A controversial scheme which charges Nottingham landlords up to £890 a year for each property they rent out will be investigated by external auditors.
Nottingham City Council set up the Selective Licensing programme in August 2018 to improve rented properties and crack down on rogue landlords.
Around 32,000 properties across Nottingham need a licence, and those who refuse to apply facing fines of up to £30,000 or prosecution through the courts.
Having a licence means the council can check properties are safe to rent and can crack down on bad landlords who leave properties in poor or unsafe conditions.
But concerns were raised by some property owners that good landlords were paying the cost for bad landlords, and the licensing fee would only be passed to tenants in terms of rent rises. Some landlords also decided to sell up.
Fees for the scheme have risen since it was first introduced, now ranging from £670 to £890 per property. The scheme comes to an end in July 2023, before renewal is considered.
The council’s external auditors, Grant Thornton, received a formal objection from a landlord in relation to the council’s 2019/20 accounts over the scheme.
John Gregory, representing Grant Thornton, spoke to councillors at an audit committee on Friday, February 25, about the issues raised.
He said: “It concerns the value for money of the scheme and the way it was managed. How much it costs? How much it has brought in terms of fees paid by the landlords? Basically, whether it was a worthwhile exercise.
“That has been made as a formal objection to the accounts and that is something we do need to consider.”
Cllr Michael Edwards (Lab) said: “One of the things I have to deal with is the shoddy nature in the way private tenants are treated by private landlords – some of the stuff I have seen is appalling.
“That sense we now have some way of bringing people to buck on that has been very significant. How can we ever put a value on that? We need that change.”
Cllr Jane Lakey (Lab) added: “What we very much want to be done, is know that this is an efficient scheme, well-run, and the bold numbers on it and then make a decision.
“On a wider context, I have actually looked for reports on the effectiveness of selective licensing and I am yet to find one.”
Giles Inman is the business development manager at East Midlands Property Owners Group, based in Lenton, which represents around 600 landlords.
He said: “We know the council are going to the government in October to justify why they believe Selective Licensing should be renewed for another five years.
“We are considering forming a committee to draft our own submission on behalf of landlords – we are considering going against that renewal.
“The costs associated with complying with the licensing scheme translates into higher rents (for tenants). There is no question about it.
“You have utility bills going through the roof and huge strains on tenants paying gas and electricity to heat their homes.
“Landlords are trying to keep costs for the tenants as low as possible.”
Landlord Mick Roberts, which has 36 properties in the selective licensing zone, said: “I want to sell most of my houses now. Rents have gone up approximately 40 per cent in Nottingham and it has started from selective licensing. I would like it scrapped.”