The London Borough of Newham has unveiled a scheme requiring all private residential landlords to obtain a licence by the end of the year. The plans will cover around 35,000 private tenancies (roughly one third of the Borough's households) and aims to tackle the increasing problem of 'rogue' landlords and poor quality accommodation. The council has cited a 'strong correlation' between poorly administrated, low quality property and anti-social behaviour.
The scheme; backed by the charity organisation Shelter, has been adopted following consultations with residents, tenants, landlords and letting agents, which found the majority of private tenants support the scheme.
The licensing regime will come into force on 1 January 2013, although landlords must register in advance if they wish to benefit from reduced fees. Landlords will pay £150 for a five year licence if they apply before 1 January 2013, and £500 if they register after 1 January. Those who fail to acquire a licence face fines of up to £20,000. Landlords will require one licence for each property they let, meaning costs could escalate for those with extensive portfolios in the Borough.
Those who do not register for the scheme voluntarily by the deadline, will be subject to monitoring and inspections in a bid to improve the standard of their tenancy management, and will only be able to obtain a one year licence.
The view that responsible landlords will take a more pro-active approach not only towards their lettings but also towards the anti-social behaviour of their tenants, giving warnings about conduct and ultimately terminating leases, if necessary.
Sir Robin Wales, Newham's Mayor, claims that"good landlords have nothing to fear from this scheme. For the bad ones, this is a clear message they must clean up their act - or pay the price."However, many landlords are likely to see this scheme as an unwelcome stealth tax; with the National Landlords Association expressing its disappointment with the decision to implement such a scheme.
It remains unclear exactly how a licensing scheme will help identify unscrupulous landlords, particularly as it is the bad landlords who exploit the type of tenant least likely to have the knowledge or means necessary to challenge them.
It is also likely that landlords will pass the cost of licensing on to tenants through increased rent, which could make unlicensed landlords' properties even cheaper and more attractive by comparison.
The increase in bureaucracy represents yet another barrier to entry for new landlords.
With 'rogue' landlords representing such a small percentage of the sector in Newham, and with fewer than 500 prosecutions per year, the implementation of such a scheme does seem onerous.
However, there is a pervading feeling that the anti-social behaviour problems linked to residential tenancies in Newham must be tackled. It remains to be seen how effective this new scheme will be and if it will be adopted by other London Boroughs.