Landlords face £1,095 postcode lottery for licensing fee costs as councils rake in millions

20 March 2019

Private landlords who need to apply for a licensing scheme in Scotland, Wales and some areas of England are facing a postcode lottery when it comes to charges.

Wide differences have been exposed in how much local councils charge for a new licence, ranging from just £55 to £1,150, analysis of a Freedom of Information request to local authorities by Direct Line for Business shows. 

Landlords buying a licence in Liverpool, for example, will pay £412, while those in Salford just 30 miles away will pay over 50% more, at £625.  

Licencing schemes allow councils to establish if landlords are a ‘fit and proper’ person to be a landlord and can include regulations about the management, upkeep and safety of a property.

Landlord licences are mandatory in Scotland and Wales, while just one in six local authorities (16%) have them in place in England. 

Since the start of 2017, there have been 1,625 landlord licences granted in Wales and more than 22,000 new landlords registered in Scotland. Around 460,000 rental properties in England are now covered by a landlord licensing scheme/

Matt Boatwright, Head of Direct Line for Business, says: “Our analysis shows landlord licensing is truly a postcode lottery, with a phenomenal range of costs for those that do have to sign up for a scheme. 

"Anyone planning on becoming a landlord, or who already has a property portfolio, should contact their local authority to see if they have a scheme in place.”

Councils hike fees

Not only are there variations in licence fees, but the research reveals that fees have shot up in recent years. For example, the cost of a licence in the London Borough of Newham has risen by 150% in just three years – from £500 in 2014/15 to £1,250 in 2017/18. 

Local authorities are raising huge sums from landlord licensing schemes: Liverpool City Council received more than £4 million in a year for over 42,000 properties. Each council with a scheme typically raised £144,629 from schemes in 2017. 

The licensing scheme has a tiered payment system, depending on how many rooms are rented out, and landlords are increasingly being prosecuted for breaching the terms of the licence or not having one in place. Local authorities across the UK recorded an average 5,069 licensing offences in 2017, an increase of 46% since 2016. 

Failing to comply with a scheme can result in prosecution and a civil penalty of up to £30,000 (£50,000 in Scotland), though the average fine in 2017 was £926.

David Smith, policy director for the Residential Landlords Association comments: “Whatever the cost of licensing, it fails to provide any assurance about the quality of accommodation.

"The RLA’s own analysis shows that there is no clear link between a council having a licensing scheme in place and levels of enforcement against criminal landlords.

“The fundamental problem with all schemes is that it is only the good landlords who come forward to be licensed. They completely fail to identify the crooks.

"They just mean landlords, and therefore tenants, having to pay more. Instead, councils need to be more creative in how they identify landlords by better using the powers they have to collect data using council tax returns and accessing information from deposit schemes.”

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