Selective Licensing Scheme 2022: Year 2 Progress Report (1 September 2023 to 31 August 2024)

Executive Summary

This report provides an overview of the progress, challenges, and future plans for the Selective Licensing Scheme during its second year of operation (1 September 2023 to 31 August 2024). The scheme aims to improve housing conditions in the private rented sector across the city, directly benefiting tenants through safer living environments and landlords by promoting consistent standards and reducing risks associated with non-compliance.

Key Achievements

Licensing Progress:

• A total of 1,041 new applications were received in year two, bringing the total to 11,940 applications since the scheme's start in 2022. Over 13,500 properties are now covered, including block licences.
• The Council issued 7,492 final licences in year two, achieving a total of 9,631 final licences by the end of the year, representing 80% of applications.
• Application processing times significantly improved, with the average time reduced from 376 days in year one to 201 days in year two.

Proactive Inspections:

• 438 inspections have been conducted since the scheme's inception, with 70% identifying Category One or Two hazards, underscoring the need for intervention.
• A trial was implemented for auditing lower-risk properties to ensure safety certification compliance.

Operational Improvements:

• Creation of the Residential Regulation Team by merging the HMO Enforcement Team and Private Sector Safety Team.
• Streamlined recruitment and training processes reduced onboarding time for new officers.

Challenges

Recruitment and Retention:

• National shortages in skilled officers have delayed proactive inspections and guidance development for landlords.
• Vacancies necessitated the hiring of contractors, which impacted budget and efficiency.

System and Procurement Issues:

• Delays in supplier upgrades for data systems have limited the ability to report comprehensively on inspections and auditing.
• Procurement for a large-scale inspection contract initially failed due to budget constraints but has since been redesigned for implementation in 2025.

Lessons Learned

• Effective use of HR recruitment specialists improved hiring outcomes in 2024.
• Delegating caseload management to individual officers reduced delays and improved customer service.
• Simplified training processes shortened onboarding time for new staff.

Future Focus (Year Three)

• Reducing processing times for new applications, with a target of 16 weeks.
• Launching a large-scale proactive inspection programme in 2025.
• Addressing the backlog of applications and improving reporting capabilities with planned system upgrades.
• Enhancing guidance for landlords on property standards and increasing tenant awareness through public campaigns.

Introduction

The Selective Licensing scheme started on 01 September 2022 and runs until 31 August 2027. The scheme requires landlords of privately rented properties across Oxford to obtain a licence, ensuring homes meet safety and management standards. Before the scheme started, in autumn 2020, the Council conducted a statutory consultation exercise. In March 2021, the Council approved 2 designations covering the whole city area. The Department for Levelling Up, Housing and Communities (DLUHC) confirmed the designations in April 2022.

The Council estimated that 12,000 properties would need a licence, with 7,200 applications expected in year 1. The Council predicted it would take 12 months from date of application to issue a licence.

After issuing the licence, property inspections take place. A risk rating system identifies properties likely to be in the worst condition. The Council expects to inspect 60% of licensed properties during the lifetime of the scheme.

Why Selective Licensing?

The private rented sector in Oxford is one of the largest in England. An independent review in 2020 estimated that 49.3% of the city's housing stock was privately rented, or 30,508 properties (including HMOs). The 2021 census predicted that 32.2% (17,762) of households lived in the private rented sector. Both datasets confirm the private rented sector in the city is significantly above the national average of 19%.

A review of housing conditions found that 6,242 (20.5%) of dwellings in the private rented sector were predicted to have at least one Category 1 hazard. This compares to the national average of 12% and is almost double the regional average of 10.3%. The intense competition for affordable accommodation in Oxford has led some landlords to let property in poor, unsafe, and sometimes dangerous conditions.

The Council has operated HMO licensing since 2006, expanding to a citywide basis in 2011. With selective licensing, any privately rented property within the city (unless statutorily exempt) now requires a property licence to operate. By the end of year 2, over 16,500 private rented properties are covered by our licensing schemes, indicating the census figures were likely inaccurate due to data collection during Covid-19 lockdown.

