What Is Selective Licensing? The Complete UK Guide for Letting Agents

Last Updated: November 2024
Reading Time: 12 minutes

TL;DR — What Is Selective Licensing?

Selective licensing is a regulatory scheme under Part 3 of the Housing Act 2004 that requires landlords to obtain a licence from their local council before renting out a property in a designated area. Unlike mandatory HMO licensing which targets larger shared houses, selective licensing can apply to any privately rented property—including single-family homes. Councils use these schemes to tackle issues like antisocial behaviour, poor property conditions, and low housing demand. Operating without a licence can result in fines up to £30,000 per property.

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What Is Selective Licensing?

Selective licensing is a system where local councils in England designate specific geographic areas where all privately rented properties must be licensed. The scheme was introduced under the Housing Act 2004 and gives councils the power to regulate the private rented sector beyond the mandatory HMO licensing that applies nationwide.

The word "selective" refers to two things: councils select the areas where licensing applies, and the scheme selects certain property types (private rentals) for regulation.

How It Differs from HMO Licensing

Many letting agents confuse selective licensing with HMO (House in Multiple Occupation) licensing. They're related but distinct:

Key point: A property can require both an HMO licence and a selective licence if it's an HMO in a selective licensing area. You'd need to apply for both.

The Scale of Selective Licensing in the UK

Selective licensing has grown significantly since its introduction:

• 317 councils in England have the power to implement schemes
• Over 60 councils currently operate active selective licensing schemes
• Millions of rental properties fall within designated areas
• December 2024: The government removed the 20% cap, allowing councils to designate entire boroughs without Secretary of State approval

This expansion means more properties will require licences in the coming years. The removal of the 20% cap is particularly significant—councils that previously needed government approval to extend schemes beyond 20% of their area can now create borough-wide schemes independently.

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Why Selective Licensing Exists

Selective licensing wasn't created to burden landlords with red tape. It's a response to genuine problems in the private rented sector that some councils struggle to address through other means.

The Legal Foundation: Housing Act 2004

Part 3 of the Housing Act 2004 (Sections 80–100) establishes the selective licensing framework. Under Section 80, councils can designate an area for selective licensing if it meets specific criteria.

Originally, councils needed to demonstrate that an area:

• Has low housing demand, OR
• Has significant antisocial behaviour problems

The Housing Act 2004 (Amended by Secondary Legislation) later expanded the criteria to include:

• Poor property conditions: High proportion of properties in poor physical condition
• High levels of migration: Significant influx creating pressures on private rented housing
• High levels of deprivation: Areas of concentrated poverty and social problems
• High proportion of HMOs: Areas where property management is challenging due to concentration of shared housing

What Councils Aim to Achieve

When a council implements selective licensing, it's typically trying to:

1. Improve Property Standards Licensing requires landlords to meet minimum safety standards and maintain properties. This raises the baseline quality across the designated area.

2. Tackle Antisocial Behaviour Licence conditions often require landlords to take reasonable steps to address tenant behaviour. This creates accountability.

3. Support Legitimate Landlords By licensing all properties, councils create a level playing field where compliant landlords aren't undercut by rogue operators.

4. Gather Intelligence Licensing gives councils data on who owns what, enabling targeted enforcement and support.

5. Protect Tenants Ultimately, the goal is ensuring tenants live in safe, well-managed properties with responsible landlords.

The Council Approval Process

Before December 2024, councils wanting to implement selective licensing covering more than 20% of their area needed Secretary of State approval. This often took 6–12 months and required demonstrating:

• Consultation with landlords, tenants, and residents
• Evidence the scheme would address identified problems
• Commitment to complementary enforcement activities
• Fee structures and licensing conditions

Post-December 2024: The 20% cap has been removed. Councils can now designate any proportion of their area—including borough-wide schemes—without government approval. This significantly speeds up implementation and expands council powers.

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Which Properties Need Selective Licensing?

Understanding whether your properties require selective licensing is essential. Getting this wrong costs £30,000 per property.

Properties That Require a Licence

In a designated selective licensing area, the following properties need a licence:

• Single-family rental homes: Entire houses or flats rented to one household
• Smaller HMOs: Shared houses that don't meet mandatory HMO licensing thresholds
• Purpose-built flats: Individual flats rented privately
• Converted properties: Houses converted into flats (each flat may need its own licence)

Properties That Are Exempt

Certain properties are exempt from selective licensing even in designated areas:

Statutory Exemptions:

• Properties licensed as HMOs under Part 2 of the Housing Act 2004
• Properties subject to a temporary exemption notice
• Properties managed by registered social landlords (housing associations)
• Properties subject to management orders
• Student accommodation directly managed by educational institutions
• Properties where the tenant is a family member of the landlord

Other Common Exemptions:

• Owner-occupied properties (not rented out)
• Holiday lets (depending on council interpretation)
• Properties let under long leases (typically 21+ years)

Warning: Exemptions vary by council. Some councils interpret exemptions narrowly. Always verify with your specific local authority.

