Blog Post

One step forward, two steps backwards for private renters – landlord licensing is under threat

Jon Tabbush unpacks what the Renters Reform Bill could mean for London’s selective licencing schemes.

London’s private rented sector is failing renters. One in six privately rented homes in the capital don’t meet basic housing standards, and more than half the city’s renters have experienced their landlord failing to make essential repairs.  

After being announced in 2022, Michael Gove has finally pledged to bring forward the Renters Reform Bill before the next election. The bill is eagerly awaited by renters and tenant groups across the country, but most of all in London, where more than a million households rent privately. The reforms would represent a significant shift in the balance of power towards tenants and improve the private rented sector markedly, despite certain limitations. 

But concerning noises have begun to issue from Marsham Street. It’s now well-known that pressure from a group of Conservative MPs (many of whom are landlords), led by Anthony Mangnall MP, has led to the Secretary of State indefinitely postponing the end of ‘Section 21’ no-fault evictions. This crucial reform, promised since 2018, is now set to be delayed until a non-specific degree of court reform (an extraordinarily complex process) has been achieved.

But another threatened backsliding has been mostly overlooked. The bill promises to create a Private Rented Property Portal – a register of rented properties. The Portal is an excellent idea. It would allow renters to look up landlords and properties before signing a contract, to make sure they have appropriate documentation and haven’t received any housing-related convictions. It would, if successful, create a uniquely comprehensive source of data on which properties are being rented out privately, helping local authorities to improve their enforcement of rental regulations. We laid out the key features the Portal should include in our 2023 report, License to Let. But landlord bodies and their allies in Parliament seem to have convinced the government that it can replace the main tool councils use to regulate their private rented sector: selective licensing. This would be a big mistake. 

Simplifying things slightly, councils can currently require a license from private landlords in their borough before they can rent out a property. They collect important information from landlords, like making sure they have up-to-date gas safety certificates. Landlords also pay a fee, which funds councils to enforce housing regulations – paying for inspectors to check properties are up to standards, for example. Crucially, licensing allows councils to inspect a property without warning a landlord, stopping rogue operators from harassing and evicting tenants before action can be taken. They can impose licensing independently if it only applies to a small part of the borough, but they need permission from government if they want it to cover a large area. 

The crucial point is that licensing and the Property Portal do not, and aren’t designed to, do the same thing. The Portal is just an exercise in data collection, simply requiring a landlord to upload their details. It doesn’t impose or implement any regulations to be allowed to register, and it doesn’t fund any kind of enforcement. That’s not a bad thing – the best way to think of the two policies is that licensing can be deep but narrow in its focus, and the Portal will be shallow but broad. If successful, the Portal will save officials uncountable hours searching for the landlord of a substandard property, but it won’t fund them to find those substandard properties in the first place. 

Many landlords and their representatives have been critical of selective licensing for some time now. They’ve argued that it’s just a revenue raising exercise and isn’t always effective at improving standards. That will certainly be true in some cases – though given bone-deep cuts to local authority funding, it’s arguable that the former argument isn’t particularly damning – but the latter is categorically incorrect.  

There have been many reviews of how licensing improves the private rented sector in areas it’s used. One study from Generation Rent found that councils with selective licensing identified and resolved many more homes with problems than councils without a scheme. Another found significant associations between licensing and improvements in both mental health outcomes and anti-social behaviour among residents. There’s a consensus that licensing has to be combined with a coherent, multi-agency strategy to address poor conditions to be effective. A recent report from Safer Renting, a charity that supports renters in the capital, found that in one of the boroughs it surveyed, 95% of properties for which a license had been applied weren’t compliant, due to poor conditions. This evidence base supports a convincing case for licensing to be strengthened, not weakened, with more flexibility and higher standards. But even now, it’s a crucial tool for councils.  

If landlord MPs’ arguments win out, their amendment passes, and any eventual review of licensing results in its removal and replacement by the Portal, the consequences will be dire. Enforcement in the best performing councils with licensing schemes will collapse, with their funding pulled, functionally calling open season for rogue landlords. Many councils will have little ability to enforce the rental regulations on their books. If large-scale schemes, covering the majority of a borough, are banned or restricted, the effect will be similar. Because of high fixed set-up costs, licensing generally has to be on a large scale to become self-funding and councils facing financial catastrophe will not be able to devote funding to subsidise small schemes. London’s private rented sector will become a more dangerous place for tenants. 

It simply doesn’t make sense.