Decision Maker:

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: No

Date of Decision: April 28, 2025

Purpose:

Content: RESOLVED:   1.  Approved a statutory consultation exercise on proposals to introduce:   1)  A Selective Landlord Licensing scheme, covering all wards in the borough, with the exception of Haggerston, Hoxton East and Shoreditch, Hoxton West and Woodberry Down, based on the criterion of poor housing conditions in privately rented homes (non-HMOs).   2)  An Additional Licensing Scheme for Houses in Multiple Occupation (HMOs), covering all wards of the borough, and would apply to HMO dwellings that are not covered by the national HMO mandatory licensing scheme.   2.  Noted that once the consultation has been carried out, a further report with the finalised outcomes of the consultation, together with any recommendations in relation to designation of discretionary property licensing schemes, will come before Cabinet for approval.   REASONS FOR DECISION   Landlord Licensing is a regulatory scheme implemented by local authorities to ensure that landlords meet certain standards in managing and maintaining rental properties. The aim is to improve housing conditions, protect tenants, and promote responsible property management. Landlord licensing comes under three main categories:   ·  Mandatory Licensing applies to larger HMOs, specifically those occupied by five or more people forming two or more households sharing facilities. This is a national requirement under the Housing Act 2004 and is designed to ensure that larger HMOs meet safety and management standards.   ·  Additional Licensing is a discretionary scheme that allows local authorities to extend licensing requirements to smaller HMOs that are not covered by mandatory licensing, specifically those occupied by three or four persons living in two or more separate households. This scheme may be introduced where there is evidence of poor management and housing conditions in HMOs that are not already subject to national licensing requirements.   ·  Selective Licensing is a discretionary scheme that applies to other private rented properties within a designated area (not HMOs which are covered by the mandatory and additional licensing schemes above). It is introduced in areas with problems such as high levels of poor property conditions, low housing demand, high levels of deprivation, or high levels of anti-social behaviour or crime.   Licences include legally binding conditions regulating room sizes, provision of amenities, levels of occupation, property conditions and property management. Compliance with these requirements are checked through inspections, enforcement visits, and reviews of landlord records. Failure to comply with licensing requirements can result in fines, rent repayment orders, and bans to landlords to prevent them renting out properties.   During 2018 - 2023 the council operated two discretionary landlord licensing schemes: a full-borough additional licensing scheme, and a pilot selective licensing scheme in three wards (Brownswood, Stoke Newington and Cazenove), designated under poor property conditions.   Our experience with these schemes has provided valuable insights into the key factors that contribute to a successful licensing programme. A well-executed scheme should include the following:   ·  Careful planning, particularly in estimating costs and mitigating the risk of underestimating the number of licensable properties.   ·  A robust approach to evidence gathering and public consultation to ensure informed decision-making.   ·  Sufficient staffing and resources to ensure the scheme is well-funded, with the capacity to enforce licensing requirements, and conduct inspections.   ·  Carefully outlining boundaries to target locations with clear, demonstrable issues, while recognising that challenges may sometimes span an entire ward.   ·  Actively engage with tenants and landlords to improve communication, ensuring landlords are aware of their responsibilities and tenants are informed.   ·  Alignment with broader community initiatives, ensuring the scheme supports wider efforts for change, backed by strong political commitment.   ·  Transparent and consistent reporting, providing updates on targets and outcomes.   Houses in Multiple Occupation (HMOs)   The demand for HMOs has and continues to grow due to decreased housing supply and affordability. Nearly half of private renters in Hackney earn less than £30,000 per annum and the average rent, including room rental in HMOs, is £1,850 per month. As a result, for many people, HMOs provide the only viable housing option.   HMOs often house vulnerable residents who have no other housing options and conditions and management standards in them are often very poor. The current principal tool for regulating HMOs is the existing mandatory HMO licensing regime.   Criteria to be met before introducing discretionary licensing schemes:   Any discretionary licensing scheme proposed by a local authority must meet specific statutory criteria as set out in the Housing Act 2004. Schemes must be evidence-based and targeted at addressing specific issues.   Additional Licensing Schemes   Of the 6,038 HMO properties in Hackney, 540 larger HMOs are covered by the current Mandatory Licensing scheme, and 4,041 HMOs may come under the additional licensing. There are a further 1,457 HMOs that are currently unlicensed and may potentially come under the additional scheme. If the proposed scheme comes into effect, we will investigate these to determine whether they require a licence.   Before making an additional licensing designation, the Council must:   ·  Consider that a significant proportion of the HMOs covered are being poorly managed such as to cause problems for occupiers or members of the public. HMOs in Hackney meet this criterion as our recently commissioned Tenure Intelligence data report (Appendix 1) shows that there are 1,818 HMO properties that are likely to have at least one serious hazard. This represents 23% of the HMO population in Hackney, and is double the PRS national average (10%). De Beauviour (142) and Stoke Newington (140) have the highest number of HMOs with serious hazards.   ·  Consider whether there are any other courses of action that might provide alternatives to licensing or would assist licensing in dealing with such problems. This criterion will be evidenced in the public consultation documents.    ·  Consult persons likely to be affected by the designation.   