Update June 2018
Nottingham City Council have announced the introduction of Selective Licensing which will cover 90% of homes in the private rental sector within the city boundary.
The implementation date is the 1st August 2018.
A license will be a LEGAL REQUIREMENT for EACH property a Landlord owns within the Nottingham City catchment area. You can check whether your property is covered by the proposed license scheme through the Nottingham City Council website by using the following link: geoserver.nottinghamcity.gov.uk/myproperty
The cost of a licence is £780 per property, reducing to £480 for accredited Landlords. A licence will last up to for 5 years and the licence fee will need to be paid at the outset of the licence period. The licence fee is paid in two parts; the first payment of £460 (£360 for accredited Landlords) is paid on submission of the licence application and a second amount of £320 (£120 for accredited Landlords) is payable once a licence has been granted.
There are a raft of license conditions that the council expect license holders to take responsibility for. Here at David James, we can handle these license conditions on your behalf through our comprehensive property management service and if we currently manage your property, we have already undertaken an audit and are preparing your property's application.
If you currently manage your own property and are concerned about the obligations Selective Licensing will place on you, or if your current managing agent is not living up to expectations in preparing you for the pending scheme, then contact our Director James Roys to discuss matters further.
To help you understand Selective Licensing a little further, we have put together the five sections below which should answer many of you initial questions:
Who do the council define as an accredited landlord?
You will not need to hold accreditation to be able to apply for a license, however Landlords who obtain accreditation will receive a discount on their license fee. Unfortunately, using a reputable managing agent like David James to look after your property is not viewed as accreditation in the eyes of the local authority or warrants a discount on the licensing fee.
Nottingham City Council have for some time been running a voluntary accreditation scheme through organisations DASH and UNIPOL. The DASH scheme covers the private rental sector with UNIPOL covering student properties. Any Landlord can apply to sign up with DASH for accreditation, however they must abide by a set of regulations known as the ‘Nottingham Standard.’ These regulations cover far more than basic legal requirements and even the additional requirements stated within the Selective Licensing legislation. The ‘Nottingham Standard’ regulations extend (but aren’t limited to) areas such as a minimum number of power points in certain rooms within the household, mains operated fire and heat detectors and minimum rooms sizes for occupation.
The cost of DASH accreditation is £95 + VAT and lasts for three years, with a renewal fee of £45 + VAT. This covers a Landlord for up to five properties which is a cost saving for multiple property Landlords as they will not need to pay an accreditation fee for each property. However, please note that DASH accreditation is necessary for the duration of your local authority license and therefore single property Landlords will need to pay £140 + VAT (£168 including VAT) for both the sign-up fee and renewal to save £132 (after VAT) on their license fee over the five-year period.
Whilst we applaud DASH for their attempts to improve the condition of properties in the private rental sector, Landlords need to be aware that their properties may require extensive and costly remedial works to ensure they meet the ‘Nottingham Standard’, and therefore any perceived savings on licensing by signing up to DASH accreditation could be consumed in bringing their rental properties up to DASH’s higher standards of habitation.
What do I need to be able to obtain a license?
In addition to paying the five-year license fee per property, a Landlord will have to complete a detailed online application form for each property they own within the catchment area. Nottingham City Council have stipulated that each property application must be supplemented by:
- Evidence of sufficient landlord insurance for the property
Landlord insurance which states the property is designated as a buy-to-let and that there is sufficient public liability cover.
- Proof of right to reside (to live) in the UK for the proposed licence holder and proposed manager
Proof of right to live in the UK for the proposed licence holder and the proposed manager where these are people; If the proposed licence holder or manager is a company then this will not need to be provided.
- Evidence of relevant training (if undertaken) by proposed licence holder
If you have undertaken relevant landlord training in the last 3 years please provide evidence of this. If training has not been undertaken it will be a condition of the license that training is undertaken within 12 months of the license being granted.
- A valid, in date, satisfactory Gas Safety certificate (If there are gas appliances in the property)
- Energy Performance Certificate (EPC) for the property
- Most recent portable appliance test (PAT) certificate
If a Landlord has chosen to leave electrical appliances in the property, these will need to be subject to a portable appliance test. Nottingham City Council have confirmed to us on the 1st June 2018 that large freestanding kitchen appliances such as a washing machine, fridge/freezer, dishwasher or cooker are not classed as portable appliances so will not need to be tested.
- Building regulations completion certificate and planning consents (If applicable)
Please note that the information above is taken directly from the Nottingham City Council website
In late May 2018, Nottingham City Council received legal advice that recommended they make amendments ot the license conditions. As a result, the list of certificates and documents required has been reduced. For example, it is no longer a license requirement for an Electrical Inspection Condition Report (EICR). For a full list of amended license conditions see What else do I need to know below.
How much are all these things likely to cost?
In addition to the cost of the license itself, Landlords should consider the following items and their associated costs:
- Basic Disclosure certificate (a criminal record check) for proposed licence holder
A basic disclosure certificate has to be obtained personally as you will need to set up a Government Gateway ID to access the service. You can access the disclosure and barring service by using the following link: https://www.gov.uk/request-copy-criminal-record A basic disclosure check costs £25.00 and usually takes 14 days to be processed.
