Newcastle Council look set to licence all residential letting properties in the city

On Monday 5th November we received a letter from Newcastle City Council (linked here) and the following day I was supplied with the link below, which gives a much more in-depth outline of the council’s objectives, which we have not studied in great detail to date.  However, due to the timing and potential consequences of this proposed legislation, we thought it prudent to make our landlords aware of this situation at the earliest possible opportunity.

Link to Newcastle City council Website providing much more information;

 We are, therefore, informing all of the landlords on our database, to make them aware of the council’s current plans.  Please note, that these proposed changes are in addition to the recent changes in licenced HMO properties in Newcastle that came into force on Oct 1st 2018, which was the removal of number of floors and the introduction of minimum room sizes with minimum height restrictions.  

We are informed that the October 2018 amendments alone will increase the number of licences required nationally by approximately 160,000, based on Newcastle’s Fee of £843 for a new HMO licence (currently), that is a national revenue stream of £134,880,000. 

If in addition, they are going to licence all HMOs which are not currently licensed in Newcastle; this means any property that rents to 3 or more unrelated people.  This is as well as the selective licensing already in place.  Using the council’s own figures from the documents provided in the link above, the Selective Licence cost; £650 x 9100 properties and additional Licence cost of £750 x 9350, giving a total revenue stream of £12,927,500.  I think you will agree this is a substantial income over a five-year period, amounting to £2,585,500.p.a. 

As this is in addition to both the existing and newly created licensed HMO stock, I for one, would like to know how that money is going to be spent.  The document stresses that this money is ring-fenced and can only be used for running this scheme but I would have thought that this sum of money would be well in excess of what would be required just for this purpose.  Therefore, perhaps a more affordable licence should at least be a consideration?  Where I fully appreciate there are overhead costs and expenses that would need to be recovered even if you paid an inspector £50,000 per annum, the additional revenue alone would pay for 50 new inspectors in Newcastle in year one and their continued salary every year after that! 

Whereas I have always supported raising the standard of private rented property and welcome any attempts to do so, I think it only right that we should look and question the motives for such action.  Especially at a time when landlords are being hit from all angles by the government (removal of tax breaks, tenant fee ban, etc.).  On the other side of the fence, it is no secret that councils are being equally underfunded by government and instead are being given ideas and the opportunity to introduce legislation to increase revenues by stealth at the expense of certain market sectors.  Landlords, in my opinion, are clearly being treated as soft, easy targets by the government. 

We hope to be attending these meetings – the three dates are in the attached letter – and would urge any interested parties to do so also, to ensure that your voice is heard and you are aware of both the motives and rationale for such proposed changes.  Again, I stress this is not necessarily bad news, as anything that improves the standard of the private rented sector is good, especially for decent landlords; it can only reduce the number of bad landlords in the city making your properties even more desirable. 

We are happy to discuss this matter further with you, so please feel free to call me on 0191 212 6970on this matter( but to date please note you are in possession of all the information we are), or  if you require any help with letting your property(s).