Selective Licensing Schemes   Requirements in the Housing Act 2004 for a selective licensing scheme are designed to ensure that the scheme is evidence-based and targeted at addressing specific issues.   A local housing authority may only make a designation if the area to be considered has a high proportion of property in the private rented sector. In England this is 19% of the total housing stock. Our data shows that all wards in Hackney exceed this threshold, with an average of 31.60% (39,493) of dwellings in the private rented sector. The lowest proportion of PRS in any ward is 25.2% (Kings Park), while the highest is 45% (Dalston), further highlighting the widespread reliance on private renting across the borough.   A local authority must demonstrate that the proposed licensing scheme addresses one or more of the following:   ·  Poor housing conditions. ·  Anti-social behaviour. ·  Low housing demand. ·  Deprivation. ·  Crime. ·  High migration levels.   The Housing Act 2004 also requires the local authority to demonstrate the following outcomes as part of its process of delivering a selective licensing initiative:    ·  Ensure that the exercise of the power is consistent with their overall Housing Strategy.    ·  Adopt a coordinated approach in connection with dealing with homelessness, empty properties and anti-social behaviour affecting the private rented sector as regards combining licensing with other action taken by them or others.    ·  Consider whether there are any other courses of action available to them (of whatever nature) that might provide an effective method of achieving the objectives that the designation would be intended to achieve.    ·  Consider that the making of the designation, when combined with other measures taken by the authority alone or with other persons, will significantly assist them to resolve the problem identified (whether or not they take any other course of action as well).    ·  Take reasonable steps to consult persons who are likely to be affected by the designations and consider any representations made.   General Approval 2024   With effect from 23 December 2024, a new General Approval came into force and local authorities in England are no longer required to obtain confirmation from the Secretary of State before implementing a selective licensing scheme of any size. The local authority must, however, still satisfy all statutory requirements contained in Part 3 of the Housing Act 2004. To support local accountability and transparency, local authorities are also requested to:   ·  Include the Mayor of London in the consultation on the proposed designation, where applicable.   ·  Provide MHCLG with data on their selective licensing scheme(s), upon commencement of the scheme, and on the scheme end date or within 12 weeks of scheme end date.   ·  Publish the outcome of any selective licensing review(s) undertaken pursuant to their legal duty to review the operation of schemes under section 84(3) of the Act of their website.   The Council’s proposals meet the required criteria set out in the legislation for both additional and selective licensing schemes, including demonstrating a clear link between poor property conditions, significant levels of privately retained housing and issues such as deprivation and anti-social behaviour. The evidence supports the need for intervention, and our proposed licensing scheme is a proportionate and targeted response to these challenges.   Statutory Consultation   Before implementing a discretionary licensing scheme, the local authority must conduct a statutory public consultation, which must run for at least 10-weeks. Stakeholders, including landlords, tenants, residents and local businesses must be given the opportunity to provide feedback. The authority must consider the responses and demonstrate how feedback has influenced the final proposal.   The Council is proposing a 12-week consultation and, with external consultancy support, will develop and implement a comprehensive consultation and engagement strategy (see Appendix 2 for the proposed consultation and engagement strategy).   Following the consultation, responses will be reviewed and analysed. A consultation report summarising the findings and the council’s response will be prepared.   The final proposal, incorporating stakeholder feedback and any revisions, will then be submitted to Cabinet for approval to implement the designations. If approved by Cabinet, implementation of the scheme(s) can commence following a statutory three-month cooling-off period to allow for final preparations and communication with affected parties.   Proposals   The Council has appointed an independent consultant to review a thorough evidence base for discretionary licensing. The proposed designation is based on this evidence (see Appendix 1).   The Council considered eleven selective licensing scheme options, ranging from using a single designation based on one criterion (poor housing), to more complex schemes using up to three designations based on multiple criteria, including poor housing conditions, ASB and deprivation.  The number of wards included in the options ranged from seven to a full-Borough scheme encompassing all 21 wards.   Having carefully considered the evidence and the strengths and weaknesses of all options, it is recommended that the Council consults residents and stakeholders on a scheme consisting of one designation.   This proposed designation consists of 17 wards and is based on the criterion of poor housing conditions in privately rented homes. The scheme would cover 26,520 properties, 76% of Hackney’s PRS. Haggerston, Hoxton East and Shoreditch, Hoxton West and Woodberry Down are not included in the proposed designations as the evidence base does not currently support a scheme covering these wards.   Officers agree with this proposed designation and intend to consult stakeholders on this option. It is important that the criteria for making a designation is evidence based and robust. It is also important that the designation is simple, clear and easy to understand, and that outcomes are achievable and measurable - something that may be more difficult to achieve with other criteria.   It is recognised that whilst the four wards of Haggerston, Hoxton East and Shoreditch, Hoxton West and Woodberry Down are not included in the proposals, there will still be privately rented properties experiencing poor standards in these wards. There is however insufficient evidence to justify including these wards in the discretionary licensing scheme proposals due to the lower numbers of identified problems which is  supported by the evidence base. These issues can be addressed using existing powers and provisions. The very purpose of selective licensing is that it is ‘selective’, targeting the areas that need intervention the most. The four wards that are excluded from the selective licensing scheme will be kept under review.   