Cost of Licensing in Portsmouth Increases Again

Tuesday, Sept 5th, PCC Cabinet approved the proposed changes to Mandatory Licence Fee Structure and Licence Conditions to be effective December 1st.  We share here the perspective of an existing mandatory licence holder, large HMO landlord, Simon Fletcher who is unhappy that PCC made zero changes as a result of the consultation and, in his view, have implemented a potentially illegal solution.

Simon Says...

The implementation is as originally proposed by PCC Private Sector Housing (PSH), without any alterations implemented based on the consultation responses. Despite the fact that there were substantive issues known to PSH, a sanitised picture was presented to the democratically elected members of PCC Cabinet to inform this decision.

Details of the Cabinet decision, and associated documents can be found at: Agenda for Cabinet on Tuesday, 5th September, 2023, 2.00 pm Portsmouth City Council

The vast majority of consultation survey respondents were Landlords, and approx 72% (of the small proportion who answered that specific question) were in favour of the change of the proposed change. However, this was a response based on a false prospectus. PCC PSH promoted the revised scheme as being lower cost for most Landlords, whereas in fact there are extra costs and burdens hidden in the details.

On the implementation timing, the exact wording is: "Any licences due to expire on or after 1^st December 2023, or any new licence applications received on or after 1^st December 2023, will be administered through the new Mandatory Licensing criteria".

So, for those with Mandatory Licences up for renewal in December wanting to submit Renewal applications prior to Dec 1st, the NEW conditions and fees will apply. Furthermore, it is understood that Licence Renewals may be processed up to 90 days prior to expiry date of the current licence, but not before that. So early December renewals can be applied for already.

The new Fee structure for Mandatory Licences shows a rather modest reduction in headline Licence Fee cost for those with "accreditation", but a massive hike for anyone who is neither accredited themselves nor using an accredited agent.

Accreditation takes time, so for those with Licence renewals coming up in the next few months, it is advisable to start that process now if you don't have the necessary credentials to qualify for the lower fee.

The new fee table for Mandatory Licences is here: Mandatory Licensing of HMOs - Appendix 3 - Mandatory licensing fee structure 2023.pdf (portsmouth.gov.uk)

There is a perverse anomaly with the new Fees in that the Part 2 Fee for a Renewal of a 5 year Licence is now £37 higher than a 5 year initial Licence, when it was previously £64 lower. It is very hard to see any justification for charging a higher Fee for administering Renewed Licences of established HMOs than for new HMOs -- this needs further investigation.

PCC PSH have offered no rationale whatsoever for denying 5 year Licences to unaccredited Landlords with a long established track record of managing Mandatory HMOs without issue. The drop to a 2.5 year Licence term and requirement then to pay the Part 1 fee twice in 5 years lacks clear justification, esp. on Mandatory Renewals, c.f. a simple discount for accreditation.

The new Licence Conditions - which apply to all Licence Renewals as well as new Initial Licences - are far more extensive and onerously prescriptive than the Conditions in current Licences, including for HMO managers who have well-run established operations. Some of the new Licence Conditions even appear to be unlawful !

Detailed concerns were raised with PSH following PDPLA's August meeting, but key points raised were not included in the consultation responses or otherwise presented by PSH to PCC Cabinet, here's a summary of some:

• Licence Conditions in contravention of Data Protection Act 2018 (GDPR):
  • Condition 20 breaches GDPR rules with respect to Tenant's personal data, and note that Landlord, as well as PCC, would be in breach.
    
  • Condition 24 breaches GDPR rules with respect to Landlord's personal data.
    
    
• Licence Conditions (and published Requirements and standard letter content) that conflict with Unfair Trading Regulations 2008 (UTR):
  • Condition 10 in requiring Landlords of joint-let HMOs to procure garden waste collection services from a specific provider.
  • Condition 7 restricting PAT test service providers to those who are also registered for building compliance work.
  • Note here that other documents published/pro forma letters regularly used by PCC PSH are also in breach of UTR in omitting that valid Building Compliance Certificates are obtainable from registered independent Building Inspectors, not exclusively from PCC's Building Control Services.
    
    
• Condition 18 contravenes Housing Act 2004 Section 67 (6):
  • "A licence may not include conditions requiring (or intended to secure) any alteration in the terms of any tenancy or licence under which any person occupies the house."
• Licence Conditions that can easily be construed as not meeting the "reasonable and practicable" test of Housing Act 2004 Section 67 2(b) on prevention/reduction of ASB:
  • Condition 24 when neighbouring properties are HMOs or other lets with a high turnover of occupants.
  • Conditions 25 & 26 for sole-traders and where agents are used.

Overall in this new set of Licence Conditions there's a thread which is not consistent with the overall intent of Housing Act 2004 - by being overly prescriptive on "how" things are done and not just "what" - PCC PSH is attempting to impinge disproportionately and unreasonably on the Landlord's right to operate their business in an efficient manner.  Each PRS Landlord naturally operates in their own way in their own tiny niche and it's that diversity that makes the whole PRS market work; PCC PSH clearly lack that fundamental understanding.

The full set of new conditions here: Mandatory Licensing of HMOs - Appendix 4 - Licence conditions.pdf (portsmouth.gov.uk)

It is hard to understand what PCC PSH think is achieved by being so prescriptive when the existing Licence Conditions together with Housing Act 2004 and Management of Houses on Multiple Occupation Regulations 2006 already provides them the means of bringing Landlords to book who do not appropriately manage gardens, forecourts, refuse storage, or respond to ASB reports that PCC Cabinet are understandably concerned about. It appears that they don't understand the statutory tools they already have.

Requiring brown bins outside every joint let HMO together with the existing green and black bins will pollute the street scene even more, especially where houses are flat-fronted. It is inevitable that the new brown bins will be misused by thoughtless tenants or their neighbours just as green bins are, so there'll be an even greater number of unemptied bins clogging the footways or being odorous in forecourts than at present. The details of these new conditions are extremely poorly thought-through, not adequately reviewed, and counter-productive.

Whilst there is good sense in aligning the two HMO Licence schemes; it is the set of Licence Conditions that are tried and tested in the Mandatory scheme which are far less problematic than the yet-to-be-implemented set of conditions of the Additional scheme. And the default 2.5 year Licence period for Mandatory Renewals with additional Part 1 fees to pay is a matter well-established landlords might be challenging strongly. The alignment of the two schemes has failed to result in a common structure that is rational for both Additional and Mandatory application.

These are very substantive issues, for PCC as well as Landlords, in the newly approved Licence Conditions, especially where they are in contravention of other pieces of legislation such as GDPR. PCC Cabinet had a right to know about these issues beforehand to inform their decision, but seem to have been blindsided.

PDPLA members might urge their elected PCC Councillors revisit this matter and take a more in-depth look at the problematic details, with a view to making some necessary improvements, prior to implementation on December 1st.