Decision Maker: Cabinet

Outcome: Recommendations Approved

Is Key Decision?: Yes

Is Callable In?: Yes

Date of Decision: October 29, 2024

Purpose: To update Cabinet as to consultation results and to seek approval for designation of an Additional Licensing Scheme.

Content: The Cabinet considered a report of the Director of Economy and Place which sought approval to implement an Additional Licensing Scheme for 3 and 4 person Houses of Multiple Occupation (HMO) across the whole Borough of Rochdale.   The Head of Strategic Housing (Property) was in attendance to present the report and to address the questions and the comments of the Cabinet Members.   The Officer informed that, in December 2023, Cabinet had approved the decision to commence a formal consultation on proposals for an Additional Licensing scheme for three and four person HMOs. The formal consultation ran for 13 weeks from 15th April 2024 and ended on 15th July 2024. Details regarding the consultation were included in section 4 of this report.     Resolved: 1.    That the designation of an Additional Licensing Scheme under Section 56(1) of the Housing Act 2004 across the whole Borough of Rochdale be agreed; 2.    That the Directors of Economy & Place and Resources be authorised, in consultation with the Portfolio Holder for Regenerations & Housing and the Assistant Director of Legal & Governance:  (i) To charge the fees for the Additional Licensing Scheme as detailed in section 4 of the report; (ii) To require the proposed Licence Conditions for the Scheme as detailed in Appendix 2 of the report.   Reason for decision: Rochdale Borough has approximately 16,688 households living in private rented property (ONS 2021 Census). The majority of that stock is traditional build older stock, with a high proportion of terraced dwellings which naturally have a far higher rate of disrepair and require higher levels of investment. Typically the level of hazards present are 25% higher in these types of stock (DA4101 Health & Safety of Dwellings, ONS 2021).   In Rochdale, the private rented sector accounts for 18% of households, reflecting an increase in over 5000 properties between 2011 and 2021.   The last additional licensing scheme expired in 2016 and since then the apparent nationwide housing and cost of living crisis have taken their toll on Rochdale. The availability and affordability of accommodation is as stark a situation as it has ever been, forcing residents to accept substandard accommodation as their only viable options.   The range of demand on the private rented sector is also at an all-time high. As well as increased demand from would-be home buyers who struggle to get a foothold in the market through unaffordable mortgages and high costs of living, increased demand for homeless accommodation due to the economic down turn, coupled with increases in demand from asylum and supported accommodation, combine to form a situation where the highest bidder wins and the availability of quality, affordable accommodation is at an all-time low.   Current evidence demonstrates that in certain sectors of the Private Rented Sector market, notably within HMOs that housing standards are declining, with many landlords not adhering to their legal responsibilities and leaving occupants in poor, unsanitary and unsafe accommodation.   The designation of a new HMO Additional Licensing Scheme will allow Housing Standards Officers the ability to utilise a range of additional inspection and enforcement powers not currently available to them.   In addition to raising housing standards and dealing with problematic HMOs within local communities it will help contribute towards balancing good quality supply with demand to help stabilise rents and encourage good quality management, to establish longer terms lets and lower turnover.   With circa 90,000 homes and a population in the region of 223,000 in Rochdale, the demand for affordable accommodation is higher than ever before and in view of the nationwide and locally affecting housing crisis, there is a distinct lack of available private rental accommodation. With house prices at record levels and the inevitable hike in rents to meet cost of living and mortgage rate increases, Houses in Multiple Occupation, more than ever, will provide a valuable source of much needed affordable accommodation. However, the Council must promote and enforce a good quality of accommodation which the introduction of an Additional Licensing Scheme for HMOs will contribute towards.   HMO's unfortunately provide some of the poorest quality housing in the Borough currently; with issues of disrepair, overcrowding, waste accumulation, poor maintenance and issues of anti-social behaviour affecting local residents. This can often stem from the nature in which they are occupied, by unrelated individuals sharing amenities within the accommodation. These properties require proper management to maintain effective tenancies and to ensure improvement of stock within local communities.   Over the past 5 years the amount of private tenant complaints dealt with by the Council’s Housing Standards team has risen from 279 to 518 across all property types. A significant proportion of these are from HMO properties where mandatory licensing does not apply, but which would be captured by Additional Licensing and conditions. Typically HMO tenants are often the most vulnerable members of society and are less likely to engage of their own volition.   Of those HMOs the Council is aware of and has inspected in the Borough from 2016 to present were found to contain category 1 hazards. Almost all the HMOs failed to provide appropriate fire safety. Fire alarm systems were either lacking entirely or not kept up to standard. Fire doors were either missing entirely or poorly maintained. General wear and tear are greater in “bedsit style” HMOs, given the high turnover of tenants and heavy use of shared facilities. It has been evidenced that landlords are not maintaining properties, either through lack of proper / regular property inspections, or because of a lack of regard to the effects these defects have on the tenants.   Since 2016 there has been a 46% rise in private tenant complaints, with increased public concern relating to the rise in HMOs within the Borough, which has been evidenced by rising member casework.   