Today's blog is by Richard Tacagni of London Property Licensing, specialist in helping residential landlords make sense of London property licensing.
Southwark Council is the latest borough set to implement new licensing schemes for private rented homes.
On 21 July 2015, the Council’s Cabinet approved borough wide additional licensing plus a network of smaller selective licensing areas spread across the borough. Both schemes will go live on 1 November 2015.
According to the Council, Southwark’s private rented sector has seen rapid growth and about 70,000 people now live in private rented homes – about a quarter of all residents.
The Council says that whilst much of the sector provides decent accommodation and is well managed, there are problems associated with parts of the sector arising from poor management, poor property conditions and issues of anti-social behaviour.
The Council says that their enforcement activity involving multiple occupied properties has increased by 289% over the past 5 years, leading to a 500% increase in the number of HMO prosecutions over the same period. Research by London Property Licensingplaces Southwark in the top five London councils when it comes to taking housing prosecutions.
Additional HMO licensing
The additional licensing scheme will extend House in Multiple Occupation (HMO) licensing to all HMOs in the borough. Every private rented property shared by three or more people who are not all related will need to be licensed – an estimated 10,000 properties.
In certain parts of the borough, a new selective licensing scheme will extend property licensing to all private rented homes – including houses and flats rented by an individual or single household.
The scheme designation says it “…includes but is not limited to Walworth Road, Camberwell Road, Camberwell New Road, Camberwell Green, Coldharbour Lane, Denmark Hill, Camberwell Church Street, Bellenden Road, Southampton Way, Old Kent Road, Meeting House Lane, Queens Road, Rye Lane, Evelina Road, Lordship Lane (North), Lordship Lane (South)”.
Yet further investigation by London Property Licensing has found that the selective licensing scheme is far bigger than at first appears. The scheme extends across seventeen distinct areas including 134 streets and is estimated to include up to 5,000 properties.
This is one of the most complex licensing schemes to date and landlords and letting agents will need to study the arrangements very carefully.
Whilst the selective licensing fee has been set at £500 / property for up to five years, the additional licensing fee for HMOs has been set at £250 / bedroom, making it £1,250 for a five-bed shared house for up to five years. This will become one of the highest additional licensing fees in London.
Landlords who apply within the first six months will receive a 20% discount, with a further 20% discount offered to accredited landlords.
The council says there will be an online application process and all properties will be inspected before a licence is issued.
Councillor Richard Livingstone, cabinet member for housing at Southwark Council said:
"With the rapid expansion of the private rented sector in Southwark, it is vital that we’re on the side of private sector tenants and those responsible landlords who provide a good standard of housing, particularly where children are concerned. We just want to make sure this is the experience of everyone residing in a private property in Southwark.
"On its own licensing will not solve the issues created by poorly managed private rented accommodation. But it’s a step towards ensuring that rogue landlords are held accountable and curbing anti-social behaviour."
The rents paid by Clapham tenants are now standing at £2,188 per calendar month (PCM), a rise of 2.25% year on year and 0.45% higher month on month.
However, this attention-grabbing monthly rent figure masks stark differences in the various different parts of the Clapham rental market. Demand in Clapham for high quality family homes with two or three bedrooms in good catchment areas for schools remains really robust due to tenants wanting access to the schools. Other influencing factors that make certain areas popular are the proximity to transport links. However, I have noticed a drop in demand (and thus rents achieved) for property where the landlord hasn’t kept the property fresh; in terms of decoration, carpets, replacement windows and poor heating.
So, what does all this mean for Clapham landlords and tenants?
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In previous articles, I have spoken at length about the crisis in supply of property in Clapham (i.e. not enough property is being built), but in this article I want to talk about the other crisis – that of affordability. It is not just about the pure number of houses being built but also the equilibrium of tenure (ownership vs rented) and therein, the affordability of housing, which needs to be considered carefully for an efficient and effectual housing market.
An efficient and effectual housing market is in everyone’s interests, including Clapham homeowners and Clapham landlords, so let me explain ..