Landlords in england face rising costs due to selective licensing schemes

• English councils are charging landlords almost £700 on average (£699.92) for ‘selective’ licenses, which are mandatory in some areas, with some councils charging hundreds more
• In 2023, English councils generated over £20 million in revenue from selective licensing schemes, and a further £2.5 million in fines alone, an increase of 80 per cent year on year
• Non-compliant landlords can face prosecution or unlimited fines, with some councils issuing with fines of up to £10,000

New research from Direct Line reveals thousands of landlords in England are facing increasing costs due to selective licensing schemes imposed by local councils¹. Selective licensing schemes aim to improve standards and the quality of privately rented homes by requiring landlords in certain parts of England to obtain a license to rent out property². Schemes require landlords to meet certain standards of management and maintenance and are often accompanied with regular property checks.

Forty-seven English councils, out of the 245 that responded to Direct Line’s Freedom of Information (FOI) request, currently have a selective licencing scheme in place. This is an increase of almost ten (9.3) per cent from those who reported having a scheme in place in 2022.  Councils including Peterborough, Merton, Charnwood Borough and Birmingham, have introduced these schemes within the last two years.

Councils are charging landlords almost £700 on average (£699.92) for obligatory selective licenses, but there is a huge variation across England. The local authorities charging the most included Leicester (£1,290), Newcastle (£900), and Greenwich (£858), whilst Ashfield District Council (£350), East Staffordshire Borough Council (£507), and North Yorkshire Council (£550) charge the least.

Table 1: Councils with the highest costs for selective licenses

Source: Direct Line 2024

In 2023, English councils generated over £20 million from selective licensing schemes. Liverpool alone raised over £5 million of this total, accounting for a quarter of the UK’s licensing revenue. Landlords failing to comply with licensing requirements face significant penalties. Burnley Borough Council, for example, issued fines up to £10,000. Last year, councils in England raised £2.5 million by fining landlords, almost double the previous year's income of £1.4 million. Waltham Forest (170), Middlesborough (128) recorded the highest number of licensing offences in 2023 and are also leading in 2024 so far.

Table 2: Councils generating the highest amount of revenue from selective licensing schemes

Source: Direct Line 2024

Some councils have had a selective licence scheme in the past and have since closed the schemes down. Since 2020, seven of the councils Direct Line contacted, including as Hartlepool, Sheffield, and Coventry, have closed their schemes down, citing increased standards in the market.

Sarah Casey, Head of Landlord insurance at Direct Line business insurance commented: “It’s important that landlords comply with all appropriate legislation as anyone not doing so could face a hefty fine. Our analysis shows significant regional variations in landlord licensing costs and a growing burden from fines for non-compliance. Anyone planning on becoming a landlord, or who already has a property portfolio, should check with their local authority to see if they have a scheme in place.”

ENDS

Notes to Editors

1.        Freedom of Information request submitted to councils in England in April 2024. 247 councils responded. This release includes data from English councils only, as there are different schemes in place in Scotland, Wales and Northern Ireland.

2.      GOV.UK. Selective licensing in the private rented sector: a guide for local authorities. Available at: https://www.gov.uk/government/publications/selective-licensing-in-the-private-rented-sector-a-guide-for-local-authorities/selective-licensing-in-the-private-rented-sector-a-guide-for-local-authorities.

For further information please contact:

Unni Henry - PR Manager

Unni.Henry@DirectlineGroup.co.uk 

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