Do I need a licence to let my property?

My friend is a landlord in Lewisham and is in the process of navigating so-called “selective licensing” for their property. I am a landlord with multiple properties across other London boroughs and I have not yet come across this. Is it something I need to budget for? If I have multiple properties across different boroughs will I be able to pay one fee? What are the problems if I don’t pay for a licence?

Anna Iceton, partner in Moore Barlow’s property dispute resolution team, says understanding the rules of letting properties, especially when it comes to selective licensing — which is a form of property licensing for privately rented properties — can be a little confusing. 

It’s essential that you get it right, though. If you don’t comply with the regulations you will be committing a criminal offence and could incur potential fines of up to £30,000 per property, plus have to repay your tenant up to 12 months’ rent.

These licences came into force in 2006 in England and Wales, giving local councils the authority to improve the management and conditions of privately rented properties. They are basically a way for councils to make sure properties meet certain standards of management and living conditions. Inevitably, the scheme divides opinion. Some people think selective licensing is great for improving housing standards, while critics highlight the extra costs and paperwork for landlords. 

The basic rule of thumb is that if your buy-to-let or rental property is within an SLS area then you almost certainly need a selective licence. The best way to check is to visit the local council’s website. It’s worth highlighting that this is separate from houses in multiple occupation (HMO) licensing — which has its own fee and compliance regime.

While not every council has these schemes, they’re becoming more common. To add to the confusion, the rules and fees vary from one council to the next and they do not necessarily extend to the whole borough — some target designated areas or council wards.

If you do need a licence, it usually lasts for up to five years and the requirements apply to each property you own and are personal to you. In other words they cannot be transferred to a purchaser of your property. So make sure that you consider those fees as part of your investment outgoing and put money aside for fees that could be incurred.

Should my ex-brother in law remain a trustee?

I’ve been married twice and have two teenage children from my first marriage. One of the trustees of my children’s trust is my most recent ex’s brother. As we’re now in the process of divorcing, what does this mean for him as a trustee?   

Emma Holland, partner at law firm Stewarts, says depending on the trust’s terms it is unlikely that your brother-in-law’s trustee status was conditional on your marriage and he would therefore remain in situ. 

As the family dynamics will inevitably change in view of your impending divorce, you or your brother-in-law may feel uncomfortable with him remaining as a trustee. If this is the case, it is likely that the trust deed will provide a mechanism for his retirement.

A trustee’s retirement will often involve certain formalities — again depending on the trust’s terms — such as notification of the other trustees and appointment of a replacement, whose identity may be set out within the trust. A deed will usually then appoint a new trustee, address the outgoing trustee’s retirement, and set out the basis on which the incoming trustee will indemnify — or protect from liability — the outgoing trustee. The terms of indemnities often require negotiation.

If your brother-in-law refuses to retire, you could ask whoever has the power to remove or replace him to consider doing so. A protector will often hold this role. Unless it is clear from the terms of the trust that removal is a personal power, it is likely that they will only be permitted to do so if it is in the best interests of the beneficiaries. 

What if there is no person nominated to remove and appoint new trustees? If your children are both aged over 18 and have capacity, and are the only beneficiaries, then they can direct your brother-in-law to retire and either appoint someone to replace him or the continuing trustees can consent to his retirement. There must be a trust corporation or at least two trustees remaining after his retirement.

If these options are not available, and you are concerned that your brother-in-law is no longer acting in the best interests of your children, a court application made by your children or, if they are minors, yourself, on their behalf, may be necessary. The court has an inherent jurisdiction to supervise and intervene in the administration of trusts should it see fit and this extends to the removal of trustees.

Hostility and friction in the relationship between your children and brother-in-law will not alone justify the court removing him as a trustee. Similarly, not every mistake on his part will suffice. However, if you are able to demonstrate that the trust assets are in jeopardy or the trust is no longer being properly administered in the interests of the beneficiaries, the court will be likely to assist.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

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