The report sought Cabinet agreement for the proposed introduction of five year selective and additional licensing schemes within the Private Rented Sector in the London Borough of Havering, as required by Cabinet on 23rd September 2015.  In addition approval was also sought to commence an informal consultation, and thereafter for the formal consultation required before the proposed adoption of both schemes.

The Department for Communities and Local Government (DCLG) Non-Statutory Guidance published in March 2015 set out the criteria for making a selective licensing scheme and discusses the type of evidence needed to support a designation.  The Cabinet report identified the evidence relied upon to satisfy the criteria for selective and additional licensing and the steps required for an extensive consultation exercise. 

To assist Cabinet in the decision making process for the preparation of a new scheme a timeframe and finance detail had been included and details of other steps required to comply with the relevant legislation which was necessary before the declaration of any new scheme.  Additional factors were also outlined in the report to support the introduction of Additional and Selective Licensing Schemes in Havering.

The report examined the potential risks of the proposed introduction of Selective and Additional Licensing Schemes and suggested ways in which they could be mitigated.  Legal opinion was that the best way of mitigating risk would be to undertake an initial informal consultation.  This would enable engagement and provide opportunity to seek to confirm those issues of principal interest to parties who may wish to make representations at formal consultation stage whether in support or, particularly, against the proposed schemes including their evidence bases.  Informal consultation would be for 4 weeks and capture of this feedback would demonstrate that the Council had made concerted attempts to work with the private rental sector, would assist the final content of the proposed schemes upon which any formal consultation would be made and was consistent with current best practice. 

It was proposed that, on completion of the informal consultation and consideration of feedback, the decision as to whether to progress either or both of the proposed schemes to formal consultation and the final content of the business case justifications for the proposed additional/selective licensing schemes including agreement to any necessary changes prior to formal consultation be delegated to the Leader of the Council, after consultation with the Cabinet Member for Housing.

Reasons for the decision:

It was considered that the potential effects of the designation of Additional and/or Selective Licensing Schemes in neighbouring local authorities could exacerbate the problems which exist within Havering’s private rented sector.  The licensing regimes may threaten to displace the worst landlords from those boroughs and drive them into boroughs that do not operate any form of non-mandatory private rented housing licensing which are, therefore, seen as being more lightly regulated. 

Although evidence was required to substantiate this perceived risk, Havering could be considered to have a buoyant private rental market and is an attractive area for property investors, some of whom may have chosen to leave other boroughs due to the introduction of property licensing schemes.  Property licensing in Havering may therefore be viewed as a preventative measure in this regard.

In response to these issues, it was anticipated that the introduction of more robust controls, such as those achievable through Selective and Additional Licensing, will potentially (i) prevent the possible migration of rogue landlords into Havering, (ii) provide an opportunity to drive up standards within the private rented sector by improving the management of those properties and (iii) reduce antisocial activity often linked to poorly managed properties.  A more proactive approach to tackle these complex issues would see benefits for landlords, tenants and local residents.

A summary of the risks associated with the proposed schemes was presented as an appendix to the report.

Other options considered:

Five options were considered.  The benefits and risks associated with each of these were summarised in a separate appendix to the report.

Cabinet

1.         Approved the preparation of the business case for the following property licensing schemes in the private rented housing sector and formal consultation in accordance with statutory requirements preceded by an informal consultation for a period of 4 weeks as follows:

(a)       Additional Licensing Schemes for landlords of Houses in Multiple Occupation (HMOs) as described in the proposal paper attached as Appendix 6 to the report;

(b)       A Selective Licensing Scheme for landlords of non-HMO privately rented residential accommodation in the selected locations set out in the proposal paper, attached as Appendix 7 to the report.

2.         Approved the fee structure for the Additional and Selective Licensing Schemes, as detailed in Appendix 2b of the report and Appendix 4 of each of the attached proposed consultation documents.  Appendix 2a to this report also sets out the expected operational costs of the proposed schemes but notes that the licence fee has currently been set to cover only the administration and associated costs of the licence application.  The Council continues to work on the licence fee model and will be considering alternative fee structures inclusive of costs under Section 63 (7) and Section 87 (7) of the Housing Act 2004 prior to the start of any formal consultation.

3.         Following completion of the informal consultation and consideration of matters raised, delegated authority on whether to progress either or both of the proposed schemes to formal consultation on proposed designation and the final form and content of the additional and selective licensing schemes themselves, including any changes to the fee structure, to the Leader of the Council in consultation with the Lead Member for Housing.  It also noted that subject to the above the informal consultation may result in either or both of the proposed schemes not proceeding at this stage.