DLUHC requested the Council submit regular progress reports. Consultation feedback highlighted the need to report throughout the scheme on progress. This is the Year 2 progress report.

Applications and Licensing Progress

Application Volumes

In year 2, we received 1,041 applications with 11,940 applications received since the start of the scheme. When including 159 block licences, the applications covered over 13,500 properties by end of year 2.

The Council issued 7,492 final licences in year 2, with 9,631 (80%) final licences issued by end of year 2. A total of 10,541 (88%) applications have received a draft licence.

In total, the number of applications received (11,940) is 37% higher than predicted by end of year 2. We expected 11,420 applications by the end of the entire scheme and have already exceeded this prediction by the end of year 2.

Processing Improvements

Application processing time has significantly improved. The average (mean) time to issue a licence in year 2 was 201 days compared to the year 1 average of 376 days. This reduction is due to both improvements in processing and reducing number of new applications.

In the early bird period from 01 September 2022 to 31 January 2023, 9,061 applications were received of which 66.25% were issued by the end of year 2. 23% of the applications received the early bird discount. An additional 57% of applications received during the early bird period received an accreditation discount.

Several key improvements contributed to faster processing:

• Caseload Management: Once an application is assigned to a Customer Services Admin Officer (CSAO), they are entirely responsible for its progression until the licence is issued. This eliminated the need for transferring applications between officers and minimized delays and errors caused by miscommunication.
• Reduced Training Time: The ideal progression for a new officer in training reduced from 16 weeks to 12 weeks. This was achieved by simplifying training processes and improving procedures for processing applications using flowcharts.
• Team Stabilization: The Applications team stabilized by spring 2024 after regular turnover of entry-level positions.

Payment Processing Challenges

The online application system processes payments via credit card. However, for large managing agents, it was agreed to use alternative methods (BACS) due to the volume of applications. Reconciliation of alternative payment methods has been challenging and added processing time.

Applications using credit card payment had significantly shorter processing times compared to those using BACS payment. At the beginning of the scheme in September 2022, it took about 42 weeks on average to process BACS applications compared to 22 weeks for card applications. Most officers required additional training to reconcile BACS payments due to the complexity, which contributed to delays.

Block Licences and Complex Applications

A number of applications from the early bird period remain outstanding. These are primarily block licence applications (where one application covers multiple flats) due to their complexity. A block licence can only be issued where it is a purpose-built block or the conversion to flats has Building Control completion.

Where a property has been converted into flats without Building Control completion, it is classified as a House in Multiple Occupation under the Housing Act 2004 section 257 and falls under Additional HMO licensing. Resourcing problems in the Residential Regulation Team have delayed processing these applications. We are currently looking to upskill the Applications team to help address this challenge.

Licence Conditions

Each property licence contains 23 conditions, including matters such as gas safety, electrical safety, furniture safety, providing and maintaining smoke alarms, and supplying occupants with written terms of occupancy.

Before a licence is issued, applicants can make representations to the council about the proposed conditions. In year 2, 346 landlords and agents made representations, equating to 4.6% of draft licences issued. The data indicates that the vast majority of landlords are satisfied with the proposed conditions.

Most representations received have been regarding permitted numbers. When reviewing representations, either the applicant made an error on their application, or the room size is within a permitted tolerance range. A small minority of representations have required an inspection to determine numbers.

Engagement with Landlords

The council holds twice-yearly Landlord Information forum sessions (one in person and one online) and maintains information on the website. Slides from the forum are made available on the council website. Online forums are recorded and audio-visual recordings made available. It is not possible to record in-person sessions due to equipment limitations at the Town Hall.

In November 2023, the in-person landlord information forum focused on energy efficiency and damp and mould. One hundred and four persons booked onto this session. This was received well, with feedback demonstrating 95% attendees felt their knowledge was either improved or confirmed during the event.

In April 2024, the online landlord information forum focused on fire safety and sub-letting. Eighty persons booked onto this session. These topics were chosen based on landlord feedback.

