Wolverhampton City Council

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1 Agenda Item: 5D Wolverhampton City Council OPEN EXECUTIVE DECISION ITEM (AMBER) CABINET Date 20 JULY 2011 Portfolio(s) Originating Service Group(s) COUNCILLOR P. BILSON/ECONOMIC REGENERATION AND PROSPERITY EDUCATION AND ENTERPRISE Contact Officer(s)/ Telephone Number(s) 0553 LESLEY WILLIAMS Title TO APPROVE THE DESIGNATION OF THE TRADITIONAL ALL SAINTS AREA AS A SELECTIVE LICENSING AREA UNDER THE HOUSING ACT 2004 KEY DECISION: IN FORWARD PLAN: NO NO RECOMMENDATION It is recommended that: 1. The designation of the traditional area, as identified in Appendix 1, as a Selective Licensing area under the Housing Act 2004 for a five year period from 4 January 2012 be approved. 2. The Licence Fee structure outlined in the report in section 5.3 be approved. 3. Annual reports on the impact of the scheme are submitted to Cabinet (Resources) Panel for information as part of the Council s wider private sector housing and selective licensing proposals. 1 open decision amber

2 1. PURPOSE 1.1 The purpose of this report is to seek authorisation from Cabinet to designate the traditional area of, as identified in Appendix 1, as a Selective Licensing area under the Housing Act 2004, for a period of five years commencing on 4 January Cabinet is also requested to agree the proposed fee structure as outlined in 5.3 below, which has been developed taking account of a number of existing schemes elsewhere in the country. 2. BACKGROUND 2.1 A significant amount of investment has gone into the area over a number of years, however, it has been well documented that the traditional core area of remains predominantly pre-1919 terraced property that is over reliant on private renting. Of the 524 residential properties in the proposed area (outlined as Appendix 1), in excess of 194 properties are currently privately rented and this number is increasing as a result of the fragile housing market and low property values. This equates to approximately 37% of the stock, with the City and national average of private renting around 12%. In a bid to support the housing markets and the surrounding developments, the introduction of a Selective Licensing Scheme requiring all privately rented properties in the designated area to have a licence to operate should bring about significant improvements in both housing management and stock condition. 2.2 The Council has tried a number of intervention initiatives over the past few years to encourage improvements in stock and housing management practices, such as introducing a local accreditation scheme. However, as this was a voluntary measure, the success was limited and very little improvement has been noted. There is still a lack of formal regulation in the private rented sector. As such, landlords and managing/letting agents do not have to demonstrate that they are competent or able to manage tenants, tenancies or properties well. In parts of, this is very much in evidence as property conditions are poor and anti-social behaviour goes unchecked. 2.3 Consequently consideration was given to the establishment of the traditional area as a Selective Licensing Area. Selective licensing schemes are highly targeted measures to tackle the most severe problems in the private rented sector. Selective Licensing is intended to address the impact of poor quality private landlords and antisocial tenants and focuses on improving the management of privately rented properties. 2.4 In November 2009 the ABCD Revenue Sub Board approved grant funding for a Selective Licensing Project Officer to prepare information and carry out a feasibility study and local consultation with regards to designating parts of (locally referred to as traditional ), as a Selective Licensing Scheme area. 3 SELECTIVE LICENSING SCHEMES 3.1 The Housing Act 2004 provides Councils with the power to introduce licensing of privately owned rented properties in selected areas with the aim of improving conditions for local tenants and the surrounding community. 3.2 Selective Licensing requires all private rented properties within a designated area to be licensed. Certain standards and conditions are required to be met in order for a licence to be granted. Failure to meet such conditions and standards may result in prosecution 2 open decision amber

3 and /or the making of a management order which will transfer responsibility for managing the property to the Council. Selective Licensing gives Councils the power to make Landlords accountable for the management of their property and tenants. It should encourage absentee or unprofessional landlords to use the services of an agent or other appropriate person to manage their property effectively. 3.3 It is a criminal offence to let a property in a Selecting Licensing area without having a licence. On conviction this may result in a fine up to 20,000. For any period where an unlicensed property is being privately rented, an application can be made to the Residential Property Tribunal for a Rent Repayment Order for up to 12 months rent to be repaid including housing benefit payments. 3.4 In order to progress the determination of an area as a Selective Licensing Area the Council has to follow a due legal process. The Local Authority must conduct a consultation of no less than 10 weeks, and must ensure that they fully consider all of the evidence before making a decision to designate; to ensure that they are not subject to judicial review following the making of the decision to designate. The Council can be confident that all due processes have been followed leading up to this report. The guidance document Approval steps for additional and selective licensing designations in England has been followed, consultation has successfully been carried out over the correct timeframes and all the necessary supporting evidence is contained within the Designation Report Appendix The Designation Report has evidenced that persistent and significant problems experienced in parts of are as a direct consequence of poor property management and conditions, and anti-social behaviour attributed to private rented property; despite sustained interventions by ABCD and the Council. This report to designate traditional is therefore a last resort measure. 4 PROPOSALS 4.1 The proposals are in summary: To designate the traditional area of as a Selective Licensing Scheme from 4 January 2012 for a five year period, subject to annual reviews To agree the fee structure as set out in 5.3 of this report To agree the mechanisms for compliance and enforcement as detailed in the Designation Report on page 19 ( ) 5 FINANCIAL IMPLICATIONS 5.1 The implementation of a Selective Licensing Scheme is proposed to be a stand-alone project based in the Housing Market Interventions team, capable of recovering the majority of its costs. ABCD funded a Project Officer post to carry out the feasibility study at Scale 6/SO1 with support and guidance from the Principal Housing Assistance Officer. This post has been temporarily extended pending the decision to proceed with the designation of traditional as a Selective Licensing area, and further supervisory and administrative support can be met from within existing resources. 5.2 There is no current provision in the budgets for the scheme and Selective Licensing Project Officer post; however, the proposal is that the post is established within the Housing Market Interventions Team, on the current grade, and the income generated will 3 open decision amber

