Based in Kent and London, they can also secure the best self-build mortgage for your needs. At Trinity Finance, we work closely with specialist lenders and private banks so you can benefit from flexible terms and competitive rates.

For expert advice and guidance on your self-build project, just give us a call on 01322 907 000. We can advise you on alternative funding options to a mortgage if you prefer as well as the insurance options available. If it’s out of office hours, send us an email at info@trinityfinance.co.uk or an enquiry via our contact form. One of our mortgage brokers will reply to you as quickly as possible with more information to help your self-build journey run smoothly.