Forum attendees requested more property standards information. They expressed difficulty finding it on the website. The Council acknowledges the need to provide more guidance to landlords about the inspection process and expected standards in licensed properties. In year two, the Council launched a new website and some changes have been made to improve information available. However it was not possible to make further improvements due to resourcing issues with the Residential Regulation Team. It is anticipated this will be completed by end of 2024.

Publicity has also taken place via the Communications team with social media posting and news reports.

Inspection Programme

Risk-Based Approach

Over the scheme, the aim is to inspect 60% of the licensed properties. Inspections will be either reactive (following a complaint) or as part of the proactive inspection programme.

The inspection programme is risk-rated. This assessment is part of the licence application processing and is based on the compliance history of the landlord/manager and the information in the application documentation. The Council inspects properties with a high likelihood of hazards. Block licences are high priority irrespective of compliance history.

This ensures that non-HMO properties are inspected proactively rather than waiting for an occupier to complain. Upon inspection, we assess the property for hazards in all cases. Where hazards are noted, a full assessment using the Housing Health and Safety Rating System (HHSRS) is undertaken.

Inspection Results

In total, 438 inspections have been undertaken since the start of the scheme, either reactively or proactively. Inspections in years one and two demonstrate 70% had hazards and required a full HHSRS assessment.

The council currently uses two database systems to record inspections. The reactive inspection work is undertaken on UNIform; however, the proactive inspection work has been using Metastreet, the supplier for the application system. The Council is currently waiting for a data connection upgrade to allow full extraction of inspection data.

Based on UNIform data, 28% of properties where an inspection was undertaken were found to have a Category One hazard. In 2020, the stock modelling survey indicated 20% properties had a Category One hazard. Our inspection data demonstrates why intervention was necessary.

Enforcement Actions

Once an inspection is completed, we consider serving formal notices. However, before doing so we give landlords the opportunity to remedy hazards to avoid service of notice. Those in receipt of formal notices have the right to appeal to the First Tier Tribunal. Failure to comply with a notice could result in prosecution, financial penalty, and/or works in default.

In Years One and Two, we served 16 Improvement Notices, demonstrating the vast majority of landlords comply with informal requests for work. However, the informal request demonstrates poor management.

Hazard Awareness Notices are served to advise of works but not require completion. Most of these cases relate to overcrowding where it is not reasonable to give a timescale for occupants to move out given high housing demands in Oxford. In Years One and Two, we served 26 Hazard Awareness Notices.

Prohibition Orders can also be served to either prevent occupation of the entire property, part of a property, or limit numbers. Only one prohibition order was served to prevent entire occupation of a property. The remaining Orders are for outbuilding prohibition or to limit numbers. In Years One and Two, we served 15 Prohibition Orders.

Emergency Remedial Action can also be taken where there is an imminent risk to life. These notices are often for failure to have working smoke alarms in the property. In Years One and Two, we undertook 5 instances of Emergency Remedial Action.

Unlicensed Properties

To ensure the scheme is effective, the Council also investigates unlicensed properties. Failing to license a property may result in a financial penalty or prosecution.

Feedback from the 2020 consultation was that for the first year of the scheme we should inform landlords of the need to licence before taking enforcement action. This continued into year two.

Feedback from the 2020 consultation also indicated that non-compliant landlords who fail to licence their properties should pay more than landlords who applied quickly. In year two, a higher fee of £1,100 was implemented where the landlord cannot demonstrate they began to rent the property in the last 12 weeks, compared to the standard fee of £530. This reflects the increased enforcement work associated with unlicensed properties. The higher fee is charged on the second stage payment. In year 2, 528 licences were charged at the higher fee.

The Council has undertaken 83 investigations into unlicensed properties. Of these, 49 have made an application and 16 are exempt. The remaining cases are under investigation. To date there has been no formal action required to ensure a licence application is made.

Rent Repayment Orders

Tenants can apply for a rent repayment order from the First-Tier Tribunal to reclaim up to 12 months rent where the property was unlicensed. We record these enquiries; however, due to the coding it is not possible to separate HMO Licensing from Selective Licensing. There were 23 enquiries in Year Two compared to 7 in Year One, showing increased awareness. From Year 3, rent repayment order recording will be split into HMO or Selective Licensing to improve reporting.

