Selective licensing is a tool used by local authorities to regulate private rented properties in specific geographical areas. Unlike mandatory HMO licensing which applies to large shared houses nationwide, selective licensing can apply to any privately rented property within a designated zone, regardless of size or occupancy.
Over 100 local authorities in England currently operate selective licensing schemes, affecting tens of thousands of landlords. Understanding whether your property falls within a designated area and what compliance entails is essential for avoiding penalties and maintaining your ability to let property legally.
What is Selective Licensing?
Selective licensing was introduced under Part 3 of the Housing Act 2004, giving local councils the power to designate specific areas where all privately rented properties must be licensed. This applies to standard single-family lets, not just HMOs.
When Can Councils Introduce Selective Licensing?
Local authorities can designate areas for selective licensing when one or more of the following conditions exist:
- Low housing demand: Properties are difficult to let or sell, with high vacancy rates and falling property values
- Anti-social behaviour: Significant problems with tenant behavior affecting the local community
- Poor property conditions: A high proportion of properties in poor condition compared to other areas in the authority
- High levels of migration: Areas experiencing significant population change requiring additional management
- High levels of deprivation: Correlation between deprivation and poor housing conditions
- High levels of crime: Where poor housing management is linked to crime levels
Councils must demonstrate that selective licensing will contribute to improving the area and that other measures would not be sufficient. They must also consult with local stakeholders, including landlords, before implementing a scheme.
Key Differences: Selective vs Mandatory HMO Licensing
Selective Licensing
- Applies to all private rented properties in a designated area
- Includes single-family lets
- Location-specific (designated zones only)
- Voluntary council decision
- Maximum 5-year designation period
Mandatory HMO Licensing
- Applies to large HMOs (5+ occupants, 2+ households)
- Three+ storey properties only
- Nationwide requirement
- Statutory obligation
- Property-specific, not area-based
Where Does Selective Licensing Apply?
Selective licensing schemes are concentrated in areas with challenging housing markets or significant social issues. As of 2025, over 100 English councils operate selective licensing, with notable schemes in:
Major Selective Licensing Areas
London
Newham: Borough-wide scheme covering all private rented properties. Fee: £500-£1,000 depending on accreditation status.
Tower Hamlets: Multiple designated areas. Fee: £780 for 5 years (£920 for HMOs).
Brent: Selective licensing in specific wards. Fee: £670 standard, £870 late application.
North West
Liverpool: Extensive coverage across the city. Fee: £820 for 5 years (discounts for accredited landlords).
Manchester: Multiple areas including parts of Moss Side, Longsight, and Old Moat. Fee: £780 per property.
Salford: City-wide scheme implemented in 2024. Fee: £900 for 5 years.
Midlands
Birmingham: Multiple selective licensing areas across the city. Fee: £920 for 5 years.
Nottingham: Selective licensing in specific wards. Fee: £920, reduced to £640 for accredited landlords.
Yorkshire
Leeds: Selective licensing in Beeston, Harehills, and other areas. Fee: £550-£900 depending on area and accreditation.
Bradford: Multiple designated areas. Fee: £700 for 5 years.
Important: Selective licensing areas change regularly as councils introduce, expand, or renew schemes. Always check with your specific local authority to confirm current designations.
How to Check if Your Property Requires a License
- Visit your local council's website and search for "selective licensing"
- Use the council's postcode checker tool (most councils provide this)
- Contact the council's private housing team directly
- Check the property's location against published designation maps
- Review any notices or communications from the council about licensing requirements
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Analyze a Property View PricingSelective Licensing Requirements
Who Can Be a License Holder?
To be granted a selective license, the applicant must be a "fit and proper person." Councils assess this based on:
- Any unspent convictions involving fraud, dishonesty, violence, drugs, or sexual offenses
- Contraventions of landlord or housing legislation
- Unlawful discrimination in property management
- Track record managing rental properties
- Whether they've been refused a license or had one revoked
Standard License Conditions
While specific conditions vary by council, most selective licenses include requirements to:
Property Standards
- Maintain the property in good repair
- Ensure adequate heating, lighting, and ventilation
- Provide working smoke and CO alarms
- Keep common areas clean and well-maintained
- Address damp, condensation, and pest issues promptly
Safety Requirements
- Annual gas safety inspections
- Electrical safety inspections every 5 years
- Furniture meeting fire safety standards
- Adequate fire safety measures
- Legionella risk assessments
Management Practices
- Provide written tenancy agreements
- Reference tenants appropriately
- Respond to tenant complaints within specified timeframes
- Deal with anti-social behaviour
- Maintain tenant contact details and next of kin information
Documentation
- Keep gas and electrical safety certificates
- Maintain records of property inspections
- Document tenant communications
- Provide certificates to the council on request
- Notify council of changes to property or management
Application Process
The typical selective licensing application process involves:
- Confirm requirement: Verify your property is in a designated area
- Gather documents: EPC, gas safety certificate, EICR, floor plans, proof of ownership
- Complete application: Submit online or paper form with full property and landlord details
- Pay fee: Fees typically £500-£1,000 depending on council and accreditation status
- Council assessment: Processing times vary from 6-12 weeks
- Property inspection: Council may inspect before granting license
- License issued: Valid for maximum 5 years
Tip: Many councils offer reduced fees for landlords accredited with schemes like the National Residential Landlords Association (NRLA) or local landlord accreditation schemes. Discounts typically range from 10-30%.
