The Intermediary – February 2025 - Flipbook - Page 28
BUY-TO-LET
Opinion
Selective licencing
laws will leave
tenants worse off
W
hile the
concept of
‘unintended
consequences’
has been
around
for centuries, the term itself was
popularised by the sociologist Robert K
Merton in a 1936 essay.
Merton identified five sources of
unintended consequences. Due to
word count limitations, I’ll spare you
detailed explanations, though it won’t
surprise you to hear that ‘ignorance’
and ‘error’ are the most common.
However, I will expand on the third
source – ‘imperious immediacy of
interest’, as Merton put it.
This is where an individual, or
indeed a government, wants to press
ahead with something so badly
that they choose to ignore obvious
unintended consequences.
An example of this in real life
is the way councils are rushing to
take advantage of the Government’s
more relaxed approach to Selective
Licencing Schemes (SLS),
despite concerns as to how it will
impact tenants.
Until last month, councils needed
the permission of the Secretary of
State if they wanted to licence more
than 20% of private rented properties
in their borough. However, they can
now introduce schemes of any size
without first obtaining consent.
Barking & Dagenham Council
(B&D) was seemingly the first to take
advantage. Last month, it announced
plans to introduce a new SLS,
capturing most of the private rented
properties in the borough, from 6th
April 2025.
Under the terms of B&D’s new
scheme, private landlords will have to
fork out £950 for a licence to operate,
although they will receive a discount
28
The Intermediary | February 2025
of up to £250 if they achieve the
highest standards when inspected.
B&D argues that the move will help
tackle anti-social behaviour, reduce
deprivation, raise the quality of
management of private rented homes
and oust dodgy landlords.
You can’t argue with any of that – if
it works as intended, that is, and I’m
afraid the jury is still out on that.
B&D claims it carried out “over
8,000 property inspections under
previous schemes, identifying hazards
in more than half of these homes and
taking action to improve conditions.”
Mixed feelings
Residents are unconvinced. B&D
surveyed more than 800 locals to
determine whether its previous
licencing scheme was a success. Just
21% said that the previous scheme
had helped improve the condition
and management of private rented
properties in the area. Moreover, just
37% said the council should continue
to use selective licencing to improve
private rented sector (PRS) properties
in the area, with 42% against the idea.
While private tenants were more
inclined to agree with the idea of
sticking with selective licencing than,
say, landlords or local businesses,
these findings are hardly a ringing
endorsement for the scheme’s
effectiveness.
B&D has also warned that there may
be inspection delays, with landlords
having to wait six months or more.
Perhaps it has a shortage of inspectors.
However, I find it odd that it has not
considered this already, given that it
started consulting on a new SLS in
February last year.
So, if B&D is underprepared and
residents don’t believe Selective
Licensing Schemes are effective,
why the rush?
DAVID WHITTAKER
is CEO of Keystone
Property Finance
B&D’s 2024-25 budget consultation
admits that its “overstretched budget
is being pushed to the edge,” as it
revealed a funding shortfall of £23m.
In a sense, you can’t blame them
for targeting what they perceive to be
‘wealthy’ property owners. Politically
speaking, it’s a low-risk move. That
said, it’s not risk-free. Tenants will
ultimately end up paying the price.
B&D knows this. During its
consultation process, it admied there
was a risk that the new regime may
cause landlords to hike their rents or
sell up, leading to a lower supply of
homes to rent in the area.
If B&D’s intentions are to improve
conditions for tenants, introducing
something that makes it more
expensive to rent and harder to find a
home isn’t going to achieve that.
With 27% of households in B&D
relying on the PRS to put a roof over
their head, a significant proportion of
local residents could be affected.
My worry is that other councils in
precarious financial positions decide
to follow suit.
I have nothing against licencing
schemes, per se, but only where it can
be proven that they drive up standards.
At present, that evidence is lacking.
Without that proof, it seems odd
that any council would press ahead
knowing that it may cause a big chunk
of their residents to be worse off.
I hope I’m wrong and that councils
are not so desperate to press ahead that
they wilfully ignore the risks.
Equally, if I’m right and tenants
begin to suffer, I hope they are just as
quick to scrap these schemes as they
were to introduce them. ●
