Proposals to introduce new property licensing schemes

1.1

Brighton & Hove City Council (the council) has consulted on two proposed licensing schemes for private rented homes in the city. The consultation ran between 4 October 2023 and 3 January 2024.

1.2

The council has a mandatory licensing scheme for Houses in Multiple Occupation (HMOs) in place. This applies to privately rented properties with five people or more over two households (families) or more and where kitchen or bathrooms are shared.

1.3

Under Housing Act 2004, the local authority can introduce two other types of property licensing. This is additional licensing for HMOs and selective licensing for other private rented properties.

1.4

The additional licensing scheme would apply to HMOs that are two or more storeys only. In addition, occupied by three or four people who are not from the same family and share a kitchen, bathroom or toilet. For example, a two-storey shared house or flat in a converted house, occupied by three or four people, with a shared, kitchen, bathroom or toilet would require a licence.

1.5

The selective licensing scheme would apply to all private rented properties which are occupied by a family, couple or two unrelated tenants (sharers). For example, a family, couple or two sharers in a single or two storey house or flat are properties that would require a licence.

1.6

This consultation is designed to inform you about the council’s proposals. Each scheme is proposed to run for up to five years. The full background and decision on both schemes is in a Private Sector Housing: Discretionary Licensing Evidence Report. This was considered at the Housing Committee on 15 March 2023. A further report, Private Sector Housing - Discretionary Licensing Proposed Fee Structure and Licence Conditions, was considered by the Housing Committee on 20 September 2023 and go to page 39 of 152.

2.1 - Scheme 1 - Additional HMO Licensing Scheme

2.1.1

It is proposed to introduce Additional HMO Licensing across the city. Section 56 of Housing Act 2004 allows local authorities to designate areas for additional licensing. 

2.1.2

There are certain requirements that must be met for the council to designate an Additional HMO Licensing Scheme. Mainly, that a significant proportion of HMOs, in a local authority’s area, are being managed ineffectively so that problems for occupants or members of the public arise.

2.1.3

With a few exceptions, all private landlords would require a licence for each of their rented and applicable properties. Failure to licence a property could result in legal proceedings before a Court (for a criminal offence and unlimited fine) or a financial penalty imposed by the council. In certain circumstances, this may also result in registration on the Government’s database of rogue landlords and property agents under the Housing and Planning Act 2016.

2.1.4

A map of Brighton & Hove below (in pink) shows all wards covered by the proposed Scheme. 

2.2 - Scheme 2 - Selective Licensing Schemes

2.2.1

It is proposed to introduce a Selective Licensing Scheme, for other private rented properties, for four wards in the city. The wards are: 

• Kemptown
• Moulsecoomb & Bevendean
• Queen’s Park
• Whitehawk & Marina

The Scheme is being proposed for reasons of poor property conditions and significant deprivation in those wards.

2.2.2

There is a further proposal to introduce a second Selective Licensing Scheme, subject to Secretary of State approval, across thirteen wards. 

The wards are: 

• Brunswick & Adelaide
• Central Hove
• Goldsmid
• Hanover & Elm Grove
• Hollingdean & Fiveways
• Preston Park
• Regency
• Rottingdean & West Saltdean
• Round Hill
• South Portslade
• West Hill & North Laine
• Westbourne & Poets Corner
• Wish

This second Scheme is being proposed for reasons of poor property conditions only in those wards.

2.2.3

Section 80 of Housing Act 2004 allows local authorities to designate areas for selective licensing.

2.2.4

There are conditions that must be met for the council to designate a Selective Licensing Scheme. Meeting one (or more) of those conditions are below:

• low housing demand (or is likely to become such an area)
• a significant and persistent problem caused by anti-social behaviour (ASB)
• poor property conditions
• high levels of inward migration
• high levels of deprivation
• high levels of crime

2.2.5

In considering whether to designate an area for selective licensing on the grounds of property conditions, migration, deprivation or crime, the council may only make a designation if the area also has a high proportion of property in the private rented sector (PRS). In addition, any proposed Selective Licensing Scheme exceeding 20% of its total geographical area or 20% of the area’s PRS must be confirmed by the Secretary of State for the Department for Levelling Up, Housing and Communities.

2.2.6

The Selective Licensing Scheme proposed for four wards in the city would not require Secretary of State approval. However, the second scheme across thirteen wards would require Secretary of State approval.

2.2.7

With a few exceptions, all private landlords would require a licence for each of their rented and applicable properties. Failure to licence a property could result in legal proceedings before a Court (for a criminal offence and unlimited fine) or a financial penalty imposed by the council. In certain circumstances, this may also result in registration on the Government’s database of rogue landlords and property agents under the Housing and Planning Act 2016.

2.2.8

A map of Brighton and Hove below shows the wards covered by the proposed schemes. 