Through the work of the Housing Standards team, there is clear evidence that a significant number of these smaller HMOs seriously fall short of the fire safety requirements, are overcrowded and lack suitable management arrangements.   Cabinet approved the decision to commence a formal consultation on proposals for an Additional Licensing scheme for three and four person HMOs. The formal consultation ran for 13 weeks from 15th April 2024 and ended on 15th July 2024. Details regarding the consultation are included in section 4 of this report.   The introduction of a borough wide Additional Licensing scheme, will provide a clear set of prescribed conditions and expectations, will aim to bring about consistency in the way HMOs are managed and will directly tackle problems such as poor property management, poor property condition and overcrowding. Further benefits should include a reduction in complaints and problems associated with HMOs, protection of the health, safety and welfare of tenants, reduction in negative impacts from HMOs for the wider community and improved management and property condition within shared accommodation.   Alternatives considered and rejected: The alternative decision open to Cabinet was not to consult, not to consider implementing Additional Licensing and not to utilise the full range of enforcement powers available to the Authority to resolve much needed housing standards issues within the Borough.   Practical alternatives to Additional Licensing must be considered with regard to s.57 (4) of the Housing Act 2004 (‘the Act’) as a Local Housing Authority may not make a designation to implement Additional Licensing unless i) it has considered whether there are any other courses of action available (of whatever nature) that might provide an effective method of dealing with the problem or problems in question and ii) it considers that making the designation will significantly assist them to deal with the problem or problems (whether or not they take any other course of action as well).   The alternatives to implementation of Additional Licensing would principally be to introduce Selective Licensing either as a stand-alone tool or in concert with Additional Licensing; pursue Civil Penalties for breaches of legislation and regulation (further detail is contained in Appendix 1).   A civil penalty can be issued as an alternative to prosecution for each separate breach of the Houses in Multiple Occupation management regulations. A civil penalty can only be imposed as an alternate to prosecution, and is currently used by the Council in line with published policies. However, it is a reactive enforcement tool which principally deals with after-the-event issues retroactively dealing with housing standards rather than setting of standards in advance and allowing consequent investigation where required.   Selective Licensing can apply to any rented property within a set area, whereas mandatory and additional licensing only apply to houses in multiple occupation. Selective licensing may only be granted if the area meets one or more conditions (such as low housing demand, significant and persistent ASB, poor housing conditions, high levels of migration, crime or deprivation).   Selective Licensing applying to any rented property is judged to place an unnecessarily high burden on all landlords in Rochdale. The rationale for pursuing Additional Licensing is specifically to target HMO rental properties where risk to inhabitants is typically significantly higher than single household rentals.   HMOs that are poorly managed and badly maintained can put an extra burden on local services and have a negative impact on the area, as well as potentially posing safety risks to inhabitants. That is why additional considerations apply to the management, maintenance and construction of HMOs.   Significantly Additional Licensing will bring more properties under the regulatory and investigative abilities of the Council, as currently without Additional Licensing powers of investigation and entry are inhibited. Selective Licensing on its own would not afford the same ability to investigate, monitor and regulate the specific cohort of HMOs as a particularised housing type.   Selective Licensing does not target the problems identified (see Appendix 1) in the same way that Additional Licensing would and creating an administrative burden to licence all properties within a given area would create unachievable capacity demands for the service and place an unnecessary burden on landlords.    The Council believe that introduction Additional HMO Licensing will help to i) improve property conditions within these HMOs ii) improvement management standards and iii) ensure residents will be afforded the same protection as people in mandatory licensed HMOs.   The Council would expect benefits of an HMO-targeted Additional Licence scheme to include:   o   As with mandatory licensing, additional licensing will bring a significant number of properties to the Council’s attention that would otherwise have gone undetected. The use of civil penalties only would not allow for this, neither does it place a legal duty on landlords being “fit and proper persons”.   o   A wider understanding from HMO landlords and agents of expected management standards, which would not be achieved through use of civil penalties alone which is a far more reactive enforcement measure.   o   Diligent private landlords would benefit from not having to compete with poorly managed properties that do not meet the standards.   o   Licensing will require absentee or unprofessional landlords to employ a professional management approach to actively manage their properties and ensure suitable arrangements are in place to deal with any problems that arise.   o   Improved management and improved conditions of privately rented accommodation will provide quality and choice for residents.   o   The better protection of the health, safety and welfare of tenants through improved safety standards within the HMO.   o   A reduction in the negative impacts for tenants of HMOs.   o   Reduction in the negative impacts from HMOs that will benefit the whole community (unlike Selective Licencing which would not be Boroughwide).