4 be sufficient to fund the annual cost of 31,900; certainly for the first two years of the scheme. It is therefore proposed that this post is established as a two year fixed period, pending current restructuring of the private sector housing service area (currently being considered). 5.3 Based on calculations and best practice from other schemes implemented nationally, a licence fee per property is proposed of for a five year licence. This will generate fees in excess of 112,700, with an estimated 50% of this income collected in 2011/12 and the remainder collected in 20012/12, based on current predictions and levels of renting in the area. This compares to the cost of for mandatory licenses for Wolverhampton s Houses in Multiple Occupation (which will be reviewed and is likely to increase next year in order to ensure full cost recovery). Fee Structure Initial application fee for a licence Fee Structure Penalties (increased costs) In the event of property being found by officers surveying for licensable properties, a finders fee will be added unless the landlord is able to demonstrate that they became the owner of the property within the previous 12 weeks Additional charge to be added following second and each subsequent letter sent chasing licence application (this may be in addition to fees above) Additional charge to be applied in the event of a re inspection being required during the licence period as a result of poor management and complaints Additional charge for missing an appointment during inspection process Fee Structure Discounts (discounted from fee payable) 2nd and subsequent properties in area Membership of MLAS (Midland Landlord Accreditation Scheme) or other recognised Accreditation Scheme Membership of a Professional Letting Agents body with recognised code of conduct (not in conjunction with MLAS discount) The Council can only charge landlords for what is reasonable, and Members are asked to approve the fee structure above. Best practice and experience of other licensing authorities indicate a licence will take on average 22 hours to process; discounts can be passed on to landlords who come forward early and provide information as required, and have membership of recognised professional bodies. This equates to approximately 2.00 per week per property over the lifetime of the scheme. As it is the owner s responsibility to apply for each licence, the costs and penalties increase where they do not come forward and attempt to avoid licensing. The aim of the proposed fee structure therefore, is to weight the financial burden on those landlords who fail to comply with the scheme. [AK/ /I] 4 open decision amber

5 6. LEGAL IMPLICATIONS 6.1 Section 80 of the Housing Act 2004, and the Housing Act 2004: Licensing of Houses in Multiple Occupation and Selective Licensing of Other Residential Accommodation (England) General Approval 2010 provides the local authority with the power to designate a selective licensing scheme. 6.2 A designation of an area as subject to Selective Licensing cannot come into force any earlier than three months after the date on which the designation is confirmed. It is therefore proposed that, subject to Member approval in July 2011, the Wolverhampton scheme is designated to commence from 4 January 2012 for a maximum period of 5 years. [SH/ /X.] 7. EQUAL OPPORTUNITIES IMPLICATIONS 7.1 This report has equal opportunities implications in that it seeks to address issues relating to substandard private sector accommodation, and as such seeks to target resources towards financially disadvantaged or vulnerable households living in non-decent homes. 7.2 Equality issues have been considered throughout the consultation period following government guidelines. A full Equality Impact Assessment of this policy will be undertaken as part of the scheme implementation and impact monitoring. 8. ENVIRONMENTAL IMPLICATIONS 8.1 This report has environmental implications in that substandard housing conditions can have a substantial detrimental impact on neighbourhoods. The purpose of a Selective Licensing Scheme is to improve the physical conditions of privately rented property. Other Local Authorities that have adopted these measures have reported significant positive environmental improvements across designated areas. 9. SCHEDULE OF BACKGROUND PAPERS proposed designation area map attached for information as Appendix 1 Designation Report (draft) attached for information as Appendix 2 ABCD Succession Strategy Renewal and Investment Strategy ABCD Delivery Plan 2009/10 5 open decision amber

