Landlord licensing has moved from a local irritation to a national cost line for anyone buying tenanted stock. In late July 2026 the High Court dismissed a legal challenge to one council’s selective licensing scheme and ordered the claimant to pay £7,500 in costs, while two more councils opened consultations on fees at or near £1,000 per property. For investors underwriting a purchase, licensing is no longer a footnote in the compliance section. On a block or a portfolio it is a five figure item.
Why licensing schemes are spreading
Selective licensing sits in Part 3 of the Housing Act 2004. It lets a council require a licence for privately rented homes in a designated area where it can evidence problems such as low housing demand, anti-social behaviour, poor housing conditions, high levels of migration, deprivation or crime.
The change that matters is procedural. Since 23 December 2024, councils in England no longer need confirmation from the Secretary of State before implementing a selective licensing scheme of any size, per the government’s guidance for local authorities. Before that, larger designations needed central sign-off, which acted as a brake. Councils still have to meet the statutory tests in Part 3, and are expected under government guidance to consult for at least ten weeks, but the decision now sits locally.
That is the structural reason the volume of schemes and consultations has picked up through 2026.
The High Court backed a licensing scheme
Thurrock Council designated 16 of its 20 wards for selective licensing, with the scheme becoming enforceable from January 2026. A group of landlords and letting agents brought a judicial review. A written High Court decision earlier in 2026 dismissed the claim, and a renewed oral hearing was dismissed in late July 2026. The council confirms the court ordered the claimant to pay it £7,500 in costs and that it is now implementing the scheme. Thurrock publishes the licence at a little over £1,000 for a five year term, with a higher rate of £1,767.40 for landlords who do not apply in time.
The point for investors is not the specific borough. It is that a well-evidenced designation survived a determined, funded legal challenge. Assuming a judicial review will unwind a scheme is not a plan.
Licensing fees are passing £1,000
As of 31 July 2026, two consultations are live.
Preston City Council is consulting on selective licensing across three wards at a proposed £1,050 per property, split into £470 on application and £580 once the council is minded to grant the licence. The published proposal carries no discounts or instalment options, though the council has asked landlords for views on whether discounts should be allowed.
Liverpool City Council is running a ten week consultation, closing on 5 October 2026, on what replaces its current 16 ward scheme when that expires in March 2027. Three options are on the table: a citywide scheme covering all 64 wards, a scheme covering the 29 most deprived wards, or one covering 26 wards with concentrations of private renting and evidence of disrepair. The proposed full fee is £995, against £704 today.
Both of those are consultations rather than settled schemes, and the ward coverage could still change. The direction of travel on price is not in doubt though, and a licence is charged per property, not per portfolio.
Article 4 spreads to HMOs
Separately, councils are reaching for planning powers to control HMO growth. Converting a family house into a small HMO for three to six sharers is normally permitted development. An Article 4 direction removes that right and forces a full planning application. Larger HMOs already need planning consent in their own right.
St Helens Borough Council has voted to bring forward a borough-wide Article 4 direction on HMO conversions. Trade press reports that a six week consultation and a twelve month lead-in will follow, though the council had not published consultation details at the time of writing. Reigate and Banstead Borough Council is further along: its consultation runs from 30 July to 24 September 2026, and the direction would come into force on 30 July 2027 if confirmed. Neither is in force today.
Our guide to Article 4 directions and HMO investing sets out how to check whether a direction is in force, proposed, or absent before you commit to a conversion play.
What this means for property investors
Underwrite the licence as a real cost. At roughly £1,000 per property per five year term, a ten unit block carries a five figure licensing bill before a single repair is done. That belongs in the net yield calculation, not in the notes at the back.
Check designation status at offer stage, not at legals. Three questions to the council settle it: is there a live scheme covering this address, is one out for consultation, and is there an Article 4 direction on HMO conversions. Consultation stage and in force are very different things, and the gap between them is worth real money on price.
Price the enforcement risk properly. Operating without a required licence exposes an owner to a civil penalty of up to £40,000 per offence, raised from £30,000 on 1 May 2026 by the Financial Penalties (Housing Offences and Breach of Banning Orders) Regulations 2026, an unlimited fine on prosecution, and rent repayment orders to tenants. Be aware that some council websites still quote the old £30,000 ceiling. On acquisition, confirm every unit that needs a licence holds one, and that licences are reapplied for on completion rather than assumed to transfer.
Watch the exit as well as the entry. A borough that adds licensing and an Article 4 direction narrows the future buyer pool, because the conversion play disappears. That cuts both ways. Existing consented HMOs inside an Article 4 area become scarcer, and scarcity supports value for the stock that is already lawful.
If you are buying tenanted stock this year, licensing status should be settled before you agree a price rather than discovered afterwards. Browse our current listings, including portfolios, or join the insider list to see off-market opportunities before they are advertised.