Four wards are orange: 

• Kemptown
• Moulsecoomb & Bevendean
• Queen’s Park
• Whitehawk & Marina

Thirteen wards are purple: 

• Brunswick & Adelaide
• Central Hove
• Goldsmid
• Hanover & Elm Grove
• Hollingdean & Fiveways
• Preston Park
• Regency
• Rottingdean & West Saltdean
• Round Hill
• South Portslade
• West Hill & North Laine
• Westbourne & Poets Corner
• Wish

The remaining wards are pink. They are not covered by the proposed schemes.

Those wards are: 

• North Portslade
• Hangleton & Knoll
• Westdene & Hove Park
• Patcham & Hollingbury
• Coldean & Stanmer
• Woodingdean

3.1 - The evidence

3.1.1

In September 2022 the council commissioned a Selective Licensing Feasibility Study (Cadence Innova, February 2023, Selective and Additional Licensing Scheme Feasibility Review, Brighton and Hove City Council) and a Private Rented Sector: Housing Stock Condition and Stressors Report (Meta Street Ltd, March 2023, Brighton & Hove City Council). If you would like copies of these reports, send requests by email to ConsultPropertyLicensing@brighton-hove.gov.uk

3.1.2

The Feasibility Study concludes that there is evidence to support an Additional HMO Licensing Scheme. The Stock Condition and Stressors Report provides evidence in support of the Scheme. This includes comparison of HMO conditions to the Housing, Health and Rating System (HHSRS). This is a housing assessment tool used by local authorities. It places legal requirements on PRS landlords to mitigate hazards and protect tenants’ and any visitors’ health and safety - Housing Health and Safety Rating System (HHSRS): Guidance for Landlords and Property-Related Professionals, Published 26 May 2006, Department for Levelling Up, Housing and Communities and Ministry of Housing, Communities & Local Government Housing health and safety rating system (HHSRS): guidance for landlords and property-related professionals.

3.1.3

There are a significant number of HMOs in the city with at least one serious HHSRS hazard (Category 1 or high rated Category 2 hazard). This is a direct indicator of poor property management. In addition, during a 5 year period, between April 2017 and March 2022, the council received 4,550 complaints and service requests from private tenants and others, linked to PRS properties. This includes HMO properties. Whilst not every complaint would have required the council to take further action, this is still evidence of poor property management and conditions.

3.2 - Why the scheme is proposed

3.2.1

Based on this evidence, the council is proposing a citywide Additional HMO Licensing Scheme. The Scheme would improve management of HMOs by compliance with licence conditions. Enforcement powers may be used where properties do not conform to the Scheme’s requirements.

3.2.2

In addition, HMOs in poor condition would be inspected using HHSRS. Licence holders would be given opportunities to mitigate any serious HHSRS hazards. Enforcement powers may be used if HHSRS hazards are not mitigated. Improved management of HMOs and removal of serious HHSRS hazards would also impact positively on tenants’ health, safety and wellbeing. 

4.1 - The evidence

4.1.1

In September 2022 the council commissioned a Selective Licensing Feasibility Study (Cadence Innova, February 2023, Selective and Additional Licensing Scheme Feasibility Review, Brighton and Hove City Council) and a Private Rented Sector: Housing Stock Condition and Stressors Report (Meta Street Ltd, March 2023, Brighton & Hove City Council). If you would like copies of these reports, send requests by email to ConsultPropertyLicensing@brighton-hove.gov.uk. 

The Feasibility Study concluded that there is evidence to support Selective Licensing Schemes. The Stock Condition and Stressors Report provides evidence in support of the Schemes.

4.2 - Poor property conditions

4.2.1

There are significant numbers of properties with at least one serious HHSRS hazard (Category 1 or high rated Category 2 hazard) in the proposed four and thirteen wards (seventeen wards in total) for Selective Licensing. Therefore, it is considered appropriate for properties in these wards to fall within selective licensing.

4.3 - Deprivation

4.3.1

Indices of deprivation are used by the Department for Levelling Up, Housing and Communities to measure deprivation. By using different factors, on deprivation (See Frequently Asked Questions (FAQs) on The English Indices of Deprivation 2019 available for download in National Statistics, English Indices of Deprivation 2019, Published 26 September 2019, Ministry of Housing, Communities and Local Government English indices of deprivation 2019), it can then be quantified. 

The factors are: 

• income deprivation
• employment deprivation
• education
• skills and training deprivation
• health deprivation and disability
• crime
• barriers to housing and services
• living environment deprivation
   

4.3.2

For the four wards proposed for selective licensing, they were found to fall in 30% of the most deprived wards in England (Cadence Innova, February 2023, Selective and Additional Licensing Scheme Feasibility Review, Brighton and Hove City Council). Therefore, significant levels of deprivation are found in these wards.