6 1 to to JEFFS AVENUE El Sub Sta a St Mary's Hall Appendix 1 Selective Licensing 161.2m 156.1m Posts TCB Shelter The Royal Shelter Posts NAVIGATION STREET 30 Key POWLETT STREET 157.6m BM m Ward Bdy Posts 35 Selective Licensing Development Sites Garage 20 Vicarage Road/Raby Street Development Site 2 2a VICARAGE ROAD 151.7m 161.2m 158.5m Playground Vicarage TCB 157.0m STEELHOUSE LANE BILSTON ROAD Midland Metro Works SUTHERLAND PLACE SUTHERLAND PLACE Garage 3 Boro Const Bdy Def Garage RABY STREET to 63 Works Builder's Yard Cleveland House Car Park 152.1m BM m Works JENNER STREET Warehouse Warehouse Works a GORDON STREET GORDON STREET Depot 159.1m LB m El Sub Sta Warehouse Def Ward Bdy 79 Gordon Street Development Site LEVER STREET Boro Const Bdy 68a 68b 70 BM m DARTMOUTH STREET PH 56 GRANVILLE CLOSE DARTMOUTH STREET 75 GRANVILLE STREET RABY STREET m m GRANVILLE STREET GRANVILLE STREET Warehouse Depot HOWARD STREET ADELAIDE WALK 28 Playground Works Ward Bdy Def 160.0m m Boro Const Bdy Bradburn and Wedge Building 123 MAXWELL ROAD Playground Housing Office GOWER STREET Games Courts El Sub Sta PH 160.3m Boro Const Bdy ALL SAINTS ROAD m m ALL SAINTS' ROAD GOWER STREET 153.0m Boro Const Bdy CR 151.2m 70 Warehouse Police Station 160.0m CR VICARAGE ROAD BM m Church and Community Centre GROVE STREET PH 32 BIRMINGHAM ROAD Works All rights reserved Wolverhampton City Council OS Licence Number Copyright 2011 Garage 160.6m Surgery BOWDLER ROAD 63 The Workspace and Learning Centre 1:1,250 BM m 1 PARKYN STREET For extra copies of this plan, or for more information regarding Copyright issues, contact the Council's "Asset Management Group" on Quote map reference "Appendix 1 Selective Licensing A2.mxd" This plan was produced on 13/12/10

7 Appendix 2 Contents June 2011 Final Designation Report 1

8 1. Introduction 3 2. Background to Selective Licensing 3 3. The Selective Licensing Area 4 4. Housing Tenure Analysis 5 5. Empty Property Analysis 6 6. Development Sites 8 7. Energy Efficiency 8 8. Crime 9 9. Housing Market Analysis Consultation Proposed Approach to Selective Licensing in Financial Considerations License Details Sanctions Selective Licensing Successes Conclusions Recommendations 20 June 2011 Final Designation Report 2

9 1. INTRODUCTION 1.1 The Local Authority (LA) recognises the importance of the private rented sector (PRS) within local housing markets and, with its partners, has supported the PRS over a number of years through various initiatives. We have provided financial assistance to improve the physical condition of properties through grant funded group repair schemes, developed a landlord accreditation scheme, implemented an Empty Property Strategy and introduced a Private Sector Leasing Scheme. 1.2 The PRS in Wolverhampton is recognised as an essential element of the housing offer that is available to current and prospective residents of the City. Wolverhampton has concentrations of private rented accommodation offered at affordable prices; however, traditionally these properties are located in areas of deprivation where the PRS is generally below standard in both management and physical terms. These properties are statistically more likely to be the hardest to heat, concentrated in neighbourhoods that suffer the effects of crime and anti social behaviour, and house families on low incomes. 1.3 Some landlords in Wolverhampton have already engaged with the LA and become accredited; undertaking to improve property conditions and management standards through a voluntary approach. However, as far as we are aware, there is only one accredited landlord operating in the proposed Selective Licensing area of. 1.4 Selective Licensing is seen as a key initiative in order to deal with in neighbourhoods where problems have persisted despite other partnership and statutory interventions. The introduction of a Selective Licensing Scheme in will not only support the ongoing area based regeneration initiatives that have been undertaken over the past ten years, but will make an invaluable and significant contribution towards the long term sustainability of the area. 2. BACKGROUND TO SELECTIVE LICENSING 2.1 Selective Licensing schemes are highly targeted measures used to tackle the most severe problems in the PRS and contribute towards the regeneration of an area when used as a tool to support other initiatives. However, it is also nationally recognised that a Selective Licensing Scheme should not be seen as a panacea or operate in isolation. Strategic relevance to the LA s long term aims, objectives and policies is essential. Areas with poor management and property standards can contribute to housing market failure, however, a Selective Licensing scheme can provide the opportunity for an area to be improved specifically in relation to environment housing conditions and property management. 2.2 Prior to designating an area for Selective Licensing, the LA must consider whether there are other courses of action available to them that might provide an effective means of dealing with the issues which the scheme is intended to address, and consider whether the scheme will significantly impact on those issues successfully. 2.3 Implementation of the scheme must be consistent with the LA s overall Housing Strategy and be co ordinated with its approach to dealing with homelessness, empty properties and anti social behaviour. June 2011 Final Designation Report 3