The rent repayment order application must be made by the tenant. The Council works closely with Justice for Tenants, a not-for-profit organisation, who assist tenants with their applications (other organisations are also available). The First-tier Tribunal is experiencing long delays with case work. Only one order has been obtained by Justice for Tenants in relation to selective licensing. The council is not aware of any successful rent repayment orders obtained directly by tenants.

In year 3, work will continue to identify unlicensed properties. The Residential Regulation Team will continue to advise landlords of the need to make applications as this has proven effective; however, enforcement action will increase. A publicity campaign will also be undertaken to improve awareness with tenants, including working with advice centres and other organisations.

Income and Expenditure

The Cabinet designation in 2021 showed predictions for a cost-neutral scheme. As the scheme operates over 5 years, this must be reviewed regularly; however, changes should not be made unless the reviews show a sustained change in the income and expenditure.

In total, 11,940 applications have been received since the start of the scheme, which is 37% higher than predicted by end of year 2. We expected 11,420 applications by the end of the entire scheme and have achieved more than predicted by the end of year 2.

As the scheme commenced in September 2022, alignment to the fiscal year is necessary:

• For the fiscal year 2022/23, the predicted number of applications would have been 6,000. In the fiscal year 2022/23 we received 9,728 applications and an actual income of £1,953,661. The predicted costs in year 1 were considerably more than the actual cost (£517,135). This is due to enforcement officers not being recruited in year 1.
• For the fiscal year 2023/24, the predicted number of applications would have been 841. In the fiscal year 2023/24 we received 1,898 applications and an actual income of £1,898,431.
• The large-scale inspection contract will start in early 2025, meaning the scheme will remain cost-neutral.

Challenges and Lessons Learned

Recruitment and Staffing

Staffing both teams has been challenging due to national shortages in skilled environmental health officers and regular turnover in entry-level positions. The Applications team stabilized by spring 2024. For the Residential Regulation team, a Spring 2024 recruitment campaign using an HR specialist and LinkedIn successfully recruited three new officers. However, vacancies remain and 4 contractors are employed for licensing work. These challenges delayed proactive inspections and landlord guidance development.

Lesson learned: HR specialist support and targeted use of professional networking platforms are effective for recruiting specialized roles.

Inspection Contract Procurement

Initial procurement in summer 2023 received only one over-budget bid. After supplier consultation, the contract was redesigned and successfully awarded in autumn 2024, with implementation expected February/March 2025. This delay significantly impacted the proactive inspection programme.

Lesson learned: Include delegated procurement powers in the designation report to Council to avoid future delays.

System and Process Challenges

BACS payment reconciliation (requested by large agents) added processing time as this functionality was not in the procured system. Supplier delays with data connection upgrades have limited efficiency improvements and comprehensive reporting on inspections and auditing. Robotic Process Automation was considered but not prioritized organizationally.

Lessons learned: Assigning complete caseload responsibility to individual officers eliminated handover delays and errors. Streamlined training (reduced from 16 to 12 weeks) improved new officer productivity through simplified processes and flowcharts.

Achievements Despite Challenges

The Residential Regulation Team was created by merging the HMO Enforcement Team and Private Sector Safety Team to improve efficiency across all private rented sector work. In year 2, 80 unlicensed property cases were investigated, and a trial auditing programme for lower risk properties was implemented. An independent audit found the scheme well-run, with medium risks identified on inspection progress and training - expected given resourcing difficulties.

Conclusion

The number of applications has exceeded predictions. This is often the case when licensing schemes are introduced. In year 2, over 80% applications have received a final licence with 88% at draft stage.

Inspection work has increased significantly. Of the 438 inspections completed, 70% identified Category One or Two hazards, demonstrating why the scheme is necessary. Significant recruitment challenges to the Residential Regulation Team have impacted the ability to begin proactive inspections at the planned scale, but work is now progressing.

Year 3 will focus on issuing the remaining licences and reducing application processing times to the new 16-week target. The remainder of the scheme will focus on enforcement work to ensure the objective of removing housing hazards from privately rented homes is met.

Monitoring data