Selective licensing in Tower Hamlets

A council can designate any part of its area for selective licensing under Part 3 of the Housing Act 2004. Inside the designated area, almost every privately rented home needs a licence, whether the property is a single-family let, a small flat, or a house shared by a couple.

Selective licensing is not about HMOs. The rule keys off the fact that the home is privately rented, not how many people live in it or how many households share it.

Renting out without a licence inside a designated area is a criminal offence. Councils can apply a civil penalty of up to £40,000 per offence, and tenants can apply for a rent repayment order of up to 12 months of rent.

If the property is inside the scheme area and rented out under most types of tenancy, the landlord usually needs a licence. That includes a couple renting a flat, a single tenant renting a whole house, and a family renting a terrace.

A selective licence does not normally apply to social housing, holiday lets, properties under the Housing Act 1985 Part 7, or homes already licensed as HMOs. The council's notice of designation lists the exact exemptions, and they vary scheme to scheme.

Whoever is in control of the property is responsible for the licence. That is normally the freeholder for a house, or the leaseholder for a flat. A managing agent can hold the licence with the landlord's written agreement.

Selective licensing and HMO licensing are different rules. A property only needs one licence at a time. If the property meets the test for a mandatory HMO (five or more people in two or more households) or for an additional HMO licence the council runs, that takes precedence and the property does not also need a selective licence.

Tower Hamlets also runs an additional HMO licensing scheme. A small house share that does not meet the mandatory threshold can still be caught by that scheme, again replacing the need for a selective licence at the same address.

The practical effect: check the HMO rules first. If the property is an HMO under either definition, apply for the HMO licence. If it is a single-household let inside a designated selective area, apply for the selective licence instead.

Applications go through the council. Most have an online form that takes the property address, the landlord and agent details, gas and electrical safety certificates, an Energy Performance Certificate, and proof of right to manage. Councils ask for the fee up front, usually split between a non-refundable application fee and a grant fee paid when the licence is issued.

A licence usually runs for five years. If the council renews the designation, every existing licence has to be re-applied for. Fees and conditions can change between renewals.

A licence is tied to the named landlord and the named property. Sell the property, change the manager, or move out and the licence does not transfer. The council needs a new application.

Renting out an unlicensed property in a designated area is a criminal offence under section 95 of the Housing Act 2004. Councils can prosecute, or apply a civil penalty of up to £40,000 instead under section 249A. The decision is the council's, and a civil penalty does not need a court case.

A tenant can apply for a rent repayment order for up to 12 months of rent already paid. Universal Credit and housing benefit paid for the same period can also be reclaimed by the council under section 41 of the Housing and Planning Act 2016. Two separate offences in 12 months can trigger a banning order, which removes the landlord from the rental market entirely.

A landlord who has not applied for a licence cannot serve a valid section 21 no-fault eviction notice. The block lasts until the licence is in place. A tenancy started inside the scheme area without a licence remains valid; only the eviction route is closed.

A buy-to-let mortgage usually requires the landlord to hold any licence the council demands. Lenders ask for the licence reference at the point of letting and again at renewal. Letting an unlicensed property in a designated area can technically breach the mortgage terms, and lenders have called in loans on that basis.

Landlord insurance is similar. Insurers normally require any licensable property to actually be licensed, and a civil penalty or rent repayment order can void cover for related claims. Disclose the licence status on renewal.

Buyers of let properties in Tower Hamlets should ask the seller for the licence reference and the conditions attached to it. The licence ends on sale, but the conditions tell the buyer what improvements the council has already required.