10 2.4 Selective Licensing will enable measures to be introduced which compel landlords to manage their property adequately and deal properly with all aspects of property management, from referencing perspective tenants through to tackling anti social behaviour caused by tenants residing in their property. 2.5 The LA has a duty to consult on the proposal to Selectively License an area with all those persons likely to be affected by it; including landlords, tenants, social housing providers, local businesses, the PCT and any party with a vested interest in the proposed area. 2.6 The Government have removed the requirement on LA s authorities to seek Secretary of State approval prior to the implementation of a Selective Licensing scheme in their area; in line with the localism agenda. 2.7 The feasibility and development of this proposal has been funded by the ABCD New Deal for Communities Initiative. 3 THE ALL SAINTS SELECTIVE LICENSING AREA 3.1 is a small residential area in the northern part of the Ettingshall Ward of Wolverhampton, located to the South East of the City centre; with good transport links including the Midland Metro. 3.2 The area is ethnically diverse, with a large Sikh Punjabi speaking community; with many householders utilising the retail and faith buildings locally. 3.3 is a priority regeneration area for the LA that has received formal recognition within a number of the Council s strategic documents including: Renewal & Investment Strategy 2007 ABCD Delivery plan Wolverhampton Futures Housing Plan Wolverhampton Community Sustainable Strategies ABCD Succession Strategy The housing stock, which was predominately privately owned, has experienced substantial growth within the private sector market during the last twenty years; the PRS is now the largest tenure in the area. This, in some instances, has contributed to poor property management, resulting in the area having some of the poorest quality private sector stock as identified in the City s Private Stock Condition Survey (2006). In addition to poor quality housing, historically the area has experienced problems with crime, Anti Social Behaviour, prostitution, fly tipping and other issues symptomatic of an area suffering multiple deprivation. 3.5 Under the Selective Licensing proposals, the owners of all private rented properties in the All Saints area will require a licence to operate within the designated area, unless the tenure changes to owner occupation or Private Sector Leasing. Accreditation of landlords in the area, in a bid to drive up standards, has been unsuccessful. 3.6 Based on a number of supporting factors, as contained within this report, it is proposed that all of the private rented properties in the following streets will be subject to the scheme: Adelaide Walk June 2011 Final Designation Report 4

11 Road Dartmouth Street Gordon street Gower Street Granville Close Granville Street Maxwell Road Raby Street Vicarage Road A map of the proposed designation area and adjacent development proposals in is attached as Appendix HOUSING TENURE ANALYSIS Proposed Selective Licensing Area 4.1 Property Type and Tenure Profile The majority of the pre 1919, 2 storey terraced housing in are privately owned or rented. Some properties have small defensible gardens to the front and court yard rear gardens, with shared gated alleyways, whilst others have frontages directly onto the footpath. Properties are often difficult to heat owing to their solid brick construction. 4.2 The area identified for the Selective Licensing proposal contains 524 properties. The tenures have been identified using an analysis of Council Tax records and other data gathered from social housing providers. The tenure mix is shown in the chart below: 4.3 Commercial There are 13 commercial properties in the proposed Selective Licensing area (excluding properties in the development area shown in Appendix 1). Four are being converted for Social Housing by Wolverhampton Homes One is being converted into a Wolverhampton Homes Office June 2011 Final Designation Report 5

12 Two are vacant and on the market for sale Four are trading as intended Two are voluntary sector projects 4.4 Owner Occupied There are 130 properties identified as owner occupied properties in the proposed Selective Licensing area. Should the Selective Licensing proposals be progressed, owner occupiers will not be required to be licensed. However, should tenure change to privately rented during the programme a licence will be required. 4.5 Private Rented There are 194 privately rented properties (at the time of this report) within the proposed Selective Licensing area. There are 28 properties managed by portfolio landlords (2 or more properties), and 166 of the landlords have just one property in the area. 4.6 Social Housing Midland Heart and Wolverhampton Homes both have large portfolios in the proposed Selective Licensing area: Midland Heart has 106 properties in the proposed Selective Licensing area Wolverhampton Homes has 56 properties in the proposed Selective Licensing area 4.7 Development There are 23 commercial and residential properties in the Vicarage Road/ Raby Street development area shown at Appendix Private Sector Leasing Two properties are being managed by the Councils appointed managing agents (1 by Wolverhampton Homes and 1 by bchs). 5 EMPTY PROPERTY ANALYSIS Selective Licensing Area 5.1 Empty properties are having a major detrimental impact in the area identified and solutions for these properties will need to be found if confidence in the housing market is to be improved. In addition to the detrimental impact on the street scene, which makes properties difficult to sell or rent, these properties are often a magnet for anti social behaviour such as arson, theft of metals, fly tipping and vandalism. 5.2 There are 55 empty properties in the area; double the average number for the City of Wolverhampton in percentage terms according to Council Tax data. Long term empty property is defined as empty over a six month period. Council Tax and Physical Inspection Data September 2010 June 2011 Final Designation Report 6

13 * Excludes empty properties within the development sites. 5.3 Physical Inspection The Council s adopted Empty Property Strategy categorises empty properties for action using the following methodology: Red properties that are detrimental to the area Amber properties that are in decline Green properties that are not problematic A physical inspection of the empty properties within the proposed Selective Licensing area was carried out on 4 th October 2010, and the empty properties were analysed using the above criteria. 5.4 Tenure Analysis of Detrimental Properties The detrimental affect of empty properties occurs irrespective of tenure so a co ordinated approach to dealing with long term empty property is required to achieve sustainable change in the area. June 2011 Final Designation Report 7

