For many landlords, compliance conversations tend to focus on gas safety certificates, electrical checks, deposit protection and the Renters' Rights Act. However, one of the biggest risks in the private rented sector often receives far less attention: property licensing.
Whilst HMO licensing is relatively well understood, we're seeing a growing number of local authorities introduce selective licensing schemes, particularly across London. These schemes can bring entirely standard rental properties into a licensing regime, even where they are occupied by a single household.
WHAT IS HAPPENING?
Many councils are expanding the use of selective licensing as a way of improving housing standards and increasing oversight of the private rented sector.
Under these schemes, landlords may be required to obtain a licence before letting a property, regardless of whether the property would traditionally be considered an HMO.
The challenge is that licensing requirements vary significantly between local authorities. A property that requires no licence in one borough may require a licence in a neighbouring borough.
Some schemes are also introduced after a tenancy has already commenced, meaning a property can become licensable during an existing tenancy.
WHY DOES IT MATTER?
Letting a property without a required licence can have serious consequences.
Potential risks include:
- Financial penalties of up to £40,000.
- Rent Repayment Orders requiring landlords to repay up to two years rent.
- Difficulties serving possession notices.
- Criminal prosecution in the most serious cases.
- Breaches of mortgage or insurance conditions.
Obtaining a licence is only part of the process. Landlords must also comply with any conditions attached to the licence, which may include property standards, documentation requirements and inspection obligations.
WHAT SHOULD LANDLORDS DO?
Licensing should not be viewed as a one-off check.
We would encourage landlords to:
- Confirm whether their property falls within a selective, additional or HMO licensing scheme.
- Review licensing requirements regularly, particularly if local authority boundaries change or new schemes are introduced.
- Ensure any licence applications are submitted promptly.
- Maintain records demonstrating compliance with licence conditions.
- Speak to their property manager if they are unsure whether licensing applies.
HOW SAVILLS CAN HELP
Our teams continually monitor licensing developments across the areas in which we operate and work with landlords to identify properties that may require a licence.
However, the continued expansion of selective licensing schemes means landlords should expect this area of regulation to become increasingly important over the coming years.
As the private rented sector becomes more heavily regulated, licensing is no longer just an HMO issue. It is rapidly becoming a mainstream compliance requirement that every landlord needs to understand