Additional licensing is a form of discretionary property licensing applied only to a house in multiple occupation (HMO). Like other forms of property licensing, additional licensing was introduced as part of the 2004 Housing Act to improve the safety, management and quality of Private Rented Sector (PRS) properties. It is an increasingly popular tool used by local authorities (i.e., councils) to improve living standards in their local areas. As of August 2022, Kamma was tracking over 60 active additional schemes in England and Wales.
What will we cover?
- Which properties need an additional licence?
- How do you obtain an additional licence?
- Who should apply?
- How much does it cost?
- How long does it last?
- What happens if I do not have an additional licence?
- What about room size?
- Are there exemptions?
Which properties need an additional licence?
Additional licensing schemes are determined at the discretion of the local authority, hence the term ‘discretionary scheme’. All property managers, such as letting agents and landlords, operating a ‘small’ HMO will need to apply for an additional licence. These properties have between three and four tenants forming two or more households. Like all HMO properties, the tenants of each household share facilities such as a toilet, bathroom or kitchen, and at least one tenant or their employer pays rent.
It is worth noting that additional licences are allocated to HMO properties that do not fit the criteria of a mandatory licence. If a property needs or already has a mandatory licence, it does not need an additional licence.
How do you obtain an additional licence?
All HMO properties need to be licensed by the local authority using the forms they provide for an application. However, new licensing schemes are introduced and updated regularly. This constantly changing landscape is part of what makes licensing so difficult to keep track of manually, especially for landlords and letting agents with portfolios spanning across different councils.
Kamma monitors the UK’s property licensing landscape to identify what licence is required for a property. We can also help with the licence application process. Speak to us to find out more.
Who should apply?
The landlord is responsible for applying for the licence and paying the associated fee. However, the letting agency is legally obliged to ensure that all properties in their portfolio are correctly licensed. Therefore, letting agents and landlords should work together to guarantee that a property under their management is compliant with local licensing regulations. Check out our in-depth guide about the roles and responsibilities associated with property licensing.
How much does it cost?
The cost of an additional licence varies between local authorities, but they tend to range from £400 to £1200.
How long does it last?
New additional licensing schemes last for a maximum of 5 years before they are either renewed, replaced or scrapped. A property within the scheme designation must be licensed for the full period. However, shorter licences may apply if the application is approved after an additional licence comes into effect. The licence may also be terminated if the application is deemed incomplete or the management of the property is called into question. When the licence is coming to an end, the property manager must check whether the additional scheme has been renewed or replaced by another scheme in the area. If so, they must submit a renewal application before the licence expiry date.
What happens if I do not have an additional licence?
Letting agents and landlords are normally allowed up to 28 days to secure an HMO licence. However, if non-compliance persists, the local authority will take legal action. The average fine for a letting agent is £5,545, whereas the largest fine levied against an agent is £167,000. As of August 2022, £8,010,344 in fines have been levied against rogue agents and landlords for unlicensed properties in London alone.
An unlicensed property is at risk of a Rent Repayment Order (RRO), which may require the landlord to repay up to 12 months’ worth of rent to the local authority or tenant. Failure to comply risks being issued with a banning order that prevents the property from being let. Serious and repeat offences may result in prosecution, a sentence of up to five years, and an uncapped fine. The landlord may also be listed on the Rogue Landlord database. An unlicensed property also means that the property manager cannot serve the occupier with a Section 21 (s21) notice, potentially preventing them from regaining possession of the property at the end of a tenancy agreement.
Greater coverage in the national press has quickly spread awareness of the tenants’ right to apply for RROs. Concurrently, local authorities are scaling their enforcement efforts against rogue agents and landlords. Our latest Rogue Landlord Roundup has all the latest information on how to avoid fines.
What about room size?
When it comes to licensing, room size matters. National standards are set for the minimum room size requirements in an HMO property, but local authorities often stipulate further measures. Read more about the key points regarding room size regulations.
Are there exemptions?
Some local authorities specify that Section 254 (s254) and/or Section 257 (s257) HMOs are not included in the scheme. If the exemption is not explicitly stated, it is assumed they are included in the scheme. An s254 HMO meets the standard criteria of an HMO but lacks one or more basic amenities, such as a kitchen or living room. A property is classified as a s257 HMO if it meets the following criteria: the whole or part of the building has been converted into self-contained flats; the conversion did not comply with the latest building regulations; and less than two-thirds of the available lettings are occupied by the landlord and not rented out.
Calling all letting agents: by subscribing to Kamma’s property licensing update, you can take the first step to protect your business from hefty fines. We help you to stay up to date with the most recent news and articles on scheme announcements and regulatory changes. Go that extra mile by booking a demo to understand how Kamma can solve property licensing for you.
