Operating an HMO or private rented property without a licence is a serious offence that can lead to a variety of penalties and consequences for both landlords and letting agents. In this guide, we’ll run through the key penalties for properties that are non-compliant within a licensing scheme.
Common tactics include fines of up to £30,000, rent repayment orders, civil penalties, and even banning orders for entire agencies or landlords if they continually breach council rules.
Types of Licensing that are subject to fines and penalties
There are three types of licensing schemes introduced in the housing act that you need to be aware of to remain complaint against fines. Mandatory and additional licensing both apply to a house in multiple occupation.
Mandatory licensing is a form of HMO licensing applied nationwide and requires any private property with five or more people forming more than one household to obtain a property licence. Additional licensing is introduced at a council’s discretion and expands the scope to smaller HMOs, requiring that all privately rented properties with three or more people forming more than one household must obtain a licence.
Licensing doesn’t just stop at HMOs, however. Selective licensing can be introduced at the councils discretion and requires that all privately rented properties in a given area must obtain a licence regardless of their size, and the penalties for having an unlicensed property can be severe.
Licensing Fines
Operating unlicensed properties can lead to unlimited fines from the council of up to £30,000 per non-compliant property. In a recent case from Ashfield Council, an a landlord was fined £17,500 after the letting agency ignored council warnings about a property within a selective licensing scheme without a licence.
Rent Repayment Orders
In the current licensing legislation, landlords and letting agents can be subject to paying rent repayments of up to 12 months to tenants who were living in properties without the correct licensing regulations. With the Renters Right Bill on the horizon, an amendment in the new legislation threatens to expand the scope of these rent repayment orders from 12 months to 24 months, making the consequences of renting out a property without a licence even more severe.
A recent case illuminates how tenants in Hackney took a letting agency to a First Tier Tribunal for renting a HMO without a licence and won £12,450 in a rent repayment order as a result. With council’s increasingly making tenants more aware of licensing and getting them to check if their property is licenced, it’s crucial to stay on top of compliance.
Banning Orders
When letting agents or landlords continually let out properties without a selective or HMO licence, they are liable for a banning order which can affect an entire agency. This means the landlord or letting agent in question will be barred from letting out properties and placed on a rogue landlord database.
A recent example of this saw the head of a letting agency receive a banning order from letting out properties for three years due to repeated failures to get the correct property licence and safety breaches.
Find out About the Future of Legislation
On top of banning orders, rent repayment orders, and council fines, there’s a lot more effort councils are putting in to enforcing their licensing practices to become more effective. From tenant awareness campaigns and private enforcement teams to the new Renters Rights Bill, licensing compliance has never been more important.
Check out our latest report, ‘Red Tape Revolution: The Next Wave of Licensing Enforcement’ to find out how councils and the government are stepping up their enforcement tactics for a new future in licensing compliance.