Methodology   The Council have worked with Metastreet Ltd who have developed a stock modelling approach based on metadata and machine learning to provide insights about the prevalence and distribution of a range of housing factors. The Tenure Intelligence (Ti) approach has been used by a number of councils to understand their housing stock and relationships with key social, environmental and economic stressors. The housing models are developed using unique property reference numbers (UPRN) as keys, which provide detailed analysis at the property level. Data records used to form the foundation of this data include:   ·  Council tax. ·  Housing benefit. ·  Electoral register. ·  Private housing complaints and interventions records. ·  Other council interventions records. ·  ASB complaints.   For each criteria, metadata was used to evidence the quantity and significance of the issue.   Evidence   % of PRS Stock Criterion - The stock profile analysis carried out by Metastreet indicates that Hackney’s PRS comprises 31.60% (39,493) of the borough's housing stock. This data provides evidence that all wards within the borough exceed the national average of 19% and can therefore be considered as having a significant level of privately rented accommodation within its overall housing stock. All wards within Hackney could therefore be considered for the inclusion within a selective licensing scheme in the borough under this criteria. However, a borough-wide designation is not being proposed. The reason for this approach is set out in 4.22-4.25.   Poor Property Condition Criterion - Predictive modelling has been used to identify properties within the PRS that are likely to be in poor housing condition. The Housing Act 2004 uses a Housing Health and Safety Rating System (HHSRS) to categorise the types of hazards identified at a property that are likely to cause risk of harm. Our data shows that approximately 5,241 PRS properties (excluding known HMOs) are predicted to have at least one serious hazard under the HHSRS (for further details please see Appendix 1). This represents 15% of the total PRS stock (excluding HMOs), which is higher than the national average of 10%. 17 of Hackney’s 21 wards are predicted to have at least 10% PRS with serious hazards. These 17 wards also have a high proportion of PRS (more than 19%), therefore meet the criteria for Poor Housing Conditions. The four wards that do not meet this criteria are Haggerston, Hoxton East and Shoreditch, Hoxton West and Woodberry Down.   Licensing Fees   The fees charged for obtaining a license must be reasonable and proportionate to cover the costs of administering and enforcing the scheme, and are not intended to generate a surplus income for the Authority. The proposed fees aim to balance the need for effective scheme administration with fairness to landlords.   Exact fees will be determined based on operational requirements, benchmarking against other London boroughs operating licensing schemes, Appendix 3, and feedback that will be received during the consultation process.   The Council is proposing, and will consult on, the following fees:   ·  Selective Licence: £925 ·  Additional Licence: £1,400   Fees will be a one-time payment, per property (with potential exemptions for properties with multiple dwellings under the additional scheme) and are valid for five years. Fees are expected to be split into two instalments: an initial application fee payable upon submission, and a final fee due upon approval.   The proposed fees reflect the costs of processing applications, scheme administration and enforcement. Subject to consultation feedback, discounts may be considered for:   ·  Accredited landlords via the London Landlord Accreditation Scheme. ·  HMO properties with multiple dwellings. ·  EPC rating above C.   Local authorities have the power to adjust the fees for licenses based on the needs and conditions of the service. Hackney has the option to raise the fees on mandatory licences annually at its own discretion without any consultation.   Timeframe   The following timescales provide an approximate framework that Officers will aim to achieve; however, they may be subject to change:   ·  Cabinet decision to request approval to consult on the two new licensing schemes: 28 April 2025   ·  Consultation Period (if approved by Cabinet): Summer 2025 (12 weeks)   ·  Cabinet Decision on potential implementation of both schemes: Autumn 2025   ·  Implementation of selective and additional scheme (subject to approval) - 3 month cooling off period: Early 2026   DETAILS OF ALTERNATIVE OPTIONS CONSIDERED AND REJECTED   Several alternative approaches were considered before proposing a consultation on discretionary licensing schemes. These options were assessed for their effectiveness in addressing issues within the PRS, their alignment with statutory requirements and their potential impact on tenants, landlords and the wider community.   ·  Do nothing: the option to take no further action above the current national mandatory HMO licensing scheme was considered and rejected. While the existing housing enforcement framework addresses some issues in the PRS, it is insufficient to tackle widespread non-compliance and poor property standards effectively. Without discretionary licensing, the council lacks the necessary tools to proactively address substandard housing conditions and related issues as described in paragraph 4.12. This option would fail to meet the council’s strategic housing objectives and obligations to improve housing standards for residents.   ·  Rely solely on reactive enforcement: another option was to rely on existing enforcement powers under the Housing Act 2004, such as improvement notices and prohibition orders. However, this approach is reactive rather than preventative, and would not provide the structured oversight that licensing schemes can offer. It would also limit the council’s ability to identify and address systemic issues in the PRS as mentioned in 6.2-6.7.   ·  Implement only additional licensing: limiting the approach to an additional licensing scheme for HMOs was considered. However, this option was rejected as it would not address the broader issues affecting single-household privately rented properties, particularly in areas of significant poor property standards.