Council Admits Selective Licensing Will ‘Push Up Rents’
Selective licensing schemes, introduced under the Housing Act 2004, were designed to empower local authorities in England to regulate private landlords in designated areas
. The goal? To tackle issues like anti-social behavior, poor housing standards, and rogue landlords.
But now, in a move that’s sparked concern across the UK’s landlord community, a local council has publicly admitted that selective licensing is likely to push up rents for tenants.
The admission, made during a recent policy consultation and later reinforced in council meeting minutes, is igniting debates among property investors, housing campaigners, and tenant groups alike.
While the council argues that the benefits of improved standards outweigh the downsides, critics believe the licensing costs will be passed straight on to tenants, already struggling in a high-cost rental market.
This article explores what selective licensing entails, the implications of rising compliance costs, and why this council’s admission may signal broader economic challenges for renters and landlords across England.
What Is Selective Licensing?
Selective licensing is a regulatory tool that local authorities can implement in areas with issues such as low housing demand or significant anti-social behavior.
Unlike mandatory licensing (which applies to HMOs—Houses in Multiple Occupations), selective licensing can target all privately rented homes in a specific area, regardless of property size or type.
To implement such a scheme, councils must demonstrate that a significant proportion of the housing stock is privately rented and that problems such as poor property conditions or high turnover exist.
Once approved, landlords must apply for a license for each rental property and meet various criteria, such as ensuring smoke alarms are installed and conducting regular safety checks.
The costs vary, but fees typically range from £500 to over £1000 per property, renewable every five years. For landlords with multiple properties, the financial burden can be substantial.
The Recent Admission and Its Significance
During a council meeting in early 2025, senior officers acknowledged that the implementation of a new selective licensing scheme would “almost certainly result in higher rents.” This came after a consultation period revealed pushback from local landlords and tenant rights organizations warning of the financial consequences.
The council conceded in internal documentation that the additional operating costs faced by landlords—license fees, mandatory safety upgrades, administration, and compliance paperwork—would likely be passed on to tenants in the form of rent increases.
This admission is significant for several reasons:
- Transparency of Impact: Councils rarely acknowledge negative economic consequences when rolling out regulatory schemes. Admitting that rents will rise raises questions about the balance of costs versus benefits.
- National Implications: While this admission stems from a single council, it may embolden landlords across the country to challenge similar licensing schemes or lobby against their expansion.
- Policy Contradiction: The government’s wider housing strategy seeks to make rents more affordable. Yet local licensing schemes may be unintentionally contributing to the opposite outcome.
Landlord Reaction
Unsurprisingly, landlords are pushing back hard. Many argue that they are already bearing the brunt of increased regulatory and taxation burdens, including changes to mortgage interest relief, EPC upgrades, and the looming threat of rent controls.
Selective licensing is seen by many in the landlord community as another example of the “war on landlords”—a trend where the government and local authorities keep tightening rules while offering little in the way of practical support.
One landlord, who owns four properties in the affected borough, said:
“Between energy efficiency upgrades and licensing fees, I’m looking at over £8,000 of unexpected costs this year alone. The only way to remain viable is to increase rent. It’s that simple.”
Tenant Perspective
Tenants’ groups remain divided. On one hand, many support tighter regulation of rogue landlords and see licensing as a means to hold landlords accountable. On the other hand, the cost implications are concerning.
With wages stagnating and inflation squeezing household budgets, any policy that leads to higher rents is bound to cause resentment among tenants—especially in areas already facing housing crises.
A spokesperson from a national tenant organization commented:
“Improving housing standards is essential, but not at the cost of making homes unaffordable. We need a better funding model that doesn’t rely on pushing costs onto renters.”
The Economic Mechanics: Why Licensing Pushes Up Rents
Selective licensing schemes increase landlords’ fixed costs. These costs include:
- Application fees
- Admin time
- Compliance inspections
- Legal consultations
- Upgrades to meet safety standards
In a market where profit margins are already being squeezed—particularly in cities with low rental yields—landlords tend to protect their investment by increasing rents.
This is a classic example of “cost pass-through” in economics. When businesses (including landlords) incur additional costs, those expenses are typically passed on to consumers (tenants) to maintain viability. The only scenario where this doesn’t happen is if the market is so competitive that landlords are forced to absorb the cost—which could lead to them exiting the market.
Potential Outcomes: Fewer Rentals, Higher Prices
If selective licensing becomes more widespread and costs continue to rise, the private rented sector could shrink. This is because:
- Landlords may exit the market due to declining returns.
