Croydon’s landlord licensing scheme is under challenge (again)

By - Thursday 2nd July, 2015

Robert Ward’s bête noire is back in the headlines, but he’s still not convinced

Photo public domain.

Following last year’s decision by Croydon Council to impose Selective Landlord Licensing across the borough, I had given up on preventing its imposition. The last line of defence beyond the council decision and its confirmation by the Scrutiny Committee is a judicial review. This is too expensive for an individual. Landlords’ organisations have also been reluctant to pursue this route.

Not surprising, as challenging the decision on the basis of poor analysis is exceedingly tough. Why? Because the quality threshold is so low. The council needs, for example, only to have a single case to justify a claim that there is a connection between private tenants and anti-social behaviour.

As I pointed out in my submission to the council Scrutiny Committee, the evidence published by the council did not even pass this very low threshold. Unfortunately the council legal advisor advised that even this was not necessary as the evidence does not necessarily have to be in the written information given to councillors. I lost some faith in the decision making process at that point.

My opposition is on the grounds that the scheme will add cost without adding any value

It was therefore a pleasant surprise when I learned that what seems to be an ad hoc organisation calling itself Croydon Property Forum has called for a judicial review. This is on the basis of possible shortcomings in the consultation process. This has been a more successful area of challenge, as happened part way through the Croydon Council consultation, necessitating extension of the consultation to neighbouring boroughs.

Perhaps I should declare an interest here, or rather the lack of one. As a landlord with property in that part of Crystal Palace which is not part of Croydon, the scheme would have no direct impact on me. The impact, if any, would be positive in that landlords just down the road will be burdened with a cost, which I will not.

My opposition is on the grounds that the scheme will add cost without adding any value. As such it will be bad for Croydon tenants as well as Croydon landlords.

Where one piece of evidence falls down is that both properties should have been licensed anyway

Coincidentally, the leader of Newham Council was giving the keynote speech at the Chartered Institute of Housing conference just as this challenge came to light. Sir Robin Wales (for it was he) rightly said that a lack of supply is at the root of the housing problems. Predictably, as a Labour politician he then went on to assert that it was the Tories’ fault that it hadn’t been solved. He then went on to the usual rhetoric around rogue landlords.

As evidence from Newham he quoted an example from East Ham where a landlord had crammed 26 people into a three bedroom house. This is very similar to a case quoted by Croydon Council in support of their proposed licensing scheme.

Where this argument falls down is that both properties should have been licensed anyway as Houses of Multiple Occupancy. Moreover the East Ham case was identified not through their licensing scheme implemented in 2013, but through a data warehouse system that studies council tax and other details. What’s more, the landlord had some three years prior (and therefore before the licensing scheme had been implemented) been served an enforcement order for a planning permission breach.

Freedom of Information requests for data on the performance of the Newham scheme were being refused on the grounds that this is a five year experiment so it is too early to draw conclusions. This did not prevent Newham claiming that there were signs of success. They just wouldn’t tell us what they were.

This is a manifesto commitment – I would therefore not expect Croydon Labour to set it aside lightly

Some FOI requests are now being answered. In August 2014 Newham stated that the income from the scheme had been 2.1 million pounds in the previous tax year. The previous month a different FOI request elicited that there had been 197 individual prosecutions in that same year. This works out at around £10,000 per prosecution. Even this is generous, in that all the prosecutions I have seen quoted have been of landlords whose case did not depend on the licensing scheme. I therefore see little evidence that the scheme is value for money and none whatsoever that it has had an impact on anti-social behaviour, which was the justification for its imposition.

Croydon’s landlord licensing scheme was included in the Ambitious for Croydon manifesto, on the basis of which Labour won the Croydon Council elections in 2014. I would therefore not expect them to set it aside lightly. They do however have a responsibility to run the council in the best interests of the people of Croydon.

I would therefore ask them to look again for evidence of the efficacy of landlord licensing schemes. They should then weigh the potential costs of a judicial review and consider whether this is a good use of taxpayers’ money. Perhaps opposition councillors might quietly agree not to trumpet this (much) as a climbdown if the scheme is quietly dropped.

As John Maynard Keynes is believed to have said – when the facts change, I change my opinion. I am hopeful that the council may yet do this, but I am not holding my breath.

Robert Ward

Robert Ward

Engineer and project manager, started work on the railway but most of career in oil exploration and production. For the last fifteen years specialised in helping businesses improve their performance. Conservative Party candidate to represent Selsdon and Addington Village on Croydon Council. He tweets as @moguloilman.