14 5.5 Detrimental Properties Wolverhampton City Council There have been a number of public sector interventions to assemble sites for development. The majority of properties have either been demolished or are awaiting demolition (refer to Appendix 1). A further 6 properties (plus 2 which are not currently considered detrimental) have been purchased by the LA when proposals for a wider programme of demolition was planned. As these plans have now been scaled back, these properties will be offered to Preferred Housing Association Partners in December 2010 as either Home buy or Social Housing refurbishment opportunities. Should a preferred Housing Association partner not be found to bring these properties back into use, further project proposals could be considered as an alternative to these properties being offered for disposal to the private sector, due to the already high number of existing PRS stock. 5.6 Detrimental Properties Midland Heart Midland Heart had 3 detrimental properties in the Selective Licensing area at the time of survey. These properties were being made ready for letting and can be considered a result of tenancy turnover in a low demand area for the Association. 5.7 Detrimental Properties Private Owners/Landlords There are 11 detrimental properties in the area that are privately owned. The Councils Empty Property Officers are taking action in line with the LA Empty Property Strategy in a number of cases. Two properties are currently the subject of a Compulsory Purchase Order, one is in the process of being sold following a bankruptcy order, and negotiations are underway with a number of other owners to broker a voluntary solution. 5.8 Recent Empty Property Success Wolverhampton Homes has secured two successful bids with ABCD to refurbish 13 two and three bed roomed family homes, classed as long term voids; some having been empty for a number of years located within the Selective Licensing area. This investment has been supported by Decent Homes funding to ensure that the properties are brought back into use, thus complementing other planned regeneration work in the neighbourhood. By investing in these properties, Wolverhampton Homes has shown a further commitment to improving the area. June 2011 Final Designation Report 8

15 6 DEVELOPMENT SITES Proposed Selective Licensing Area 6.1 The Council has requested development proposals for the sites edged in blue and identified as Phase 1 and 2 in Appendix 1. Developers have made proposals and the Council will be working with the selected developer to bring forward development of these sites. Phase 1 does not require any further site assembly. There are still a number of properties to be acquired in Phase Proposals for the development of The Royal Hospital site are currently out to public consultation; a planning application is expected to be registered with the LA by April ENERGY EFFICIENCY in 7.1 Affordable Warmth The LA set up an Affordable Warmth scheme in 2001 which coordinates funding and delivers insulation to properties across the City. This scheme has to date received in excess of 2,500 referrals. The poor thermal efficiency of the properties, due to their solid brick construction, has been recognised; however energy efficiency and heating measures have only been successfully completed in the following streets: Street Total no. Gordon Street 1 Gower Street 2 Granville Street 2 Maxwell Road 5 Raby Street 4 Vicarage Road 8 The reasons for the low take up of free and discounted insulation measures are unquantified, but the high levels of privately rented properties may be a contributing factor. 7.2 Wolverhampton Homes An initiative to refurbish 13 long term voids in the area includes piloting the use of renewable and low carbon technologies. This will dramatically reduce the carbon production, energy demand and the possibility of fuel poverty for the incoming families. Over a period of time the utility bills will be monitored and evaluated to measure the energy saving costs, energy and CO2 emissions, in order to quantify the benefits and plan future investment in Council owned and private housing stock. June 2011 Final Designation Report 9

16 8 CRIME Including Anti Social Behaviour and Environmental Crime 8.1 Overall recorded crime levels for the area have fallen over the past three years. However, the Ettingshall Neighbourhood Tasking Group, which is a stakeholder multi agency forum, believe that this decrease is due to the under reporting of incidences rather than an actual improvement in instances of crime in the area. The Tasking Group comprises members of: Anti Social Behaviour Unit Social Services Police Wolverhampton Homes Neighbourhood wardens West Midlands Fire Service Neighbourhood Manager Youth Service Selective Licensing Project Officer 8.2 Reported crime in the Area 2006/7 2008/9: Crime Category City 2006/7 (No. of recorded crimes) 2007/8 (No. of recorded crimes) 2008/9 (No. of recorded crimes) Change between 2006/7 and 2008/9 Rate per 1,000 population 2008/9 Change between 2006/7 and 2008/9 Rate per 1,000 population 2008/9 Total Crime % % Domestic Burglary % 24.2* -3% 15.5* Burglary Other % % 8.3 Theft of Vehicle % % 3.7 Theft from vehicle % % 7.5 Robbery % % 4.1 Violent crime % % 18.1 Criminal Damage Theft from Person % % % % 0.9 Source: West Midlands Police (* = rate per 1,000 households) [: Population 4,024 Households 1,573] June 2011 Final Designation Report 10

17 Notes: Although over the three year period overall recorded crime fell by a greater amount than the city average, the rates in remained well above the city average Rates for all individual crime categories are greater in than the city average Recorded domestic burglary figures in rose whilst the city average fell Robbery figures increased at a greater rate in compared to the city average increase The key crime and disorder issue over recent years in the area has been the vice trade and associated issues such as illegal drugs. There is no specific data available which can quantify this e.g. drug crime data is often more reflective of police activity than actual levels of crime. 8.3 Anti Social Behaviour and Environmental Crime ASB and environmental crime is below the City average in the Selective Licensing proposal area. However, this may again be due to under reporting as contended by the Ettingshall Tasking Group. Incidents reported to the Public Protection division for the year 2009/10 in the proposal area is as follows: 8.4 Housing Standards Complaints The Local Authority s Regulatory Services and Private Sector Housing Standards teams deal with housing complaints across the City, which includes issues of property disrepair and, public health issues such as fly tipping. The number of Housing Standards complaints, in relation to poor property conditions, is almost 3 times the City average in the proposal area. Complaints received relating to housing standards in 2009/10 for privately rented property can be evidenced as: June 2011 Final Designation Report 11