4.4 - High proportion of property in the Private Rented Sector (PRS)

4.4.1

Government guidance on selective licensing states that nationally, proportions of the PRS currently make up 19% of the total housing stock in England. If an area has stock of more than 19% then the area is considered as having a high proportion of PRS properties. (Selective Licensing in the Private Rented Sector, A Guide for Local Authorities, June 2023, Department for Levelling Up, Housing and Communities)

4.4.2

Housing Census data (for the year 2021) of the Office of National Statistics shows the PRS was at least 20% of the total housing stock. Locally, twenty out of a total twenty three wards in Brighton & Hove show higher PRS percentages than the 20% Census level. Particularly, in each of the four and thirteen wards (seventeen wards in total) proposed for selective licensing.

4.5 Why the scheme is proposed

4.5.1

Based on this evidence, the council proposes a Selective Licensing Scheme for four wards (with poor property conditions and deprivation). The remaining thirteen wards (with poor property conditions) would bring a further thirteen wards and second Selective Licensing Scheme. 

4.5.2    

The schemes would improve the management of properties by compliance with licence conditions. Enforcement powers may be used where properties do not conform to the Schemes’ requirements. 

4.5.3

In addition, properties in poor condition would be inspected using HHSRS. Licence holders would be given opportunities to mitigate any serious HHSRS hazards. Enforcement powers may be used if HHSRS hazards are not mitigated. Improved management of properties and removal of serious HHSRS hazards would also impact positively on tenants’ health, safety and wellbeing. Conversely, this would also help to reduce deprivation.

5.1

At the council’s Housing Committee on 15 March 2023 (where the Private Sector Housing: Discretionary Licensing Evidence Report was presented) four possible options were exchanged, for tackling problem housing in Brighton and Hove’s PRS.  

These were:

• A - do nothing
• B - use existing reactive powers
• C - targeted use of Management Orders
• D - area based voluntary accreditation

5.2

For A - Do nothing then continuing only with the council’s current approach for investigating and responding to complaints from PRS tenants on problem housing, would be too shallow. There is an opportunity for a proactive approach from property licensing to address poor housing conditions. In addition, preventing housing problems at the outset would be more efficient.

5.3

For B - Use existing reactive powers, then it ensures the council meets its basic statutory responsibilities. However, it is not a proactive step for improving PRS conditions. Furthermore, it is limited to properties where tenants have complained about poor housing conditions.

5.4 

For C - Targeted Use of Management Orders, this would allow the council to have control over specific properties. Yet, management orders are restricted to certain properties. They may evolve from a complaint made by a tenant on poor housing conditions. Again, they are mostly a reactive rather than proactive approach for improving PRS conditions.

5.5

For D - Area based voluntary accreditation, then this can produce good results. However, it is very much voluntary and does not guarantee all landlords will take up accreditation. Equally, accreditation is not a statutory requirement unlike the proposed property licensing schemes, if implemented.

5.6

Further strengths and weaknesses of each option were considered. This showed that none of the options were expected to bring a scale of improvement, big enough for addressing various issues in the city’s PRS.

6.1

The council aspires to a healthy PRS market for Brighton & Hove. The PRS should be a positive housing option for individuals. Licensing schemes which provide a clear set of conditions and expectations would, it is believed, bring a step change in how the PRS is managed.

6.2

The Brighton & Hove City Council plan 2023 to 2027 sets the council’s core priorities to achieve ‘A Better Brighton & Hove for all’. This plan seeks under the priority ‘Homes for everyone’ a goal to deliver accessible, affordable and high-quality homes (including within the PRS) for all residents of Brighton & Hove. Key aims are improving HMO conditions and enforcing minimum energy standards in the PRS. Equally, by raising PRS standards via property licensing schemes it supports the ‘Homes for everyone’ priority.

6.3

Currently, the biggest cause of homelessness in the city is end of PRS tenancies. Mostly from short 6 or 12 month tenancies, creating insecure housing tenures. It is hoped the proposed no fault evictions legislation would come into force this current year, 2023. However, we await further announcements on this and until this legislation is in place tenants continue to face abrupt end of tenancies and struggle to find new PRS accommodation.

6.4

The Homelessness and Rough Sleeping Strategy 2020 to 2025 aims to increase early intervention and prevent such end of tenancies. It also aims to provide more move-on accommodation. This includes providing support for residents to access and maintain private rented accommodation, particularly where this prevents or relieves homelessness.

6.5

If a landlord agrees to work with the council by offering a tenancy to a referred household and in the process, preventing or relieving homelessness. It is then proposed the council will pay the total amount of licence fee to a licence applicant. The full cost of a licence would be met where a tenancy period was for five years. Presently, this would be for the Selective Licensing Scheme only. However, the council is looking at how covering licence costs can apply to the Additional HMO Licensing Scheme.

