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Guide to licencing in Southwark, Lambeth and Lewisham

Guide to licencing in Southwark, Lambeth and Lewisham

Published: 11/12/2019 By Felicity Blair

 The licensing of private rental sector properties has become a minefield to navigate and get to grips with, particularly as the definition of what must be, or need not be licensed, varies from one local housing authority to another. The following attempts to clarify the existing situation in south east London. Read on to make sure you're letting your property legally.  

Background to HMO and rental sector licensing  
 In 2006, following the Housing Act 2004 it became mandatory in England and Wales for larger houses in multiple occupation to be licenced. An HMO was broadly defined as, “three or more storeys housing five or more occupants who are not from a single household.” They were subject to regulations aimed at tackling overcrowding or poor management. Prior to this there were a number of licenced HMOs, but licensing had not been compulsory.  In October 2018 the government extended the definition to cover properties containing five or more people, “regardless of the number of storeys.” The scope of mandatory licensing was also extended to cover smaller HMOs with fewer than five people.

Current licence types  

 At present there are three types of license:
  • Mandatory License. For larger properties with five or more unrelated tenants. This applies to all such properties across the UK.

  • Additional (discretionary) License. For smaller HMO properties, “having living accommodation occupied by three or more persons who do not form a single household.”

  • Selective License. This is not related to the property or the people within the property, but to the geographical location. It will be required by all properties within designated zones (those earmarked by the council as having anti-social behavioural problems, for example). The council will require you to get a Selective Licence if your property falls into the area/s they have designated, regardless of how many tenants live there, even just one.
What constitutes a relationship or household?
 The determining factor is whether tenants are from a single household. If they are related it’s OK, but the definition of how they are related doesn’t seem to be stipulated. If a family connection, however distant, can be established then those tenants are considered a single household. Cohabiting couples are considered a single household but the two can be combined. An example of this could be a couple plus a brother/sister of one of the couple. This arrangement is defined as a single household since cohabiting couples and relatives are both considered one household.

Costs of licences 
BoroughMandatoryAdditionalSelective
Southwark £268 per bedroom up to 10 rooms. £161 thereafter.£268 per bedroom£526 per house/flat
Southwark Council have mapped areas for selective licensing
Lewisham£500 per bedroom£500 per bedroom (above commercial premisesNo selective licensing as yet, though they are consulting on plans
Lambeth£279 per letting roomNo additional licensingNo selective licensing

In Southwark and Lewisham, up to 20% discounts are available for landlords who become accredited through the London Landlord Accreditation Scheme (though there is a cost for the course).

Which licence applies to my property?
 The responsibility for determining the finer details of which properties in which areas should require additional or selective licensing, devolved to local housing authorities (LHAs). It is they who are write the rule books for their borough in response to research they conduct on local needs: they set prices, handle applications, inspect, issue licences and monitor.

Some LHAs, notably Southwark and Croydon, were very quick to formulate their policy. Others are still a work in progress. So, the determining factors on whether you need a licence and what type of licence you need depend broadly on:

  • which borough you are located in

  • which street within the borough

  • how many unrelated tenants live in the property
You may find that your property falls into two licensing categories. However, you will only require one—a Mandatory Licence supersedes an Additional or a Selective Licence. An Additional Licence supersedes a Selective Licence.

What does licensing involve?
  • an application fee

  • address of your lender, your lender’s permission to let, your mortgage account number, your freeholder/leaseholder’s details (if the property is shared), a Gas Safety Certificate, a floorplan of the property, tenants’ details, a tenancy agreement and various electrical certificates

  • After your application is submitted, the council will contact you to arrange an inspection of the property (usually some weeks later). The reason is for the council’s inspector to check matters such as room sizes and health and safety aspects and clarify whether further measures may have to be taken for you to acquire your licence
What kinds of measures might be required?
 These vary significantly from property to property and borough to borough. Some properties require no measures at all, but having attended over 200 property inspections in Southwark, we can list just a few of the kinds of undertakings you may have to make to acquire the licence.

These include:

  • installation of a hard-wired fire alarm/fire extinguishers/fire blankets

  • installation of fire-rated doors (minimum FD30)

  • restoration of a wall between an open-plan kitchen/dining room and hallway or alternative arrangements

  • ensuring that bedrooms are not inner rooms

  • an electricity consumer unit may need to be upgraded depending on its status
It is also worth noting that the recommended minimum room size for an adult is 6.51m², which LHAs are at liberty to interpret locally. Southwark has uprated this to 8m². So, you could find that a house you are currently letting as a four bed, would be considered fit only to let as a three bed.

Should I go through licensing or should I avoid it and let to fewer people?  
 Roy Brooks have now guided over 200 landlords through the licensing minefield.  Your decision to become licensed depends very much on your home and the number of years over which you intend to let it. Clearly a licence costs money, and while measures you take to become licenced vary, without one you are limited to the number of occupants you can rent your house to. This limits your market appeal either to families only or to a maximum of two unrelated occupants. This will depress the rent you can achieve.

If you are letting your own home and going away for a year or two, you may conclude that it is not worth the hassle. There are advantages to letting your home to fewer people—less wear and tear to name one, so this may well be a wise decision.

If letting your property is your business, pension or nest egg and you plan to do it for a number of years, then you will want to invest in essential work and maximise your return on investment. You will minimise void periods by ensuring your property is available to the entire market, as opposed to fewer sections of it.
 
What happens if I don't get a licence?
 You risk being prosecuted by the council, getting a criminal record, and losing a lot of money. You could:

  • be fined an unlimited amount

  • ordered to pay court costs and a victim surcharge

  • issued with a civic penalty of up to £30,000 without any warning

  • be ordered to repay up to 12-months’ rental income via a Rent Repayment Order

  • become unable to issue a Notice of Seeking Possession under the Section 21 Housing Act 1988 to evict tenants
Lastly, any landlord successfully prosecuted will likely fail a "fit and proper person" assessment which will make it very difficult to get a future licence.

How we can help you
 We can tell you exactly what you need to know in order to stay on the right side of the law, for no charge at all.

Other things we can help with are:

  • help you navigate documents and paperwork

  • we can set up gas and electricity certification every year for you

  • we can arrange any associated jobs to be carried out, e.g. fitting smoke alarms

We can also help you find tenants, collect rent on your behalf or even fully manage your property. If you'd like 30% off any of these services, call us on 020 8206 3063 or drop us an email.
 

Further information can be found on your relevant council website as follows:

https://lewisham.gov.uk/myservices/housing/landlords/hmo/licensing-fees-for-houses-in-multiple-occupation--hmos 

https://www.lambeth.gov.uk/housing/landlords-and-ownership/hmo-licensing-guide

https://www.southwark.gov.uk/business/licences/private-rented-property-licensing?chapter=8