Landlord Licensing in 2026: Selective Licensing Schemes and How to Stay Compliant

Selective Licensing in 2026: The Expanding Patchwork

In 2026, a growing number of UK councils are introducing or expanding selective licensing schemes, requiring landlords to obtain a licence for each privately rented property in designated areas. As of January 2026, over 100 local authorities operate some form of selective or additional licensing, covering an estimated 1.2 million homes. Councils in Birmingham, Liverpool, Nottingham, and Sheffield have either launched new schemes or extended existing ones this year. For landlords and agents, ignorance of local licensing rules is no defence, and penalties can reach £30,000 per offence.

What Is Selective Licensing?

Selective licensing is a discretionary power under Part 3 of the Housing Act 2004. It allows local authorities to require landlords of privately rented homes in a designated area to obtain a licence. The scheme aims to tackle low housing demand, anti-social behaviour, poor property conditions, and other local issues. Unlike HMO licensing, which applies to larger shared homes, selective licensing can cover any privately rented property, including single-family lets.

Additional licensing, also under the Housing Act 2004, targets smaller HMOs that fall outside mandatory HMO licensing. Mandatory HMO licensing applies to properties with five or more occupants forming two or more households and sharing amenities. In 2026, the threshold for mandatory licensing remains five occupants, but many councils use additional licensing to cover three- and four-person HMOs.

New and Expanded Schemes in 2026

Several high-profile schemes have come into force or been extended this year:

• Birmingham City Council: A city-wide selective licensing scheme for all private rented homes in 25 wards launched on 1 April 2026. Fees are £700 per property for a five-year licence.
• Liverpool City Council: Extended its selective licensing scheme to cover 16 additional wards from 1 January 2026. The licence fee is £600 for five years.
• Nottingham City Council: Introduced a new selective licensing scheme covering 12 wards on 1 March 2026, with a fee of £650 per property.
• Sheffield City Council: Launched a selective licensing scheme for the Burngreave and Darnall areas on 1 February 2026, charging £550 per property for five years.
• London Borough of Newham: Extended its existing selective licensing scheme for a further five years from 1 January 2026, with a fee of £750 per property.

These are just a few examples. Many other councils are consulting on or planning new schemes. Landlords must check their local authority's website or use the GOV.UK find local council tool to confirm whether a scheme operates in their area.

How to Apply for a Licence

Applications are made directly to the local council. Requirements vary, but typically include:

• Proof of ownership or legal interest in the property.
• Details of the property, including number of bedrooms and occupants.
• Gas Safety Certificate (if gas is supplied).
• Electrical Installation Condition Report (EICR) dated within the last five years.
• Energy Performance Certificate (EPC) with a minimum rating of E.
• Fire safety risk assessment and smoke/CO alarm compliance.
• Landlord's contact details and, if using an agent, their details.
• Fit and proper person declaration, including any relevant convictions or breaches of housing law.

Some councils require a criminal record check or references. The application fee must be paid at submission. Most councils process applications within 4–8 weeks, but delays are common. Operating without a licence while an application is pending is an offence unless the council has a temporary exemption policy.

Fees and Penalties

Licence fees range from £500 to £1,000 per property for a five-year term, though some councils charge more for larger properties or HMOs. Fees are set to recover administrative costs and are non-refundable if the application is rejected.

Penalties for non-compliance are severe:

• Unlicensed operation is a criminal offence, punishable by an unlimited fine (typically up to £30,000 on conviction).
• Councils can issue a financial penalty of up to £30,000 as an alternative to prosecution.
• Rent Repayment Orders (RROs) can require landlords to repay up to 24 months' rent.
• Tenants can apply for an RRO even if the landlord is unaware of the licensing requirement.
• Repeat offenders may be banned from letting properties under a Banning Order.

In 2025, HMRC and local authorities increased data-sharing to identify unlicensed landlords. Enforcement activity is rising, with councils using proactive sweeps and tip-offs from tenants.

Auditing Your Portfolio for Licensing Obligations

With schemes changing frequently, landlords and agents should audit their portfolios at least twice a year. Follow these steps:

• Map your properties by local authority. List each address and the council it falls under.
• Check each council's licensing page. Look for selective, additional, and mandatory HMO schemes. Note designation dates and expiry.
• Verify property occupancy. Determine if any property meets the HMO threshold (five or more occupants, two or more households).
• Review compliance documents. Ensure gas safety, EICR, EPC, and fire safety certificates are current.
• Assess fit and proper person status. Check for unspent convictions or breaches that could disqualify you.
• Budget for fees. Factor licence costs into your cash flow, especially if you have multiple properties in one area.
• Set renewal reminders. Licences typically last five years; diarise renewal dates well in advance.

Using a property inventory software can help you track compliance documents, licence expiry dates, and property details in one place, reducing the risk of missed deadlines.

HMO Licensing: Key Differences

Mandatory HMO licensing applies to properties with five or more occupants forming two or more households. The licence is required regardless of whether the council operates a selective scheme. Additional licensing covers smaller HMOs (usually three or four occupants) if the council has designated an area. Selective licensing can apply to any private rented property, including single lets, but only in designated areas.

If a property is both an HMO and in a selective licensing area, you may need both licences. Councils often combine them into a single application, but fees may be higher. Always confirm with the local authority.

Staying Compliant: Practical Tips

• Join a landlord association. The NRLA and ARLA Propertymark provide updates on new schemes and compliance advice.
• Use council alerts. Many councils offer email notifications for licensing consultations and designations.
• Train your team. Letting agents should know which schemes apply to managed properties and flag changes to landlords.
• Keep records. Maintain digital copies of licences, certificates, and correspondence. Inspectors can request them at any time.
• Act early. Apply for a licence as soon as a scheme is announced. Late applications can lead to enforcement action.

What's Next for 2026 and Beyond

The Renters Reform Bill, expected to become law in 2026, includes provisions for a national landlord register and mandatory licensing in some form. While the full details are still being debated, licensing is becoming more widespread and more strictly enforced. Landlords who audit their portfolios and maintain compliance will be best placed to avoid penalties and protect their income.