James Driscoll considers a failed challenge by a consortium of developers and landlords to a selective licensing scheme
Key points
- What is “selective licensing”?
- Can a local authority selective licensing decision be successfully challenged?
Court or tribunal decisions usually decide a very specific issue that deserves some analysis or commentary. In some cases, however, they can illustrate a broader policy initiative. The decision of the High Court in R (on the application of Croydon Property Forum Ltd) v Croydon London Borough Council [2015] EWHC 2403 (Admin); [2015] PLSCS 253 is one such case. This was a challenge (by way of judicial review) to the decision of Croydon LBC to adopt a selective licensing scheme for private landlords operating in its local area. Selective licensing was introduced by Part 3 of the Housing Act 2004 (“the 2004 Act”) as one of a number of measures to tackle poor standard private sector housing. It is not mandatory as it is for each local housing authority to decide whether to adopt selective licensing as part of their local housing strategy.
Dealing with poor rented accommodation
Other notable features of the 2004 Act are a new system for dealing with housing hazards in private rented housing and an entirely new way of dealing with houses in multiple occupation (“HMOs”). Under the legislation, an authority can only take steps to adopt licensing where there is evidence of low housing demand coupled with antisocial behaviour (see Driscoll, Housing: the New Law – a Guide to the Housing Act 2004, Butterworths).
Introducing a requirement that private landlords can operate in an area only if they are licensed may seem a bold step for a local housing authority to take. Some private landlords, perhaps those who already operate fairly and efficiently, might take exception to having to go the trouble and the expense of obtaining a licence; landlords might also baulk at the conditions that might be included as part of a licence being granted. Concerns are also expressed that such a licensing designation might stigmatise local housing.
But many local housing authorities have adopted – or are considering – selective licensing where there are poor standards (and antisocial behaviour) in their area. While action can be taken to deal with substandard housing in individual cases, and enforcement can be taken where a HMO landlord has failed to obtain a licence for a property, some authorities may conclude that the most effective way of promoting higher standards is by a mandatory licensing requirement which applies to all private landlords.
Consultation requirements
Before such a licensing system can be adopted, the authority must first carry out a consultation exercise with local residents, landlords and others who are likely to be affected. While the legislation provides for post-consultation central government approval, since March 2010 a general approval has been given (see the Housing Act 2004: Licensing of Houses in Multiple Occupation and Selective Licensing of Other Residential Accommodation (England) General Approval 2010).
In March 2015, Croydon LBC adopted a Part 3 licensing scheme for all private rented accommodation within its borough. After this designation was made, the Croydon Property Forum – a consortium of developers and local private landlords – was formed. It challenged the Part 3 designation arguing that the pre-consultation was faulty as it failed to specifically consult developers and private landlords operating within the borough as a group. As a result of this faulty consultation, the consortium argued, the Part 3 designation should be quashed.
The challenge was unsuccessful as the court was satisfied with the adequacy of the consultation process. Croydon had adopted a three-stage process: first it consulted private landlords, managing agents, residents and others; second, it consulted on four options, including the one it favoured; and third, it extended the consultation to those operating in neighbouring areas.
The court concluded that Croydon had correctly followed the guidance given by central government and that the steps it took (over a period of some six months ) were “reasonable” steps as required by section 80(9) of the 2004 Act. It had communicated its intentions in several ways, including through press releases, website postings and advertisement in local papers and libraries. Overall, this was adequate so that developers and local landlords were made aware of the intention to introduce selective licensing and were in a position to make submissions.
High threshold
Generally, the judge, Sir Stephen Silber, concluded that a public authority has a wide discretion as to how a consultation process is carried out and the process cannot be considered unlawful “unless something went clearly and radically wrong”. So there is a “high threshold for the claimant to reach to obtain relief”.
The court considered a case where a selective licensing decision had been quashed (R (on the application of Regas) v Enfield London Borough Council [2014] EWHC 4173 (Admin); [2015] PLSCS 7). In that case the challenge was successful as the borough’s failure to consult residents, businesses, landlords and agents who lived or operated in adjoining areas made its decision flawed (and it had also failed to consult for the period required by the general approval). Acting on this, Croydon decided to extend its consultation to adjoining areas.
Legal challenges to the exercise of this sort of discretion are difficult (and the challenge may not have been made any easier by the fact that the consortium was formed after the decision was taken). But the claimant may take some comfort from the changes to the policy following the Department for Communities and Local Government’s announcement in March 2015 that, in future, there will be restrictions to the sorts of cases where a Part 3 designation can be made.
Professor James Driscoll is a solicitor and a writer
