Agents 'should guide landlords through blizzard of licensing rules'

Letting agents should help landlords through a blizzard of red tape and regulation cause by local licensing schemes, a PropTech entrepreneur suggests.

“Agencies are in a trusted position to help guide landlords through their licensing journey – giving them another opportunity to demonstrate their value in a competitive market" says Neil Cobbold, chief sales officer at PayProp.

"Landlords will be looking for agents’ help when it comes to responding to consultations, completing applications and meeting deadlines so they can avoid significant financial penalties for non-compliance" he says.

PayProp’s monitoring of the rental market suggests there has been a rise in licensing activity from local authorities in recent months. The company does not feel licensing is wrong - indeed, it can raise standards - but keeping up with different systems in different areas can be challenging for many landlords.

Updates and guidance relating to landlord licensing schemes are becoming an increasingly time-consuming part of a letting agency's management service, even though this is an opportunity for agencies to increase their value proposition.

"When implemented effectively, selective and additional licensing schemes can contribute towards improving standards in the rental sector" says Cobbold.

"With the pandemic likely to have an impact well into the future, local authorities will need to consider the financial implications for landlords during a difficult time for the sector, as well as their own capacity to effectively police any new or extended schemes" he adds.

“Licensing is a long-term solution and, when looking at other UK professions, a balanced approach to regulation has had the most beneficial impact. Landlords will continue to require the help of letting agencies when it comes to complying with any new regulations as well as the existing systems in their local areas.”

Despite the impact of the pandemic, local authorities went ahead with a range of consultations and applications for new licensing schemes during 2020. 

Research released in early December by data platform Kamma found that 44 licensing consultations were in progress at the time. The study also forecast that HMRC could collect £400m in licensing fees and fines from landlords this year - 2021 - as well as an additional £2m in related unpaid taxes.

Since Kamma's report, there have been numerous extra licensing developments affecting letting agencies and landlords. 

In London’s Westminster - the borough with the largest share of the UK’s private rented sector - the council has launched a consultation on additional licensing of HMOs, while elsewhere in the capital Havering and Lambeth councils are in the process of rolling out licensing proposals too.

Areas outside the capital are also affected. A consultation for additional licensing in Newcastle closed at the end of January, while a consultation to license an additional 1,500 homes in Manchester has been launched.

Towards the end of 2020, Liverpool council lodged an application to license 45,500 properties after its initial plan to license all 55,000 rental properties in the city was turned down by the government. There have also been landlord licensing developments in Oxford, Doncaster, Gedling and Southend-on-Sea in recent weeks.

Trade body ARLA Propertymark has described this flurry of licensing activity as 'socially irresponsible', arguing that landlords will struggle to comply with new rules during an ongoing pandemic – and that local authorities will find it challenging to enforce them.