18 8.5 Four Improvement Notices were served on private sector landlords where enforcement was necessary to remove the hazards in the properties concerned. 9 HOUSING MARKET ANALYSIS 9.1 Property Sales In line with the economic downturn, the number of property transactions has fallen dramatically in the proposal area: 9.2 Property Values Properties in the proposal area have consistently had lower sales values than Wolverhampton in general: June 2011 Final Designation Report 12

19 This tells us that properties in the proposal area sell for 39,109 less than the average property in Wolverhampton (Land Registry Data). A physical survey undertaken of the area on 12/10/10 identified one three bedroom property for sale in the area with an asking price of 69, Private Sector Property Rental Values Information on rental yields is difficult to analyse at a local level as no historic information is collated. The Local Housing Allowance (LHA) which is now used to set levels of housing benefit is based on an average of the broad rental market area for Wolverhampton. There have been no significant changes other than a fall of 11 PCM for 2 bedroom properties since the start of the year. The physical survey of the proposal area on 12/10/10 also identified 8 residential properties for let. When compared to the Local Housing Allowance rates these properties were being marketed for rent as follows and in all but one case were below the LHA rate June 2011 Final Designation Report 13

20 Street Property Type Local Housing Variance Allowance Rate (pcm) Vicarage Road 1 bed Vicarage Road 3 bed Gordon Street 2 bed Gordon Street 3 bed Adelaide Walk 2 bed Road 3 bed Road 3 bed CONSULTATION 10.1 The Housing Act 2004 previously required LAs to apply for Secretary of State for Communities and Local Government (CLG) for approval to designate areas for discretionary licensing. Section 80 of the Housing Act: Licensing of Houses in Multiple Occupation and Selective Licensing of Other Residential Accommodation (England) General Approval 2010 provides LAs with the power to designate a Selective Licensing scheme in line with the Future is Local agenda The general approval states that the LA must conduct a consultation of not less than 10 weeks. The LA must ensure that they fully consider all the evidence before making a decision to ensure that they are not subject to judicial review following the making of the designation There is a risk of judicial review where the correct processes leading to the declaration of a Selective Licensing scheme have not been properly followed. The Council can be confident that all due processes have been followed in the preparation of this Designation Report. The CLG guidance document Approval steps for additional and selective licensing designations in England has been followed and guidance sought from CLG where appropriate. Consultation has successfully been carried out within the designated timescales and the evidence is summarised in the following paragraphs There are 524 properties in the Proposed Selective Licensing Area and the percentage consultation response rate when compared to other LA s currently delivering a Selective Licensing scheme is: Local Authority Resident Response Rate Landlord Response Rate Stakeholder Response Rate Manchester 4 % 2 % u/k Newcastle 6 % 13.7 % 10 % Oldham 2 % 15 % 0 % Wolverhampton 8.1 % 12 % 0 % 10.5 Approach to Consultation The approach to initial consultation with residents, landlords and other stakeholders followed best practice and guidance. Consultation concluded with residents on 27 th September 2010 and with landlords and other stakeholders concluded on 4 th October June 2011 Final Designation Report 14

21 10.6 Of the 524 properties in the proposed Selective Licensing area identified, every household, business and stakeholder was invited to comment on the proposal by means of a questionnaire, through face to face meetings, by visits to their homes, locally held surgeries, focus groups, fun days and through direct mailing of literature Preliminary Consultation This took the form of a meet and greet with stakeholders and partners, in order to seek views about the introduction of a Selective Licensing scheme in the area and to obtain a broad overview of their remit. At the same time the aim was to promote the Selective Licensing scheme proposal and provide a general awareness. This initial consultation took place with: Action Network (ASAN) Children Centre Clarkes Stores Anti Social Behaviour Unit Ettingshall LNP Empty Property Team Regeneration Team Tenancy Deposit Scheme Tenancy Sustainment Team Dartmouth Arms Public House Pharmacy 10.8 Resident Consultation 8.1% (44 out of 524) of residents in the proposal area returned the questionnaire and responded as follows: 16% (7) knew of households where tenants had been evicted and subsequently re housed close by 37% (16) had experienced problems with privately rented property in the area 77% (33) thought the council should do more to control and regulate private landlords 88% (38) thought landlords should make sure tenants know anti social behaviour is unacceptable 77% (33) thought landlords should demand references from tenants 96% (41) thought landlords should take action against tenants who cause anti social behaviour 93% (40) thought landlords should ensure properties are in good condition 49% (21) thought not many landlords acted responsibly, 21% (9) thought most landlords acted responsibly and 14% (6) thought landlords never acted responsibly 70% (30) thought privately rented properties should be licensed 56% (24) thought licensing would improve the area 39% (17) felt completely safe in their home 30% (13) would be willing to become part of a Selective Licensing focus group Resident Quotes... the anti social behaviour, drugs and bad tenants have made it difficult landlords to maintain properties, make tenants responsible for upkeep/front of property... June 2011 Final Designation Report 15

