East London Wales

Ipswich begins refunding licensing fees to landlords

RLA
Written by RLA

The Residential Landlords’ Association has learnt that Ipswich Borough Council has begun the process of refunding landlord licensing fees, following the Westminster Court of Appeal sex shop case last year…

The Residential Landlords’ Association has learnt that Ipswich Borough Council has begun the process of refunding landlord licensing fees, following the Westminster Court of Appeal sex shop case last year.

In an email to the RLA last week, the council confirmed that it is, “…currently going through their records to refund landlords of any [overpayment of] fees charged” on mandatory HMO licences. The council also confirmed that, “…Once the information is gathered, the Council will contact those landlords and arrange payment.”

The fees are being refunded following a Court of Appeal decision last year which found in favour of a European Services Directive (ESD), which operates to curtail the ways in which domestic UK legislation provides for fees to be charged by local authorities to landlords for such licences.

The decision of the Court of Appeal in the Westminster Sex Shop Fees case (Hemming (t/a Simply Pleasure) Limited v Westminster City Council) radically altered the landscape so far as fixing fees for regulatory authorisations such as for HMO and selective licensing is concerned, meaning local authorities must adhere to a set of principles when setting licensing fees.

These principles include:

  • A local authority can only charge for HMO licensing or selective licensing for:
    • The actual and direct administrative costs of investigating the background and suitability of the landlord applicant; and,
    • The cost of monitoring the compliance by licensed landlords with the terms of their licences.
  • Fees must be reasonable and proportionate.
  • Fees can only cover the actual cost of the application process (plus monitoring); i.e. only the cost of processing the application and monitoring can be charged.
  • Local authorities cannot include the costs of enforcing the licensing scheme against unlicensed landlords in the licence fee.
  • Set up charges for the scheme cannot be recovered.
  • Overheads and general administrative costs cannot be recovered.  This means that the running and capital costs of the relevant council department cannot be charged as part of the fee.
  • The Council is not allowed to make a profit.

Should a local authority chose to ignore the ESD and implement either a selective or an additional HMO licensing scheme based on a proposed budget that does not adhere to the ESD, then the local authority may become liable for overcharging landlords, and have to refund them in a cash payment with interest.

If landlords believe they have been overcharged they are allowed six years to submit a claim.

The RLA has been in touch with several local authorities to discuss this issue with them, and has been actively challenging other local authorities where licensing schemes are being proposed, such as licensing proposals by Northampton Borough Council.

The RLA Landlord News Hub will continue to provide you with the latest news on this subject.

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RLA

RLA

The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

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  • Burnley Borough Council are demanding £650/ property for a selective licensing fee in the Trinity Ward with more areas in the Borough to have a licensing fee introduced in future.
    The Trinity Ward has already had 5 years of licensing which was brought in to address apparently rouge & absentee landlords who owned terraced properties which were in poor condition in areas of low demand.
    However, during the last 5 years of the licencing scheme there has been no significant improvement in the Trinity ward & only around 3 landlords have been prosecuted ?
    Burnley housing stock consists of approximately 50% of relatively small terraced houses which are 100 years old many In what are relatively low demand areas where many potential residents don’t want to either own or rent this type of property. Yet instead of repossessing these properties & allowing the areas to be rediveloped & modernised, Burnley Council has insisted on demanding what appear to be excessive licensing fees which they haven’t demonstrated reflects a value for money charge or one which would result in a significant impact in the Trinity ward.
    These fees would also have to be reflected Where possible In the rents charged by landlords putting undue pressure on tenants as well as local landlords.

  • Plymouth City Council charge £800 for a licence renewal, reduced to £470 if you submit the forms promptly. How does Joe Public asess if the charges are fair or if they are overcharging?

  • Hastings Borough Council are trying to charge my partner and his fellow freeholders £1000 plus for an HMO licence. To my mind they are definitely trying to revenue raise. The building is split into 4 separate self contained flats and is share of freehold. At one time 3/4 of the occupants were the freeholders themselves. However, currently one of the freeholders lives there and the other flats are let to single working tenants (no HB). It cannot possibly be classed as over crowded or in a poor state, yet the council are behaving in a very heavy handed way towards them. Giving them 28 days to fill out extensive and intrusive forms and threats of £20K fines. Having looked into it, our biggest concern is that residential mortgage lenders will not lend on a flat classed as an HMO. The label HMO doesn’t distinguish between a looked after (and part freeholder occupied) building and some overcrowded bedsit. My partner lived there 10 years and spent a lot of money and effort making his flat a lovely home. We now have a tenant that also loves her home. If we are forced to get this license, when we sell we will only be able to sell to some dubious BTL landlord. It will eventually lead to a decrease in owner occupiers and an increase in BTL landlords in the area. Where on earth is the sense in this?

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