Costs and Financial Impact
Direct Costs
Indirect Compliance Costs
Beyond the license fee, landlords may incur additional costs to meet license conditions:
- Property improvements to meet standards: £500-£5,000+
- Annual gas safety check: £60-£100
- EICR every 5 years: £150-£300
- Additional smoke/CO alarms: £50-£150
- Professional property management (if required): 10-15% of rent
- Time spent on documentation and compliance: Variable
Impact on Investment Returns
For a typical buy-to-let property generating £850 per month in rent:
Annual rental income: £10,200
License cost (amortized): £150/year
Impact on gross yield: ~0.08% reduction (on £180k property)
Verdict: Modest impact on returns, but non-compliance risks far outweigh the cost
Penalties for Non-Compliance
Operating without a required selective license or breaching license conditions can result in severe penalties:
Criminal Prosecution
Renting a property without a required license is a criminal offense punishable by:
- Unlimited fine (magistrates' court)
- Conviction recorded on criminal record
- Potential future difficulty obtaining licenses
Civil Penalty
Instead of prosecution, councils can issue a civil penalty of up to £30,000 per offense. Factors affecting penalty amount include:
- Severity of the offense
- Culpability and track record
- Harm caused to tenants
- Financial benefit from non-compliance
Rent Repayment Order (RRO)
Tenants can apply to the First-tier Tribunal for a Rent Repayment Order, forcing landlords to repay up to 12 months of rent. This applies when:
- The landlord has been convicted of operating without a license
- The council has issued a civil penalty (conviction not required)
- The landlord was required to have a license during the tenancy
RROs have resulted in landlords being ordered to repay £10,000-£30,000+ in extreme cases.
Section 21 Restrictions
Operating without a required license prevents you from serving a valid Section 21 notice (no-fault eviction). This restriction remains until:
- You obtain the required license
- The licensing requirement is removed
- A court determines you have a reasonable excuse
Frequently Asked Questions
Do I need a separate license for each property?
Yes. Each privately rented property within a selective licensing area requires its own license. If you own five properties in a designated area, you need five separate licenses. However, some councils offer portfolio discounts for landlords licensing multiple properties.
What if I already have an HMO license?
If your HMO is in a selective licensing area, you may need both an HMO license and a selective license, or the council may combine them into a single license application. Check with your local authority as practices vary. Some councils charge a combined fee, while others require separate applications.
Can I operate without a license while my application is being processed?
Generally no. You should apply for a license before you begin letting the property or as soon as a designation comes into effect. However, councils usually provide a grace period (typically 3 months) when new schemes are introduced. Late applications often incur higher fees and may result in penalties.
How do I renew a selective license?
Licenses are valid for up to 5 years. You must apply for renewal before expiry, typically 3-4 months in advance. The renewal process is similar to the initial application. Some councils offer discounted renewal fees for compliant landlords with good track records. If the selective licensing scheme is not renewed by the council, licenses lapse and are no longer required.
What happens if the property is managed by an agent?
The property owner remains responsible for obtaining the license, even when using a letting agent. However, you can nominate the agent as the license holder or property manager. Ensure your agent is aware of licensing requirements and has relevant experience managing licensed properties.
Are there any exemptions from selective licensing?
Very few exemptions exist. Properties occupied by close family members, properties managed by registered social landlords, and buildings with resident freeholders (where the freeholder owns more than two flats) are typically exempt. Holiday lets and properties subject to a management order may also be exempt. Commercial tenancies are not covered by selective licensing.
Conclusion
Selective licensing represents a significant regulatory requirement for landlords operating in designated areas. While the direct costs are relatively modest when amortized over five years, the penalties for non-compliance can be substantial, including unlimited fines, rent repayment orders, and loss of Section 21 eviction rights.
The expansion of selective licensing schemes across England means more landlords will encounter these requirements. Staying informed about local licensing designations and maintaining proactive compliance is essential for protecting your investment and avoiding costly penalties.
Before purchasing a property, always check whether selective licensing applies in the area. Factor licensing fees and compliance costs into your investment calculations, and ensure you understand the ongoing obligations that come with holding a license.
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