22 A full analysis of resident survey responses is shown as Appendix Landlord Consultation 12% (22 out of 170) of private sector landlords in the proposal area returned their questionnaire and responded as follows 91% (20) agreed that the council should intervene in areas suffering from low demand and anti social behaviour 50% (11) agreed that Selective Licensing could have a positive impact in the area 95% (21) agreed that poorly maintained and managed properties contributed to area decline 77% (17) agreed that landlords have a responsibility to manage their property satisfactorily and obtain references 50% (11) agreed that Selective Licensing will ensure good management and maintenance 50% (11) agreed that selective licensing would reduce anti social behaviour 55% (12) had problems getting honest and accurate references for tenants 41% (9) of landlords agreed they should take action against anti social tenants in their property 36% (8) agreed that Selective Licensing would increase rental values and property prices, 46% (10) didn t know 46% (10) agreed that the council should designate areas for Selective Licensing 55% (12) agreed with the Selective Licensing proposals and 29% didn t know 41% (9) would give time to a Selective Licensing focus group Landlords Quotes... there should be positive, active and quick action against anti social behaviour. Landlords/agents should have support and guidance... I have only been in the area a short while and first impressions of the area are not good...if I had done my research I would not have bought in the area... A full analysis of landlord survey responses is shown as Appendix Agent Consultation Local letting agents were also surveyed. Only one letting agent responded to the questionnaire, stating that they did not operate in the area due to the quality of property and the type of tenants generally attracted to such property. 11. PROPOSED APPROACH TO SELECTIVE LICENSING IN ALL SAINTS 11.1 As identified in the preceding sections, it is clear that many of the issues affecting the proposed scheme area result in a detrimental quality of life for local residents, and many of these issues cannot be specifically attributed to any single housing tenure From a Private Sector Landlord perspective, rental yields and additional costs associated with tenancy turnover make the area a difficult market to operate in. Anecdotal evidence that landlords are relinquishing their interest in favour of more stable housing market areas or keeping their property empty in the hope that the general housing market will improve are supported by the evidence gathered for this report The LA has two Neighbourhood Sustainment Officers that are dedicated to bringing long term empty properties back into use, through a range of measures from advice and guidance to enforcement. One of these officers has been tasked with looking at tackling problematic June 2011 Final Designation Report 16

23 long term empties as a priority in order to support the aims of this scheme. Their focus will specifically be on: Bringing problematic empty properties back into use Encouraging take up of the Private Sector Leasing scheme Encouraging landlords to become members of an accredited or professional body 11.4 It is important that the focus of any work around the private sector in concentrates on restoring confidence and facilitating local improvements the area; visible measures for the residents. However, in order to support the Selective Licensing proposal and to bring forward a cross tenure approach, the relevant officer resources need to be identified if sustained improvements are to be achieved Following best practice across the country, it is suggested that the Selective Licensing Officer would broadly be responsible for the implementation of the scheme; including the issuing of licenses, spot checks on property conditions, promoting the scheme, monitoring the impact and signposting landlords to relevant support services (such as ASB Unit, Housing Benefits etc). The Officer would also be responsible for maintaining community engagement and ongoing consultation. 12 FINANCIAL CONSIDERATIONS 12.1 As part of the selective licensing proposal for a transparent fee structure needs to be in place. A number of calculations by other LA s have been considered where fees for both HMO and Selective Licensing schemes have been implemented. However, since implementation, many LA s report that they have understated the actual costs of licensing There are a number of variables which can make a major difference to how the cost of implementing a scheme. For example The number of years the scheme runs for How many licence fees are collected How much enforcement work is carried out The salary scales of officers allocated the tasks 12.3 When looking at the examples from other LA s, it is clear that all the fees relate directly to the cost of generating a licence. There appears to be no time allocated to work with landlords or to assist landlords with problems which subsequently arise. Selective Licensing differs from HMO licensing as it is not mandatory. On this basis, landlords may question what they are getting for their fee. Without the support element, the scheme could be seen as a self financing administrative function with little benefit to landlords, tenants or the area in general Based on the information from other LA s, the Oldham fee schedule (as developed specifically) for Selective Licensing is the easiest to understand and is comparable in terms of estimated costs and hours to Wolverhampton HMO Licensing. The most recent scheme to be adopted estimates each licence takes around 22 hours to produce at a cost of 525 per property. Wolverhampton s own calculations concur with this estimate Another issue to consider is that the majority of administrative work is required in the first year of licensing. The majority of licence fees are also likely to be generated in the first year. This calls into question if staffing levels need to be sustained after the first year if there is no landlord support function June 2011 Final Designation Report 17

24 Fee Structure Initial application fee for a licence Fee Structure Penalties (increased costs) In the event of property being found by officers surveying for licensable properties, a finders fee will be added unless the landlord is able to demonstrate that they became the owner of the property within the previous 12 weeks Additional charge to be added following second and each subsequent letter sent chasing licence application (this may be in addition to fees above) Additional charge to be applied in the event of a re inspection being required during the licence period as a result of poor management and complaints Additional charge for missing an appointment during inspection process Fee Structure Discounts (discounted from fee payable) 2nd and subsequent properties in area Membership of MLAS or other recognised Accreditation Scheme Membership of a Professional Letting Agents body with recognised code of conduct (not in conjunction with MLAS discount) Issues raised are Only costs arising directly from the licence can be charged (time spent promoting good management practice can t be charged for) The full licence fee must be charged upfront and not annually This may work for HMO Licensing but may be ineffectual on an area basis As with the HMO licensing regime, landlords must pay a charge for a licence issued under a Selective Licensing scheme. LA s can set the level of the fee; the intention is that the rate should be transparent and should cover the actual cost of the scheme s administration Dependant on the success of the proposal and other external market forces, private sector landlords should see an increase in potential rental yields and the value of their property/ portfolio The proposed support for tenancy management and area improvement should reduce costs arising from void periods and tenancy turnover Bringing empty properties back into use will restore confidence in the area in addition to generating income for the individual owners. June 2011 Final Designation Report 18