How to Determine If Your Property Needs a Licence

Step 1: Check if the property is in a designated area

Visit your council's website and search for "selective licensing." Look for:

• Boundary maps showing designated areas
• Ward lists specifying which areas are covered
• Address lookup tools

Step 2: Verify the property type isn't exempt

Review the exemptions list above and check whether any apply to your property.

Step 3: Confirm with the council if uncertain

If there's any ambiguity, contact the council's licensing team directly. Get confirmation in writing.

Step 4: Check upcoming designations

Even if your property isn't currently in a designated area, check whether consultations are underway that might include it. Schemes can be implemented with as little as 30 days' notice.

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How Selective Licensing Works

Understanding the process helps you prepare and ensures you meet deadlines.

The Application Process

1. Gather Required Documentation

Most councils require:

• Completed application form
• Gas safety certificate (current)
• Energy Performance Certificate (minimum E rating)
• Proof of landlord identity
• Proof of property ownership or right to manage
• Floor plan showing room sizes
• Details of proposed licence holder and property manager
• Fit and proper person declaration

2. Submit Application and Fee

Applications are usually submitted online through the council's portal. Fees typically range from £400–£900 per property, though London boroughs often charge more (£600–£1,000+).

Many councils offer discounts for:

• Early applications (before scheme goes live)
• Members of accredited landlord schemes
• Online applications
• Portfolios (multiple property applications)

3. Application Assessment

The council reviews your application, checking:

• Fit and proper person status
• Property suitability for the intended number of occupants
• Management arrangements
• Compliance with proposed licence conditions

Processing typically takes 4–12 weeks, though some councils take longer during scheme launches when application volumes surge.

4. Licence Issued or Refused

If approved, you receive a licence specifying:

• The property address
• The licence holder's name
• Any specific conditions
• The licence duration (maximum 5 years)
• The maximum number of permitted occupants

Understanding Licence Conditions

Every selective licence comes with conditions. These vary by council but typically include:

Mandatory Conditions (Required by Law):

• Provide annual gas safety certificates to the council
• Keep electrical appliances and furniture safe
• Install smoke alarms and keep them in working order
• Provide the tenant with a written tenancy agreement
• Obtain references from prospective tenants
• Keep security deposits in approved schemes

Discretionary Conditions (Council-Specific):

• Conduct property inspections at specified intervals
• Provide specific fire safety measures
• Address antisocial behaviour by tenants
• Maintain external areas and gardens
• Provide minimum furniture or equipment
• Respond to repair requests within specified timeframes
• Carry out certain safety certifications

Important: Breaching licence conditions is a separate offence. You can be fined up to £30,000 even if you have a licence but fail to comply with conditions.

Timeline and Renewals

Selective licences last up to 5 years—typically aligned with the duration of the council's designation scheme.

Key Timeline Points:

• New scheme launch: Apply immediately during the transition period (usually 30–90 days)
• Ongoing compliance: Maintain all conditions throughout the licence term
• Renewal: Apply before the current licence expires (councils usually notify you)
• Scheme extension: If the council renews or extends the scheme, you'll need a new licence

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What Happens If You Don't Have a Licence

The consequences of operating without a selective licence are severe and multiply quickly across a portfolio.

Financial Penalties

Civil Penalty Notices

Councils can issue civil penalty notices of up to £30,000 per property. This is per property, per offence—so a portfolio of five unlicensed properties could face £150,000 in fines.

Penalty amounts depend on factors including:

• Whether the breach was deliberate or negligent
• The landlord's compliance history
• Financial benefit gained from the offence
• Harm to tenants
• Duration of the offence

Most councils now default to high penalties for professional landlords and letting agents who are expected to know the regulations.

Criminal Prosecution

Alternatively, councils can pursue criminal prosecution instead of civil penalties. Conviction results in:

• Unlimited fine (no £30,000 cap in criminal courts)
• Criminal record
• Potential banning order preventing you from letting properties

Councils typically choose civil penalties for speed and certainty, but reserve prosecution for serious or repeat offenders.

Rent Repayment Orders (RROs)

Perhaps the most financially devastating consequence is the Rent Repayment Order. Under the Housing and Planning Act 2016, tenants can apply to the First-tier Tribunal to reclaim rent paid while the property was unlicensed.

Key Points:

• Tenants can claim up to 12 months' rent
• The tribunal can award this even without a council prosecution
• Applications can be made up to 12 months after the tenant moves out
• The landlord/agent has no defence if the property was genuinely unlicensed

For a property renting at £1,500/month, an RRO could mean returning £18,000 to the tenant—on top of any council fine.

Other Consequences

Insurance Implications Many landlord insurance policies require properties to have all necessary licences. Operating unlicensed may invalidate your cover, leaving you exposed to property damage, liability claims, and legal costs.

