First UK license introduced in London for buy to let

A typical British estate

A borough council in London has become the first in the country to license every private rental property, a move which has been met with much criticism from the National Landlords Association (NLA). The mandatory scheme was approved by Newham councillors; and is to come in to force on 1 January 2013. The amount of tenancies covered is estimated to be around 35,000.

The council says that while the vast majority of landlords are responsible and provide good quality lettings, there are, however, those that are unprincipled and whose properties do not meet certain safety standards and offer their tenants poor quality accommodation.

Landlord licensing is the next step for Newham following the introduction of a special unit to clamp down on landlords that leave tenants living in shabby conditions in illegal dilapidated structures, often built at the bottom of a garden, that they refer to as 'sheds with beds'.

All licenses must be applied for by the 1 January 2013, so buy to let landlords in Newham need to apply as early as possible before that date. Currently the licenses for each property cost £150 this is a reduced rate to landlords who get applications in early. If they register after January 1st the cost shall rise to £500 for each property.

Landlords may have to undergo a number of checks, such as a Criminal Record Bureau check, in order to demonstrate they are 'fit and proper'. They will also need to present the electrical and gas safety certificates for their rental properties and copies of written tenancy agreements to get a license.

Each license is for up to a maximum of 5 years, however the period of the license is at the council's discretion should they deem a property needs any improvements they may give a shorter period license.

Fines of up to £20,000 could be imposed on landlords who fail to apply along with an order for rent repayment that could be up to 12 months.

The scheme has been welcomed by housing charity Shelter who is urging other local councils to implement a license scheme.

Kay Boycott, director of communications, policy and campaigns at Shelter, said: "We are delighted to hear that Newham Council will be introducing this scheme, which will help protect vulnerable tenants from rogue landlords who are making their tenants' lives hell."

"We urge other local councils to follow Newham's lead in sending a clear signal that enforcing the law against rogue landlords is a priority."

However, the National Landlords Association (NLA) is not supporting the licensing scheme and has said that will another burden on landlords whom already follow the law.

Landlord licensing is already compulsory across Scotland and the Welsh Government looks to follow suit. The difference here is that it seems this type of licensing in England will be introduced one council at a time, and each council will be able to set its own rates.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.