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When you make a living as a landlord it is important to protect your investment. This is not just about taking on good tenants or ensuring your properties are well taken care of, though this is certainly vital; it is also about making sure that you have all the necessary documentation and licences in place in order to avoid serious fines and even criminal prosecution.

Unfortunately, the rules on exactly what kind of licences a landlord needs tend to vary between locales. In order to be absolutely sure that you have everything you need, it is important to contact your local council to ask about whether they utilise ‘additional’ or ‘selective’ licensing. 

There is sadly no countrywide network of schemes, so it will be up to you to check. However, an experienced local estate agent may also be familiar enough with local property law to give you the information you need.

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Which licences can a landlord need?

Mandatory licensing 

When a House in Multiple Occupation (HMO) is big enough to be classed as a ‘large HMO’, the landlord will need to apply for an HMO licence. The landlord will not usually require any additional licences after this point.

A HMO will require a licence if all of the following criteria apply:

  • The property, or any part of it, comprises of 3 storeys or more
  • It is occupied by five or more persons which make up two or more households
  • Occupiers share some facilities

It is important to keep in mind that local councils can choose to have smaller HMOs require licences too, so be sure to check!

Additional licensing

‘Additional licences’ were introduced under Part II of the Housing Act 2004. They relate to HMOs and are usually brought in when safety standards in a specific locale are not being met.

There are two important things to note: first, each council decides individually when and where they want to apply additional licensing rules. Secondly, the rules can force all HMO landlords to get a licence, regardless of how large their HMO actually is or what shared facilities it has on offer.

Acquiring an additional licence usually costs between £400 and £800, though if you already have a mandatory licence then you will not require an additional licence as well.

The law on additional licensing can be complicated and there will often be a number of exemptions in place. As such, it is important to seek advice from an expert, usually either an estate agent or council representative.

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Selective licensing

These licences are introduced to small areas so that councils can more closely scrutinise local landlords. This is often necessary if there is either low demand for housing or persistent problems with antisocial behaviour. 

Unlike previous examples, selective licenses apply to all properties within the private rental sector, not just HMOs (though HMO landlords who already have licences are usually exempt).

Acquiring this type of licence will usually cost between £400 and £600, with fees depending on the size of your property and the number of tenants living there, but there may also be a number of checks involved to make sure that you are a ‘fit and proper’ landlord. In some cases you may also need to sign up to a charter.

During the application, our council may ask for:

  • Copies of safety certificates
  • Location of smoke and carbon monoxide alarms
  • Details of past tenants and tenancy agreements
  • Details of who manages the property (e.g. if the landlord lives abroad)

Once you have a selective licence it will remain valid for five years.

It is important to note that certain properties are exempt from this rule. This includes:

  • Holiday lets
  • Business premises
  • Student premises where the landlord is a university
  • Premises where the tenant is a family member
  • Properties let by local authorities or registered social landlords
  • Properties already licensed as HMOs

This may sound like a lot to take in, but we really cannot over-stress the importance of going along with it should your council choose to start applying this law. If you breach your licence or fail to acquire one when necessary, you could face prosecution along with a civil penalty of up to £30,000!