6.6

A new Housing Strategy for the city is in development and will be consulted on in 2024.  The PRS will be a key theme of the Strategy. Another aspect of it will be empty homes. The council has a programme of reducing empty homes and returning them to use. A number of properties brought back to use have gone into the PRS. There is now an opportunity for the proposed property licensing schemes to support empty homes’ interventions by the council.

6.7

The council is committed to reducing crime and anti-social behaviour (ASB) across all housing tenures. The council has a Community safety and crime reduction strategy 2020 to 2023. ASB is key priority of the Strategy, seeking to cause less harm to individuals and communities. The proposed licensing schemes will, therefore, require conditions placed on tenancy agreements so that properties are not used for any antisocial purposes. In addition, it is proposed advice and guidance material on ASB will be made available for property licensing.

7.1

Landlords or managing agents responsible for a private rented property that requires a licence would need to make a licence application. Those who do not apply for a licence and have no exemption in place, may face further investigation or enforcement by the council.

7.2

Ultimately, the council must be satisfied that a proposed licence holder is a ‘fit and proper’ person and suitable property management is in place. If the council is not satisfied, it may decide to refuse a licence, reduce the term of it or impose further conditions on a licence holder.

7.3

In addition, proposed payment of the total amount of licence fee to a selective licence applicant, by offering tenancies to referred households, would only be permitted if ‘fit and proper’ tests are met. Equally, suitable property management would need to be in place.

7.4

Upon receipt of a licence application, it would be reviewed and risk assessed. Depending on levels of risk identified, a licence would be issued before inspecting a property or granted after inspecting it. Once granted, compliance visits to properties would be made to ensure they meet licence conditions.

7.5

Once properties are licenced, licence holders must comply with licence conditions. These conditions are slightly different for Additional HMO Licensing and Selective Licensing. 

Read the proposed Additional Licensing conditions.

Read the proposed Selective Licensing conditions. 

8.1

Housing Act 2004 allows local authorities to set a fee for property licences. This is set against all costs incurred by the council for carrying out property licensing. There must also be no profit from licence fees. Proposed licensing scheme fees are set out in Appendix 3.

8.2

Fees are payable in two parts. Part A covers average costs of granting or refusing a licence application. This part of the fee is payable when submitting applications. Part B covers compliance with licensing scheme requirements and general administration costs.

9.1

In addition to improving property conditions and management of the PRS for both of the proposed schemes. For the Selective Licensing Scheme, it is expected that deprivation would reduce for the four wards: 

• Kemptown
• Moulsecoomb & Bevendean
• Queen’s Park
• Whitehawk & Marina

Both property licensing schemes may also improve habitability and desirability of different wards in Brighton & Hove.

9.2

The reputation of the PRS, as a tenure of choice would be enhanced. There are economic opportunities for the rental property industry. Tenants seek good private sector homes rather than bad or poor condition properties. Equally, it is proposed that licensing will have a positive impact on homelessness. Essentially, by working to reduce end of tenancies that otherwise result in loss of accommodation within the PRS.

9.3

A further advantage of both schemes is their ability to diffuse housing disrepair disputes between landlords and tenants. Properties in good states of repair, free from serious hazards and well managed are unlikely to give tenants cause to seek private action against landlords. This, therefore, benefits both tenants and landlords. Tenants may also find it difficult to take such action, especially if they are outside legal aid eligibility.

10.1

The consultations ran between 4 October 2023 and 3 January 2024. They are now closed.

Feedback was received through online surveys, with papers copies available from the Customer Service Centre at Hove Town Hall and Hove, Jubilee, Portslade, Moulsecoomb and Whitehawk libraries.

A series of online and in person meetings were also held to outline property licensing schemes’ proposals and receive feedback. 

11.1

At the end of the consultation, responses will be considered and a further report will be presented to the Housing & New Homes Committee in March 2024. Members would then decide on whether to proceed with introducing new property licensing schemes.

11.2

Following this decision, the council would then have two options:

• option 1 - to do nothing and not implement property licensing schemes
• option 2 - to proceed with the next steps and give a necessary three month statutory (designation) notice for Additional HMO Licensing or Selective Licensing (for the four wards)

11.3

Note, if a decision is made to introduce a second Selective Licensing Scheme (for the thirteen wards) an application to the Secretary of State would first need to be made. Agreement must then be reached before a designation notice can be issued. It is estimated this application would be made in January 2025. It is proposed this forms a second phase of selective licensing, after the first scheme.

Appendix 1 - Proposed Additional HMO Licensing Standards and Conditions

Appendix 2 - Proposed Selective Licensing Conditions

Appendix 3 - Proposed Licensing Scheme Fees