- A valid, in date, satisfactory Gas Safety certificate
If your property is rented and has a gas supply you will already hold a gas safety certificate, which is renewed annually as per legal requirements. A gas safety certificate is £60.00 + VAT (£72.00 including VAT)and covers the cost of one gas appliance within the property. Any additional appliances are charged at an additional rate of £10.00 + VAT (£12.00 including VAT)
- Energy Performance Certificate (EPC) for the property
Every property that has been let by an agent should hold a valid EPC. However it is worth noting that an EPC has a 10-year lifespan and given that they came into force in October 2008, EPCs will begin to expire from later this year. We will of course let you know as and when your EPC becomes close to the end of it’s lifespan. An EPC costs £50.00 + VAT (£60.00 including VAT). We are also currently seeking clarification from the local authority as to whether the EPC needs to be valid for the entirety of the license period.
- Most recent portable appliance test (PAT) certificate
If a Landlord has supplied portable electrical appliances, they will need to be annually PAT tested by a competent person. Costs on PAT testing vary dependant on the number of appliances being tested. We can put a bespoke quote together for your property, likely to be between £40 - £50 plus VAT. PLEASE NOTE Nottingham City Council have confirmed to us on the 1st June 2018 that large freestanding kitchen appliances such as a washing machine, fridge/freezer, dishwasher or cooker are not classed as portable appliances.
What else do I need to know ?
There are clearly lots of questions, however below are some pertinent questions and answers taken from the local authority’s FAQ’s document:
- Do I need to tell others, like my mortgage provider, about my licence application?
Licences are legally enforceable and may require changes to the house. People with a legal interest in the property have a statutory right to know how the licence may affect them. This would include mortgage companies, other owners, managers, leaseholders, freeholders etc.
- Will there be a discount for multiple applications from the same landlord?
No, it is proposed that there will the same fee for landlords despite how many properties they have.
- Is the fee refundable if the property is sold within 5 years?
The Council will only give a refund if a duplicate application has been made or an application has been made for an exempted property by mistake.
- I am selling a Licensed house, what do I need to do?
Licences are non-transferable. When you sell a licensed house you must inform the Council that you have done so because the new owner will need to apply for a Licence if they are also intending to rent it out.
- Is the licence fee tax deductible?
The Council understands that the fee is tax deductible as an expense in running the business, however it is recommended that landlords receive independent financial and legal advice on this. Managing agents and / or professional bodies may also be able to advise on this matter.
- What happens if I do not comply with the licence conditions?
You run the risk of prosecution and a possible unlimited fine. The Council can now issue financial penalties of up to £30,000 for certain offences under the Housing Act 2004. This would be instead of prosecution. It may also affect your 'fit and proper' status and your licences will most likely be revoked.
- What changes have the council made to the licence conditions?
1 Proof of building insurance will now only need to show it is for a buy to let property and provide public liability cover. It will no longer need to specify alternative accommodation for tenants in the event of non-habitation (e.g. fire, flood etc).
2 If the licence holder has a current, standard or enhanced DBS (Disclosure and Barring Service) certificate, it will be accepted as part of the application process on a voluntary basis as the DBS has now been downgraded as a mndatory part of the application.
3 There is no requirement for an Electrical Inspection Condition Report (EICR), although should the property not hold one, it will be rated as higher risk by the Selective Licensing team which increases the probability of it being inspected throughout the license period. It is worth noting that EICR’s are expected to become a legal requirement across the entire Private Rented Sector from October 2019 so it may still be prudent to get one completed and DASH accreditation still requires an EICR.
4 There is no longer a requirement to fit a thumb turn mortice lock on the front door of the property.
5 Floorplans are no longer required; however, there remains a discussion about whether room sizes will be required as part of the online application form. We are expecting a decision on this imminently.
6 There is no longer a requirement to produce an inventory.
What if I don't live in the UK?
The council have also stated that license holders must reside within the UK. Should you live abroad, you will have to nominate someone living within the UK to be the license holder. If this presents an issue, please contact us at the earliest opportunity to discuss this matter further.
How can David James help?
We have held extensive dialogue with the local authority and other industry bodies in preparing our Landlords for this scheme. We have been informed that the process submitting a license application is time-consuming as is ensuring all properties are compliant and collating all the necessary information for an application. For existing Landlords, or those moving to our management, we will be charging an administration fee of £40 inc. VAT for each license application that we collate and submit. If we do not manage your property and you require us to submit an application on your behalf, we can do so for a charge of £75 inc. VAT. Please contact our team who will be happy to provide a list of all documents and certification we require in order to submit an application on your behalf.
We will continue to update our website as more information is released in relation to the license process and we would encourage Landlords to meet with us to discuss the process and it’s implications further. Should this be of interest, please contact our Director, James Roys to arrange a meeting.
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