Crucial new restrictions to selective licensing schemes of private rented homes have been announced by housing minister Brandon Lewis.

The changes – which are likely to stop a number of proposed schemes in their tracks – come into effect very shortly on April 1.

From then, councils will need specific Secretary of State approval before introducing a licensing scheme covering more than 20% of their geographical area or affecting more than 20% of private rented homes in the target area.

At present, councils can introduce selective licensing on the grounds of low housing demand and/or significant anti-social behaviour without government approval.

In a letter to local council leaders, Lewis makes crystal clear his disapproval of blanket licensing schemes – the type introduced by Newham and Liverpool.

The latter’s city-wide scheme will mean that each of 50,000 private rented properties will have to be licensed from April 1. Under the new regime, the scheme might well not have got through.

Describing such schemes as having major drawbacks, Lewis says: “Licensing can play an important role when it is strictly focused on discrete areas with specific problems.

“However, the blanket approach adopted by some local authorities has major drawbacks.

“This is because it impacts on all landlords and places additional burdens on reputable landlords who are already fully compliant with their obligations, thereby creating additional unnecessary costs for reputable landlords which are generally passed on to tenants through higher rents.

“The vast majority of landlords provide a good service and the Government does not believe it is right to impose unnecessary additional costs on them, or their tenants. Such an approach is disproportionate and unfairly penalises good landlords.”

This change will have a significant impact on local authorities that are currently consulting, or have recently consulted, on new borough-wide selective licensing schemes.

Richard Tacagni, managing director of consultancy and advice firm London Property Licensing, said: “The housing minister’s decision will I’m sure be welcomed by many landlords and letting agents across the country.

“Whilst carefully targeted licensing can help to address issues of low demand or anti-social behaviour, councils already have strong powers to tackle criminal landlords who let out unsafe properties and place tenants’ lives at risk through an intelligence led, risk-based approach.

“The challenge for councils is how to resource this enforcement activity when local authority budgets are under so much strain. But rules already prevent licence fee income from being used to enforce against landlords who evade licensing.”

The changes will not impact on mandatory HMO licensing and additional licensing schemes, and will not be applied retrospectively to selective schemes already in force.

Only last week, regulations were laid in Parliament to extend the criteria for selective licensing.

When these come into force, selective licensing must be restricted to areas with a high proportion of private rented homes. A scheme would also need to satisfy one or more conditions concerning housing conditions, migration, deprivation or crime.

The minister’s letter is linked below

Housing Minister SL letter