Section 21 Restrictions You cannot serve a valid Section 21 notice (no-fault eviction) on a tenant in an unlicensed property that requires a licence. This can trap landlords who need to regain possession.

Reputational Damage Civil penalty notices and prosecutions are often publicised. For letting agents, being named in enforcement action damages client trust and can affect your ability to win new business.

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How to Check If Your Property Needs a Licence

Follow this systematic process to verify your licensing requirements.

Step 1: Identify Your Local Council

Determine which local authority covers your property. This isn't always obvious—particularly in areas with district and county councils. Use the government's postcode checker at gov.uk/find-local-council.

Step 2: Search for Selective Licensing Information

Visit the council website and search for "selective licensing" or "property licensing." Look for:

• Current scheme information
• Interactive boundary maps
• Ward lists
• Address lookup tools
• Consultation announcements for upcoming schemes

Step 3: Check the Boundary Maps

Most councils provide maps showing designated areas. These are typically defined by:

• Ward boundaries
• Specific street names
• Postcode sectors (though postcodes don't always align with ward boundaries)

Cross-reference your property address against the boundaries. If in doubt, use the council's address lookup tool if available.

Step 4: Verify Property Type

Confirm whether your property falls into an exempt category. Remember:

• Being licensed as an HMO doesn't exempt you in all areas (check your specific council)
• Short-term lets may or may not be exempt
• Holiday accommodation rules vary

Step 5: Document Your Findings

Record your research:

• Screenshot the boundary map
• Note the date you checked
• Save any correspondence with the council
• Set a reminder to re-check periodically

Step 6: Set Up Ongoing Monitoring

Councils can introduce new schemes or expand existing ones. Set up:

• Google Alerts for "[council name] selective licensing"
• Calendar reminders to check quarterly
• Bookmark the council's licensing page

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Frequently Asked Questions

What is the fine for not having a selective licence?

The maximum fine for operating an unlicensed property in a selective licensing area is £30,000 per property under the Housing Act 2004. Councils issue this as a civil penalty notice, which doesn't require court conviction. Additionally, tenants can apply for Rent Repayment Orders to reclaim up to 12 months' rent—potentially adding thousands more to your costs. These penalties apply per property, so multiple unlicensed properties can result in hundreds of thousands of pounds in total liability.

How do I know if my property is in a selective licensing area?

Check your local council's website for selective licensing information. Most councils provide interactive boundary maps or address lookup tools. Search for "selective licensing [council name]" and look for designated area maps. If uncertain, contact the council's private sector housing or licensing team directly. Remember that selective licensing areas are defined by ward boundaries, not postcodes, so postcode searches can be misleading.

Can I be fined if I didn't know about selective licensing?

Yes. Ignorance is not a defence under the Housing Act 2004. The legislation operates on strict liability—if your property requires a licence and doesn't have one, you're liable for penalties regardless of whether you knew about the requirement. This is why proactive monitoring is essential. Councils are not required to notify individual landlords when schemes are introduced, though many do attempt to communicate changes.

How long does a selective licence last?

Selective licences last up to 5 years, though the exact duration depends on the council's designation period. Many councils align licence duration with their scheme period. When the licence expires, you must apply for renewal if the scheme continues. Some councils issue licences for shorter periods if there are compliance concerns or the scheme is nearing renewal. Always check your licence certificate for the specific end date.

Do I need a selective licence for a property that already has an HMO licence?

It depends on the council. Some councils exempt HMO-licensed properties from selective licensing requirements; others require both licences. Check your specific council's scheme documentation. The exemption typically only applies to properties with mandatory HMO licences under Part 2 of the Housing Act 2004—properties under additional licensing schemes may still need selective licences. When in doubt, contact your council's licensing team for clarification.

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Stay Ahead of Selective Licensing Changes

Selective licensing is expanding. With the December 2024 removal of the 20% cap, councils can now designate entire boroughs without government approval. More schemes are coming, covering more properties, with shorter implementation timelines.

For letting agents managing properties across multiple councils, manually tracking every scheme, boundary change, and deadline is becoming impossible. A single missed change across a 50-property portfolio could mean £1.5 million in potential fines.

ProperLet Protect monitors all 317 English councils for selective licensing changes and alerts you within 24 hours when any boundary affects your properties. No more checking council websites. No more surprise enforcement letters. No more fine anxiety.

What you get:

• Real-time monitoring across every English council
• Instant alerts when schemes affect your portfolio
• Deadline tracking so you never miss an application window
• Portfolio dashboard showing compliance status at a glance
• Documentation support for each council's requirements

The cost of one £30,000 fine exceeds years of monitoring. Protect your portfolio before the next scheme launches.

Book a Demo →

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This article is for informational purposes only and does not constitute legal advice. For specific guidance on licensing requirements, consult a solicitor specialising in housing law. Scheme details and fees are subject to change—always verify current requirements with your local council.