Licensing rules are becoming more and more common, and they might apply to your investment property even if you don’t think they do. Many councils, especially in London now require rental properties to have Selective licensing… sometimes meaning all rental properties, not just HMOs, may need a licence.
If you let to multiple tenants from different households, you could also need Additional licensing or even Mandatory HMO licensing if five or more tenants share facilities.
Not having the right licence can be costly, with penalties like Rent Repayment Orders of up to 12 months’ rent. A quick check with your local council could save you thousands.
When does a landlord need a licence?
There are three main types of property licensing that landlords need to be aware of. Landlords need a licence if any of the following apply:
- If the local council has introduced Selective licensing, you’ll likely need a licence for all rental properties in that area, not just houses in multiple occupation (HMOs). This is becoming more common and is usually introduced in areas with concerns like poor housing or anti-social behaviour. If you’re unsure, it’s best to check with your local authority as rules are constantly changing.
- If you’re renting to at least three tenants from two or more different households (i.e. different family groups) who share common areas like a kitchen or bathroom, you may need an Additional licence. Councils use this scheme to regulate smaller shared properties that aren’t HMOs but still need proper oversight.
- If you’re renting to five or more tenants from two or more ‘households’, your property is classed as an HMO and you’ll always need a Mandatory HMO licence. This ensures that the property meets important safety standards and that your tenants are living in good conditions.
What licensing changes should you expect in 2025?
In December last year, the government announced a big shift in how housing regulations are managed. Local councils in England now have more power to introduce Selective licensing schemes without needing central government approval.
This follows Blackpool Council’s decision to introduce a new Selective licensing scheme, which now covers over 20% of the borough!
Barking and Dagenham are the first to take full advantage of these new powers. They launched a borough-wide Selective licensing scheme, meaning from 6th April 2025, all privately rented properties in the area have to be licensed.
In Lambeth, the council is set to roll out a second Selective licensing scheme covering most of the borough – excluding Waterloo, South Bank, and Vauxhall. With nearly 50,000 privately rented homes in the area, this will affect tens of thousands of properties, with the scheme expected to be in place by July 2025.
These are just a few examples, and more councils are likely to follow. The best thing landlords can do is regularly check their local council’s website to stay up to date with the latest licensing developments.
The risks of renting without the correct licence
Failing to comply with licensing requirements can lead to serious consequences.
If you’re caught renting out a property without the proper licence, you could face hefty fines, management orders, and Rent Repayment Orders of up to 12 months’ rent.
In some cases, you might even be banned from renting out your property altogether. Or even lose the ability to apply for Section 21 eviction notices (while they’re still in place), making it harder to regain possession of your property if needed.
Is applying for a licence difficult?
Applying for a licence is usually a straightforward process, though it can vary depending on your local council. Landlords need to fill out an application form, which is often available online, and provide details about their property – like its size, the number of tenants, and the facilities it offers.
Landlords also need to submit documents such as proof of safety checks (like EPC, gas safety and electrical safety checks) and information about how you manage the property.
Some councils may also require an inspection before issuing the licence.We know property licensing can feel like a headache!
But don’t worry – Horizon Lets are here to keep you updated with the news in the private rented sector and support landlords navigate their way through legislation changes and best practice.
For further information, get in touch with the team today on hello@horizonlets.com
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