With Newcastle City Council proposing a city-wide licensing scheme that could potentially cost landlords up to £750 per property, it's worth asking if these schemes are really worthwhile. Or are they, as a local landlords' group is saying, a 'sledgehammer to crack a nut'?
Landlord licensing could cost £750 per property
The council claims that it currently receives over 1,500 complaints annually from private residential tenants in the city, out of a total of 19,000 privately rented properties. The scheme they are proposing would offer a five-year license to most landlords, or a on-year rolling license to those with previous issues and complaints upheld against them.
The proposed scheme differs from other licensing programmes for buy to let landlords in that it covers the whole of the Newcastle City Council area, as opposed to more localised schemes such as Gateshead Council's chaotic attempt to implement a selective landlord licensing zone in the Bensham and Swalwell areas of Gateshead.
While there is of course a problem with irresponsible landlords in some areas, to many buy to let investors this scheme is bound to feel like yet another hoop they need to jump through. As with Stamp Duty on second homes, cuts to tax relief and the ban on tenant fees, it's all money that needs to be found from somewhere and is most likely to be added to tenant fees.
Should you avoid landlord licensing areas?
The simplest solution is quite simple, Don't buy in an area that is covered by a landlord licensing scheme. There is of course no guarantee that such a programme will not be introduced in the future, although the truth is that these landlord licensing schemes were actually introduced in 2006 and only a handful have so far been enacted.
In total, across the UK, there are around 30 schemes, many applying only to specific problem areas, with fees ranging from £500 to £1,000. Landlord licensing is supposedly not-for-profit, although this does beg the question as to why Newcastle City Council feels the need to include areas such as Jesmond and Gosforth where the market dictates that most properties are off a far higher standard than places like Heaton and Elswick. I'm sure the £14 million potential income for a cash-strapped council has nothing to do with it.
What are the requirements of landlord licensing?
If you do find yourself with a property in a landlord licensing zone, other than the extortionate fee, you should not find the requirements too onerous. In fact, for any responsible buy to let landlord, it's pretty basic stuff such as a valid gas safety certificate, safe electrical appliance, smoke alarms and a written contract.
In principle, I'm sure none of us are opposed to the concept of any scheme that makes life better for private rented tenants. More likely, however, it will probably be the rogue landlords who decide to ignore the scheme while the responsible ones fork out £750 for the privilege of doing something they do already.
If landlord licensing and other rules are getting you down, maybe Clarice Car & Company can help you on your journey to a profitable portfolio.