06 Sep 23
A survey of local authorities in some of the poorest areas of the country – bodies which enforce many private rental sector regulations – suggests many are considering declaring “effective bankruptcy”.
This follows the news that Birmingham council, the largest local authority in Europe, is already effectively bankrupt.
Landlords are at the greatest ever risk of enforcement action because council financial supremo’s see it as a highly effective method to generate cash. They can generate fines of £50,000 to £60,000 almost at the drop of a hat at the majority of HMOs because landlords do not have the knowledge to meet the latest compliance rules which are self-made by the council without any controls or scrutiny. Landlords also do not have the knowledge and skills to challenge these fines in th pathetically short period of time permitted to raise a challenge (a representation).
One of the massive reasons behind selective licensing, and which we at Landlord Licensing & Defence now see regularly is that councils can and do put all manner of conditions into selective licences (which landlords accept without realising what they are accepting) which then allows them to generate cash just as easily as they can with instant fines for “breach of a licence condition”. For each ‘breach’ the council can issue fines of up to £30,000 and they get to pocket the cash.
So the council sets the rules, is the housing police, judge and jury, and gets to pocket the cash. Oh and they are desperate in the extreme for the cash.
Its a good job councils are totally honest and would not dream of over-egging the pudding.
A survey of 47 local authorities in the Midlands, the North of England and on the South Coast revealed a severe strain on finances – particularly acute in 26 of the councils.The survey was conducted by the Special Interest Group of Municipal Authorities (Sigoma) which says that some member councils were considering issuing a section 114 notice, which freezes all non-essential spending.
Councils said the most common cause of financial pressures was demand for children’s social care services following requests from the government to treat those services as an equal priority with adult social care, and allocate additional funding. Other significant factors cited were inflation costs and wage rises, with warnings an imminent increase in the cost of borrowing is set to add further financial pressure.
S114 notices have been used only rarely in the past – by Hackney council in London 2000 and Northamptonshire County Council in 2018, but more recently by Thurrock, Woking, Croydon and Slough authorities.
The news of possible bankruptcy comes just as Trading Standards in many local councils are being expected to beef up their enforcement.
Anyone would think there was a financial motive!
Sigoma chairperson Sir Stephen Houghton, Labour leader of Barnsley council, says: “The government needs to recognise the significant inflationary pressures that local authorities have had to deal with in the last 12 months.
“At the same time as inflationary pressure, councils are facing increasing demand for services, particularly in the care sector. Pay increases are putting substantial pressure on budgets, and so the government must ensure that local authorities have the additional funding they need to fully fund these pay increases or risk impacting future service delivery.
“The funding system is completely broken. Councils have worked miracles for the past 13 years, but there is nothing left.”
The words of Gilbert and Sullivan come to mind…”and they’d none of them be missed. They’d none of them be missed”!
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