Agenda item

10.1

The Team Manager introduced the report which explained that Cabinet first approved a mandatory licensing scheme for Houses in Multiple Occupation (HMOs) in April 2006, as prescribed within the Housing Act 2004. Substantial changes to the scheme were approved in 2018 when the definition of licensable HMO properties was expanded, and new building standards were imposed.

Following a detailed review of current fees and charging arrangements, the Committee were asked to approve increases to the HMO licence fees and amendments to the charging structure.

10.2

RESOLVED UNANIMOUSLY: That the Housing Policy Committee:-

1.     Approve the changes to the HMO licence fees and charging structure as detailed.

2.     Agree to implement the revised fees and new charging structure for new applications from 31st October 2023 and renewals from 31st December 2023.

10.3

Reasons for Decision

10.3.1

The services provided by the City Council's Private Sector Housing Service detailed in this report have been reviewed and determined not to be achieving full cost recovery at their current levels. To achieve full cost recovery, new fee and charging structures are presented for decision by committee members.

10.3.2

The implications of the two landmark rulings R (Gaskin) and R (Hemming) are significant for any local authority that does not currently operate a Directive[1]compliant licencing fee regime. The report advises recommended changes to SCC’s HMO licence fees and charging structure are approved to ensure compliance.

10.4

Alternatives Considered and Rejected

10.4.1

Do nothing. This would result in the Council continuing to charge the current lower HMO licence fees, preventing full cost recovery for the licensing scheme, and reducing the Council’s capacity for detecting and enforcing against landlords operating illegally. This puts the Council at risk of legal challenge for charging in advance for costs other than those directly associated to the authorisation of a licence application. The fees are intended to off-set the cost to the Authority of administering the licensing scheme and must be split between costs incurred before and after deciding to issue a licence. There is no safe legal alternative to a split fee regime, therefore the option to do nothing has been ruled out on that basis.

10.4.2

Split the fee charges to conform to case law precedent but leave fee levels unaltered. This would be the most straightforward option to remove the risk of challenge to the single part licence fee, however our review of the costs incurred by the Council in running the Mandatory HMO licensing scheme revealed that the current HMO licensing fees are not achieving full cost recovery. The proposed revised fees given in Table 1 have been calculated to achieve full cost recovery in performing HMO licensing activities. The local authority has a duty to administer funds in such a way as to protect the interests of council taxpayers, with the accepted principle that licensed activities should be funded by those benefitting from them, rather than council taxpayers. This option was ruled out on that basis.

10.4.3

Split the fee charges and apportion the increased costs equally across all licence holders. This option would require a further increase in licence fees as the anticipated costs for managing non-compliance would need to be incorporated into the fee income generated from all licences, rather than additional charges being applied when non-compliance is detected. Our fee review included consideration of officer time spent assessing applications, inspecting properties and detailing licence conditions, and it was both clear and unsurprising that larger properties took proportionately greater amounts of officer time throughout the licensing process. To apportion costs equally across all licence holders would not be fair or reasonable and would put the Council at risk from legal challenge, so this option was also ruled out.

10.1

The Team Manager introduced the report which explained that Cabinet first approved a mandatory licensing scheme for Houses in Multiple Occupation (HMOs) in April 2006, as prescribed within the Housing Act 2004. Substantial changes to the scheme were approved in 2018 when the definition of licensable HMO properties was expanded, and new building standards were imposed.

Following a detailed review of current fees and charging arrangements, the Committee were asked to approve increases to the HMO licence fees and amendments to the charging structure.

10.2

RESOLVED UNANIMOUSLY: That the Housing Policy Committee:-

1.     Approve the changes to the HMO licence fees and charging structure as detailed.

2.     Agree to implement the revised fees and new charging structure for new applications from 31st October 2023 and renewals from 31st December 2023.

10.3

Reasons for Decision

10.3.1

The services provided by the City Council's Private Sector Housing Service detailed in this report have been reviewed and determined not to be achieving full cost recovery at their current levels. To achieve full cost recovery, new fee and charging structures are presented for decision by committee members.

10.3.2

The implications of the two landmark rulings R (Gaskin) and R (Hemming) are significant for any local authority that does not currently operate a Directive[1]compliant licencing fee regime. The report advises recommended changes to SCC’s HMO licence fees and charging structure are approved to ensure compliance.

10.4

Alternatives Considered and Rejected

10.4.1

Do nothing. This would result in the Council continuing to charge the current lower HMO licence fees, preventing full cost recovery for the licensing scheme, and reducing the Council’s capacity for detecting and enforcing against landlords operating illegally. This puts the Council at risk of legal challenge for charging in advance for costs other than those directly associated to the authorisation of a licence application. The fees are intended to off-set the cost to the Authority of administering the licensing scheme and must be split between costs incurred before and after deciding to issue a licence. There is no safe legal alternative to a split fee regime, therefore the option to do nothing has been ruled out on that basis.

10.4.2

Split the fee charges to conform to case law precedent but leave fee levels unaltered. This would be the most straightforward option to remove the risk of challenge to the single part licence fee, however our review of the costs incurred by the Council in running the Mandatory HMO licensing scheme revealed that the current HMO licensing fees are not achieving full cost recovery. The proposed revised fees given in Table 1 have been calculated to achieve full cost recovery in performing HMO licensing activities. The local authority has a duty to administer funds in such a way as to protect the interests of council taxpayers, with the accepted principle that licensed activities should be funded by those benefitting from them, rather than council taxpayers. This option was ruled out on that basis.

10.4.3

Split the fee charges and apportion the increased costs equally across all licence holders. This option would require a further increase in licence fees as the anticipated costs for managing non-compliance would need to be incorporated into the fee income generated from all licences, rather than additional charges being applied when non-compliance is detected. Our fee review included consideration of officer time spent assessing applications, inspecting properties and detailing licence conditions, and it was both clear and unsurprising that larger properties took proportionately greater amounts of officer time throughout the licensing process. To apportion costs equally across all licence holders would not be fair or reasonable and would put the Council at risk from legal challenge, so this option was also ruled out.