The extension of an additional licensing scheme in Newport could lead to increased rents, the RLA has warned in its response to the proposals put forward by Newport City Council.
The Council is reviewing its current HMO additional licensing scheme, to see if it should be extended for five years, from June 2019.
Currently, the scheme requires a private rented property to be licenced if there are three or more unrelated people forming more than two households in the same building.
Additional HMO licensing applies to Houses of Multiple Occupation which are not subject to mandatory HMO licensing but which are of a description designated for HMO licensing by the local authority.
The RLA response
In its official response to the proposals, which you can read here, the RLA warns that the high cost of licences will leave landlords with no choice but to pass the cost on to tenants, all while criminal landlords will continue to ignore the additional licensing scheme.T
DBS check requirement and concerns about cost
As part of the council’s criteria for a HMO application process, landlords are required to obtain a basic disclosure from the Disclosure and Barring Service-this would qualify the landlord or the proposed licence holders as being a ‘fit and proper’ person. In our response to the Council, we state that while the requirement for this check is not unreasonable, the cost of completing the DBS check should be included in the licence fee and should not be an additional cost to the landlord.
In our response to this consultation, we have also highlighted recent research from RLA PEARL, which shows that 61% of landlords that let to tenants on Universal Credit have experienced their UC tenants going into rent arrears in the past 12 months.
In our response to this consultation, the RLA is warning that based on this, and that many landlords may be in a situation where they are not able to pay both licensing fees, Rent Smart Wales registration fees, possible increase fees from the introduction of banning of agency fees. There is also the reduction in mortgage relief tax to consider, resulting in financial difficulties for landlords, and may lead to an increase of demand on council services as they consider leaving the sector.
In our response we also warn that the extension of this additional HMO licensing scheme could put pressure on non-selective licensing areas, because landlords will become risk-averse in terms of the tenants they let to.
The Council’s full proposals can be read here, and the consultation closed on 16th December 2018.