When a normal rented house needs a selective licence
Councils in England can require a licence for every privately rented home in a designated area. Here's how schemes work, what they cost and what non-compliance costs, which just got a lot more expensive.
4 mins read
16-09-2026
Written by
Editorial Team
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Selective licensing catches landlords out precisely because it has nothing to do with HMOs. Under Part 3 of the Housing Act 2004, a council in England can designate any part of its area for selective licensing, and once it does, every privately rented home in that area needs a licence, however ordinary the house and tenancy.
Licensing law is national but every scheme is local, and this is general information rather than legal advice. The rules described here apply in England.
How schemes are made
A council can designate its whole area or any part of it where it sees low housing demand, persistent anti-social behaviour, poor property conditions, high deprivation, high crime or high levels of migration. A designation lasts up to five years, and social housing and a short list of exempt tenancies fall outside it.
Since 23 December 2024, councils no longer need Secretary of State confirmation before introducing a scheme of any size. The trade-off, set out in the government's guidance to local authorities, is a consultation of at least ten weeks, and a scheme cannot start until three months after it is designated. New schemes are therefore visible well in advance if you look.
Fees are set by each council, so the only reliable figure is the one on your own council's published schedule. Two neighbouring authorities can run schemes with different fees, different discounts and different licence conditions.
What it costs, Newcastle as a working example
Newcastle has eight designated selective licensing areas in total. Two of them, Byker Old Town and Greater High Cross, have been licensed since 2021 and that designation is due to expire on 30 September 2026, but the council has already approved a five-year renewal from 1 October 2026, so there's no gap in coverage there, just a new licence period.
Newcastle selective licensing at a glance | |
|---|---|
Standard fee | £1,000 per property (£300 on application, £700 on grant) |
Discount for applying within a month of purchase | minus £50 |
Discount for an EPC rated A to C | minus £100 |
Compliant landlord licence length | 5 years (£200 a year) |
Non-compliant landlord licence length | 1 year |
Civil penalty for letting unlicensed | Up to £40,000 (government starting point £12,000) |
Rent repayment order | Up to 24 months' rent |
The cost of letting without one
Letting a property that needs a selective licence without one is a criminal offence. As of 1 May 2026, the council can impose a civil penalty of up to £40,000 or prosecute, in which case the fine is unlimited, and it can also take over management of the property. Government guidance suggests £12,000 as a typical starting point for a first unlicensed letting, with councils free to go higher for aggravating factors, so don't take that figure as a cap.
A tenant or the council can also apply for a rent repayment order, and since 1 May 2026 that can reach up to 24 months' rent on top, double the old 12-month limit. On a Newcastle terrace let at £750 a month, that's as much as £18,000 handed back for want of a licence that would have cost £1,000.
Enforcement history follows you too. A landlord who has previously let without a licence is exactly who Newcastle says it will restrict to one-year licences, so the first failure raises every later cost.
Check the map before you buy
Selective licensing is a due diligence point when you buy a tenanted property, because the obligation applies from completion and schemes appear mid-ownership. Newcastle's October 2026 renewal, for instance, was approved back in February 2026. Ask the selling agent which schemes cover the postcode and check the council's licensing pages directly, since a licence does not transfer with the sale and you'll need your own. If you're building a portfolio, it's worth lining up landlord insurance alongside the purchase, not as an afterthought once the licence question is settled.
Selective licensing sits alongside, not instead of, HMO licensing. A licensable HMO in a designated area still needs its HMO licence, which we cover in our separate guide to HMO licensing. Everything else privately rented in the area needs the selective licence.
If you're adding to a portfolio, price in the buy-to-let conveyancing costs specific to a rental purchase, then get conveyancing quotes through Moving Compared before you instruct.
