The absurdity of Newham’s borough wide licensing scheme became clear this week as it emerged that of the estimated 35,000 privately rented properties in the borough only 19,000 – or 54% – have actually applied for the license, according to a letter sent by the council to me and other Newham landlords. That means that instead of focusing resources on finding rogue operators, council staff will now have to trace these 16,000 properties. The deadline for applications was 31 January 2013.
Newham’s Mayor, Sir Robin Wales, believes that most anti social behaviour across the borough is caused by privately rented homes and the solution is to license all of them. He also believes that licensing will help improve housing options for tenants in the borough.
But the strategy is hopelessly flawed and unfairly taxes good landlords who have diligently paid their £150 fee, whilst rogue landlords will go underground. Meanwhile, Newham continues to use negative campaigning to discredit all landlords, failing to point out that in London 69% of tenants are satisfied or very satisfied with their landlord, according to The Mayor of London. Such antagonism towards landlords makes them reluctant to work with the borough at a time when they desperately need properties to house vulnerable tenants, especially those affected by the new welfare caps.
The 2004 Housing Act allowed local authorities to create discrete areas of their borough where privately rented properties could be licensed because of anti-social behaviour or low housing demand and, crucially, all other avenues had been exhausted. Newham’s use of these powers is an indictment of its own failure to deal with anti social behaviour and its borough wide application is a perverse use of the legislation. 79% of landlords said that they disagreed with the scheme during the consultation period. Many feel that the whole process was a sham, with an autocratic Mayor pushing through a publicity grabbing proposal aimed at persuading the general public that Newham is taking control of problem landlords.
Local landlords question the Mayor’s motivation and believe this is little short of a money raising exercise for a council facing cuts in government grant. Some believe it is Newham’s solution to ridding the borough of “sheds with beds” as unlicensed landlords will be fined up to £20,000 – far higher than the paltry planning infringement fines, typically £2,000. Why don’t the council campaign to increase planning fines rather than make good landlords pay the price? £150 may not sound like much, but if you have 10 properties or more the fees add up, as does the associated admin burden, especially when the Newham website keeps crashing. Some say this is about gentrification, because landlords will be put off buying in the borough, encouraging home ownership to grow.
There is likely to be a considerable impact on housing in the borough, especially if you consider that Newham is also planning to ban shared housing through an Article 4 direction from July 2013. Fewer properties to let – and particularly for sharers – could force up rents. If landlords stop buying in the area, house prices may fall, and the borough will lose out on valuable investment. Landlords often refurbish vacant and neglected properties, bringing them back into use and employing local people and businesses. Displacement of tenants into other parts of East London is likely to cause neighbouring boroughs to introduce similar schemes, potentially distorting the housing market across the whole of East London. All this at a time when welfare reform means tenants under 35 on benefits now have to look for shared accommodation. Just why is it acceptable for a local authority to discriminate between families and single people in this way?
There are currently 31 discretionary licensing schemes across the country and the Mayor of Liverpool looks set to copy Newham’s harebrained scheme. Meanwhile, the Labour Party is developing policy on a national register of landlords in England. Let’s hope if they form a government in 2015, they will allow a light touch register to replace local authority licensing and withdraw their Article 4 powers.