- New investors may be discouraged from entering the sector.
- Rents may rise to unsustainable levels for low-income tenants.
The result could be a tightening of supply, worsening the very problems these schemes aim to solve—such as homelessness and poor housing conditions.
The Broader Legislative Context
This admission comes at a time when the rental sector is facing sweeping changes:
- The Renters Reform Bill is set to abolish Section 21 “no-fault” evictions.
- Minimum EPC ratings are being raised from E to C by 2028.
- Taxation changes have made it harder for smaller landlords to turn a profit.
In this context, the council’s admission that selective licensing will drive up rents only reinforces the growing perception that landlords are being over-regulated without sufficient recognition of their role in housing provision.
Industry Calls for Reform
Industry groups such as the National Residential Landlords Association (NRLA) have long called for:
- A standardized national licensing scheme instead of localized, inconsistent systems.
- Incentives for good landlords, such as reduced fees or tax breaks for energy-efficient properties.
- Simplified compliance processes to reduce admin burdens.
These suggestions aim to ensure that the goals of licensing—improved safety and housing standards—are achieved without unnecessarily harming affordability or pushing landlords out of the market.
Public Trust and Accountability
Critics also argue that many councils use selective licensing as a revenue-generating tool rather than a genuine method of enforcement. Several investigative reports have found that councils often fail to inspect properties or follow up on complaints despite having collected substantial license fees.
The concern is that the money collected isn’t reinvested into improving housing conditions but used to fund general administrative budgets.
Tenants and landlords alike are now demanding greater transparency, calling for annual reports showing:
- How many inspections are carried out
- The number of enforcement actions taken
- How licensing revenue is being spent
A Tipping Point?
This public admission may mark a tipping point in the ongoing debate around private renting in England. Landlords are becoming increasingly vocal, forming regional lobbying groups and taking legal action against councils for allegedly unlawful or exploitative licensing regimes.
Tenants are demanding more comprehensive protections—without the financial side effects.
Councils, caught in the middle, must find a way to balance tenant protection with affordability. The easiest route may lie in central government intervention, offering councils financial support for enforcement while capping the license fees that can be charged to landlords.
Frequently Asked Questions (FAQs)
What is selective licensing for landlords?
Selective licensing is a scheme where local councils require landlords to register and obtain a license for each rental property in certain areas. It is used to improve housing conditions and reduce anti-social behavior.
Why would selective licensing cause rents to increase?
The licensing process includes costs such as application fees, safety upgrades, and compliance admin, which landlords often pass on to tenants through higher rent.
Has any council admitted that licensing will push up rents?
Yes, a local council recently admitted during a policy consultation that selective licensing is likely to raise rents in the designated areas, due to cost pass-through.
Are all landlords affected by selective licensing?
Only landlords with properties in designated areas are affected. However, the number of councils implementing such schemes is growing.
Do tenants benefit from selective licensing?
Potentially yes—properties must meet minimum standards and councils can take enforcement action against rogue landlords. However, the benefit may come at the cost of higher rent.
Can landlords appeal against selective licensing?
Yes, landlords can object during consultation phases and even pursue judicial reviews if they believe the scheme is unfair or unlawful.
Is selective licensing the same as HMO licensing?
No. HMO licensing is mandatory for certain types of shared accommodation. Selective licensing applies more broadly to single-family lets in specific areas.
What happens if a landlord doesn’t get a license?
They could face fines, and prosecution, and potentially be required to refund rent to tenants via a Rent Repayment Order.
How long does a license last?
Typically, a selective license lasts up to five years, though this varies by council.
Is the licensing income reinvested into housing improvements?
This varies. Many councils claim the income is used for enforcement, but critics say there is a lack of transparency over how funds are spent.
External Sources for Further Reading
- National Residential Landlords Association (NRLA): https://www.nrla.org.uk
- Shelter – UK Housing and Homelessness Charity: https://www.shelter.org.uk
- Local Government Association on Housing Standards: https://www.local.gov.uk
- GOV.UK – Selective Licensing Guidance for Local Authorities: https://www.gov.uk
Conclusion
The council’s admission that selective licensing will drive up rents is a moment of reckoning for housing policy in England. It exposes the unintended consequences of well-meaning regulation and puts pressure on policymakers to revisit how they manage the private rented sector.
As councils continue to grapple with housing crises, balancing affordability, tenant protection, and landlord viability is more urgent than ever. Whether selective licensing remains a helpful tool or a burdensome levy will depend not just on policy but on how it’s implemented—and funded—in practice.
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