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  • David White

    In so many walks of life licensing is required. Generally it’s a positive thing and provides protection to the public.
    For most of my life I have worked as a solicitor. I was required to take out a practising certificate and arrange compulsory insurance. I didn’t regard this as a stealth tax or complain that the cost would inevitably be passed on to clients. And it wouldn’t have made much sense for me to say “I’m not going to break the rules, why should I have to pay.”
    It’s the same for accountants, doctors, taxi drivers and so many others. You have a system of regulation or licensing to ensure high standards. Landlords should accept this and stop whingeing.

    • Stephen Giles


    • Mandy Thomson

      Prima facie I would agree with you – solicitors and other professionals have to pass exams & attain a certain standard before they can practice. Even to drive you must pass a test and have a valid licence.

      Many landlords DO choose to become accredited, if only because of the changing and increasingly complex legislation they must take on board; even the many who choose to appoint a letting agent are still ultimately responsible and therefore still need at least an overview of the legislation and their responsibilities.

      However landlord licensing in its current form is NOT there to help landlords to become better landlords and take a pride in letting property nor is it usually fairly targeted at the right landlords.

      Do local authority landlord licensing schemes ensure that landlords are trained and take a pride in what they do? NO (if they did, the National Landlords Association and the Residential Landlords Association would be in favour).

      Are local authority landlord licensing schemes run by people who care about decent landlords & accept the valuable contribution made by the private rental sector and wish to support and promote it? NO.

      Do landlord licensing schemes drive up standards of privately let accommodation? AS Robert Ward has said in his article, there is little evidence of this, and indeed councils already have powers to tackle bad landlords.

      • moguloilman

        Thanks Mandy,
        If I may add a few thoughts.

        My frustration is that there are issues with the Private Rented Sector yet any attempt to address them is immediately politicised, indeed the sector was looked at almost purely as a political opportunity by Labour at the 2015 General Election. Length of tenure given the increasing number of children in the PRS and too many amateur landlords who need to understand their responsibilities better are two of them.

        My view is that families who are good tenants do have security, they just don’t feel they have it because once a year they need a new agreement. It should not be beyond us to work something out here.

        Landlord education is needed. It primarily needs enforcement of current regulations to get it started or something like the NLA and RLA ideas. What is not needed is a revenue raising house registration scheme which is what is proposed for Croydon.

    • Pass The Deutschy

      Landlords will simply pass the cost onto tenants who already whinge rents are too high. Nuff said.

      • moguloilman

        An economist would argue that the rent is set by the market, so the landlord will pay the cost.

        The truth in my opinion will be somewhere in between. At the moment tenants who have been in a property for some time pay lower rents than a new tenant to a similar property. At the next renewal I suspect landlords will ask for a higher rent so all or part of the cost will be passed on. It is even possible that more than the cost may be passed on. However overall market conditions may have a bigger effect.

        It will be interesting to see the impact in an area like Crystal Palace where a similar area with high number of rented properties is only partially covered by Croydon’s licensing scheme.

        • Pass The Deutschy

          £750 is £62 a month, a landlord could easily recoup that over a year or two.

          • moguloilman

            It is actually much less than that. The licence will be valid for five years. How much of the cost can be recovered from tenants is a moot point. My point is that it will add no value.

          • Pass The Deutschy

            Exactly and that’s what I mean it’s a cost easily recouped within a year or two and it’s because it adds no value that Landlords will ensure they pass the cost on. I agree that Crystal Palace will be an interesting experiment. xx

  • moguloilman

    Your points are, I think, licensing is in place elsewhere so why not for landlords and that it is there to ensure high standards.

    On the latter, I have seen no evidence that landlord licensing has improved standards. Newham has as far as I can see used it as a registration scheme, raising money and employing more staff but not improving standards. Enforcement is what is needed, but Councils have generally shied away from this. Newham has put some extra effort in here but not much. There are numerous regulations already in place but almost none are enforced. Why on earth not? In any case, the justification for the scheme is on reducing anti-social behaviour, in spite of an absence of evidence.

    As to the “if lawyers, why not landlords question”, I do not accept that everything should be licensed because some things are licensed. There has to be a purpose, something that will improve as a result. I see no evidence of what.

    Could the license just be a cost of doing business? Yes it could. Consquencies will be a combination of some landlords leaving the market, some landlords making less money and tenants paying more. None of these are worthwhile unless there is something positive achieved.

    • moguloilman

      P.S. I would also point out that this, and other similar schemes are not set up as Landlord Licensing schemes, They are house licensing schemes. You pay for every property so analagous to a lawyer having to licence every case.

  • Sean Creighton

    Delighted that the High Court judge has thrown out Croydon Property Forum’s attempt to stop the licensing scheme. It has until Tuesday next week to seek permission to appeal. Over 1,000 landlords handling 1,500 properties have already paid their reduced £350 licensing fee rather than pay the full fee when the scheme goes live on 1 October.