25 13 LICENSE DETAILS 13.1 Licenses will be required for all private sector properties where the occupier(s) of the property is not the registered owner and if the landlord is paying the council tax as the property is in multiple occupation Two types of licenses are proposed: Full Licenses Where the application form, fee and all supporting information has been provided. Interim Licenses Where the application form and fee has been provided but some information is missing (e.g. Gas Certificate/ Energy Performance Certificate/ Tenancy Agreement/ Agreement with agent etc). Two types of Notices are also proposed where licenses are not yet in operation/required: License Liability Notice Where the property is empty or no application has been made. TEN (Temporary Exclusion Notice) 13.3 Properties with Interim Licenses will be targeted for inspection before properties that have applied for and obtained a Full Licence Properties with Full Licenses will be inspected if housing standards or anti social behaviour complaints are received Full or Interim Licenses may be suspended if it is necessary to issue formal Housing Act improvement notices or if unprofessional management of the property is proven Landlords who rent properties with a without a license will be liable to a fine/ prosecution. 14 SANCTIONS 14.1 If a LA believes that a landlord has breached licence conditions, they can issue a fine of up to 5,000 for each offence/breach. Operating a property without a licence in a designated area can attract a fine of up to 20,000. For its part, the LA is obliged to take reasonable steps to ensure that applications are made for all licensable properties Part 4 of the 2004 Act contains additional provisions for enforcement action in respect of properties that are licensable under Parts 2 and 3 of the Act including those licensable under selective schemes. The mechanisms that LA s have at their disposal include Interim Management Orders and Final Management Orders. Interim Management Orders allow the transfer of the management (not ownership) of a property to the LA for a period of up to twelve months. Final Management Orders are in place where Interim arrangements need to be extended, and can be in place for up to five years The Council can make an application to the Residential Property Tribunal (RPT) for a rent repayment order if a property is rented without a licence. If approved, the landlord of the unlicensed property can be required to repay up to 12 months of Housing Benefits payments. Tenants who are not on housing benefits can also make such an application to the RPT. June 2011 Final Designation Report 19

26 15 SELECTIVE LICENSING SUCCESSES 15.1 Selective Licensing has been successfully implemented in a number of areas across the country. There are, to date, 18 designations in 12 LA areas prior to the introduction of general consent in April Middlesbrough Selective Licensing in Middlesbrough as introduced in June 2007, and phased in on a street by street basis in areas experiencing high levels of crime and anti social behaviour. The strategy was to challenge the private tenants and families causing anti social behaviour, encourage them to engage with support agencies, assist tenants to modify their behaviour and help them sustain their tenancy. Support for families and/or individuals is an essential component of their intervention strategy. Their evaluation of the scheme (published in May 2010) indicates that there has been a considerable increase in the uptake of services provided to landlords; in particular the tenancy referencing service, where the requests for references are now at around 150 each month. Implementation of the Selective Licensing scheme has led to increased engagement with landlords in the area Salford There is evidence that the property prices within the designated area have risen and property turn over has decreased. Void rates have also shown a clear downward trend. The reporting of anti social behaviour increased at the start of the project, which was considered to be as a consequence of the scheme setting up and giving residents the confidence to report problems (as well as providing additional resources to tackle the issues raised). This has subsequently fallen as a result of the scheme s interventions Gateshead There has been a dramatic increase in the membership of the Landlords Association. Almost half of the new members joining since July 2007 have properties in the licensing area, which is when the scheme became operational. There has been a substantial increase in the number of accredited, resulting in more decent homes in the private rented sector. Of those properties where works have been carried out to bring up to the accreditable standard, landlords have on average spent over 2,000 per property on improvements. Letting Agents and landlords have generally shown more commitment to the area, becoming proactive with difficult tenants and participating in training events in order to further improve management skills. Where deficiencies in the management of tenants and properties occur, these have been highlighted in the application process and are part of on going actions being carried out to safeguard tenants and improve property conditions. Feedback from residents has been positive and the scheme has complemented other regeneration works in the area; particularly block improvement schemes. Landlords have been much quicker to respond to issues relating to anti social behaviour arising from their tenant s behaviour, understanding that this may affect their status as a licence holder Wolverhampton City Council has developed positive relationships with a number or LAs that have been through the Selective Licensing process and have shared best practice. 16 CONCLUSIONS 16.1 Based on the evidence gathered and the results of initial consultation with residents and other stakeholders; there is a strong case to support the introduction of a Selective Licensing scheme in the proposal area of, Wolverhampton Understandably, many of the landlords who responded to the initial consultation did not know if Selective Licensing would be effective or beneficial to them as this will depend on the cost and how successfully the proposals operate. June 2011 Final Designation Report 20