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Consternation as Lewisham Council approved new landlord licensing fee of £500 per bedroom

Wednesday, March 23, 2016

Following approval of a new additional landlord licensing scheme on 2 March (read here), Lewisham Council’s Licensing Supplementary Committee met last night (22 March) and approved proposals for a dramatic increase in HMO licence application fees.

The fee structure will apply to the existing mandatory HMO licensing scheme and the new additional licensing scheme.

At present, Lewisham Council charge an application fee of £180 per unit of accommodation for a mandatory HMO licence, so it costs £900 to license a 5-bed property. The fee has remained static since 2012.

Under the new arrangements, the application fee will rise to £500 per unit of accommodation, an increase of 278%. This fee will be applied to each bed-sit, bedroom in a shared house or hostel. Within a flat in multiple occupation, the charge will be applied to each bedroom, with a maximum limited of £5,000 per property. Each licence will normally last for five years.

Under the new rules, it will cost £1,500 to obtain a licence for a 3-bedroom property and £2,500 to obtain a licence for a 5-bedroom property. The new additional licensing scheme will only apply to Houses in Multiple Occupation above or below commercial premises.

After listening to the officer’s report, councillors were addressed by a representative from the National Approved Letting Scheme (NALS), an independent licensing scheme for lettings and management agents which operates UK wide.

NALS raised concern about the excessive increase in fees and presented members with a detailed analysis of all current HMO licensing fees in London. This showed that the average licence application fee is currently £952 for a 5-bedroom mandatory HMO licence and £698 for a 3-bedroom additional licence. The new fees being proposed in Lewisham are far in excess of this and are twice as high as neighbouring Southwark borough.

NALS asked the Committee to defer a decision to allow time for council officers to share their financial appraisal with key stakeholders and work with the industry to try and develop a fairer and more balanced fee structure.

A local HMO landlord also addressed the Committee, raising concern that they had not been consulted about the increase in fees. Council Officers acknowledged that the licensing consultation had been geared towards landlords likely to be affected by the new additional licensing scheme and that they did not write to existing licensed HMO landlords about the proposed increase in fees until after the consultation had ended.

In response, Council officers assured the Committee that their financial appraisal had been developed with assistance from an external consultant and the the scheme was designed to be self funding over the 5-year life of the scheme. They explained there would be a 20% discount on the first licence for accredited landlords, while all landlords licensing 2 or more properties would receive a 33% discount on subsequent applications.  

Officers also highlighted that the Mayor had agreed an extra £1 million funding over the next 5 years to help strengthen their housing enforcement activity.

After listening to all the representations, the Committee voted unanimously to approve the new fee structure.

Isobel Thomson, Chief Executive, NALS commented:

It is disappointing that Lewisham Council has decided to implement such a large increase in fees which will ultimately be passed onto tenants in the form of higher rents. Once again, these fees will be paid by good, responsible landlords and letting agents whilst rogue landlords will continue to evade the licensing scheme.

"I would urge the council to publish their financial appraisal and work with landlord and letting agent associations to explore ways to reduce their excessive scheme administration costs. I would also encourage the council to extend their accreditation discount to properties that are managed by an accredited letting agent”.      

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