Does property licensing improve property standards?

I’m often asked, does property licensing improve property standards? For most Environmental Health Practitioners regulating PRS standards the answer is simple, yes absolutely! However we should do more to explain to policy makers and the majority of good landlords how it works in practice.

Parts 1, 2 and 3 of the Housing Act 2004 makes a clear distinction between licence conditions relating to the management, occupation and use of a property and those relating to its condition and contents, particularly for Part 3 dwellings. The recent Brown vs Hyndburn BC Court of Appeal case highlights these legal limitations. Even with these legal limitations, licensing remains a very effective tool to drive improvements in housing standards. This is why.

My experience of poor property standards have taught me they nearly always result from poor property management. This stands to reason. A landlord who fails to manage their property will inevitably end up with a property with serious hazards. Residential properties are not static boxes; modern homes are more like machines that degrade over time. Equipment and services fail (boilers, pipes, cables, valves etc) and materials wear out (tiles, plaster, mortar, floor boards etc), putting aside force majeure events. Unless these failures are predicted or quickly observed they unavoidably result in hazards. The longer the failure continues, the worse the hazard gets and the greater the exposure for the tenant. The nature of occupation can also considerably increase the rate of degradation. That is why landlords must professionally manage their properties to avoid putting tenants’ health at risk. It is also my experience that a significant minority of landlords do not take this responsibility seriously. This is where licensing comes in.

Large scale licensing can be used by the housing authority as a giant housing standard ratchet, cranking up the quality of property management, and thereby driving up housing standards.

In my experience, this ratchet effect works in 5 main ways:

  1. Unlicensed properties are more likely to have Category 1 hazards. Landlords who are unable to proactively manage property standards also struggle with other property management issues, including applying for a licence. The absence of a licence alerts the authority to properties that are more likely to have serious hazards and in need of regulation.
  2. Licence holders convicted of housing crimes or other serious offences can be found ‘not fit and proper’. This process effectively excludes criminal landlords from the rental market.
  3. Landlords subject to enforcement can be issued with shorter licences and additional licensing conditions. This closer monitoring ensures struggling landlords are forced to improve the management of their properties or choose to leave the sector.
  4. Licensed properties with Category 1 hazards can be more effectively dealt with because landlord information is readily available, including name, address and contact details. This speeds the whole process up of getting important repairs and maintenance completed. Licensing generally makes Part 1 enforcement much more effective and longer lasting because the loss of a licence will have a significant financial impact on a landlords finances.
  5. Risk based audits of licensing conditions can be remotely checked to ensure key hazards are properly managed, including safety certificates and tenancy management documents, this proactive and cheaper approach means that many more properties can be checked to ensure commonly arising hazards and tenancy issues are addressed.

The link between poor property standards and poor property management is real. Although the law separates licensing and housing conditions, licensing can still be effectively used by regulators to drive up property standards and protect the growing numbers of private renters. For good landlords, licensing also helps the authorities drive out landlords who are avoiding their responsibilities, helping to make a level playing field for all.

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Russell Moffatt

Russel Moffatt

Chartered EHP and Co-founder of Metastreet

5th April 2018

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