Licencing: Part 3 v. Part 2

In the first half of 2025, we have seen a significant upsurge in councils introducing Selective licencing. Often councils take their existing Part 2 HMO licencing scheme as the blueprint for Part 3 Selective licencing without taking into account the differences. So we now have increasing numbers of councils imposing requirements on PRS providers of homes rented to single households that should only be imposed for HMOs.

This article aims to set out the key differences between Part 3 and Part 2 provisions so that associations with members in an area where Selective licencing is either in effect or proposed can challenge the local authority on any elements of the scheme that lacks a lawful basis provided by Part 3 of Housing Act 2004.

Note: The legislation in full is on the gov.uk website here : Housing Act 2004

Key differences

Part 2 is defined in sections 55 to 78, and Part 3 in sections 79 to 100 of the Act. There is no equivalent in Part 3 of the two sections 65 & 76; but otherwise headers, purpose and content of each section is directly comparable and in the same sequence in each of the two parts. The key differences are:-

1. S55(5) v. S79(5) on precautionary inspections

The first notable difference is that for HMOs, defined in S55(5)(c), every local housing authority has a general duty:

“to satisfy themselves, as soon as is reasonably practicable, that there are no Part 1 functions that ought to be exercised by them in relation to the premises in respect of which such applications are made.”

Part 1 covers assessment and enforcement of housing conditions, and this is the provision that drives councils to undertake an initial precautionary inspection of newly licenced HMOs. However, the same provision is not included in S79 of Part 3.

That is, unlike for Part 2 HMO licencing, there is no basis found in the statute for a council to undertake inspections purely on a precautionary basis as part of a Part 3 Selective scheme. But many councils assume there is, and to add insult to injury that erroneous assumption inflates the cost basis of licence Fees. (Fees is a subject I aim to address in a subsequent article.)

2. S56 v. S80 on designation of areas

Criteria for designation of an area to be subject to Additional licencing naturally differs significantly from criteria for the designation of Selective licencing, and I won't expand here on that.

However, it is worth noting that S80(7) allows for the Secretary of State to specify conditions for Selective licencing beyond the two defined in S80(3) and S80(6), and there are four more defined in: The Selective Licensing of Houses (Additional Conditions) (England) Order 2015 .

3. S64(3)(a) v. S88(3) on number of occupants

S64 and S88 cover Grant or refusal of licence. A licence may be granted where the authority is satisfied that matters under subsection (3) are satisfied.

S64(3) includes at (a): “that the house is reasonably suitable for occupation by not more than the maximum number of households or persons mentioned in subsection (4) or that it can be made so suitable by the imposition of conditions under section 67;”.

S88(3) does not have an equivalent to S64(3)(a) on maximum numbers.

That is, there is no basis in the statute for the imposition of conditions, generally, limiting the number of occupants with Part 3 Selective licencing. Still, even though there is no basis in law, a number of councils do just that, including setting maximum occupancy at levels that would not constitute statutory over-crowding.

4. S67 v. S90 licence conditions

S90(1) allows: “A licence may include such conditions as the local housing authority consider appropriate for regulating the management, use or occupation of the house concerned.”. This differs from S67 (for HMOs) which allows additionally for conditions regulating the 'condition and contents' of the house.

But numerous councils copy blanket conditions relating to condition and contents applied in their Part 2 HMO scheme(s) into Part 3 Selective licencing. Most commonly specifying conditions of external features such as boundary walls/fencing and security of outbuildings, gardens, and provision of storage for household waste; all of which make far more sense in an HMO context than where the whole property is in the legal possession of a single household as tenant.

S67(2)(f) allows for conditions that require the licence holder or manager to attend a training course relating to a prescribed code of practice for HMO management. There is no equivalent in S90. However, there is a relevant Upper Tribunal case in Berg v. Burnley [2020] UKUT 91 (LC). Berg as appellant with the burden of proof did not present his case as well as it could have been, as he overlooked para 242 of statutory guidance: A guide to the licensing and management provisions in Parts 2, 3 and 4 of the Housing Act 2004 which might have swung it. Anyhow, the Judge determined it was reasonable for the council to have a blanket policy requiring all Selective licence holders to attend a training course. As a tribunal case, it doesn't set a precedent in case law but that decision is still authoritative to a point and makes it a lot harder for anyone else to argue the same point successfully in judicial proceedings.

It's also worth noting here there is a Court of Appeal case, Brown v Hyndburn [2018] EWCA Civ 242, which includes discussion on the differences between S90 and S67.

5. Schedule 4 mandatory conditions

All conditions of Schedule 4 para. 1 are mandatory for all (Part 2 and Part 3) licences.

Para. 1A applies to Part 2 licences in England only addressing floor area of rooms used as sleeping accommodation, but some councils include these in Part 3 licences even though the landlord has no means to dictate sleeping arrangements where a house is let whole to a single household.

Para 1C also applies to Part 2 licences in England only, requiring compliance with council schemes on storage and disposal of household waste. This is another commonly copied inappropriately into Part 3 licence conditions.

Para 2 applies to Part 3 licences, requiring the licence holder to demand references from persons who wish to occupy the house. This is often copied into Part 2 licences even where there is no Part 3 scheme in effect.

Final word

There is such an extraordinary amount of duplication found in Selective licencing across authorities of elements that lack any clear lawful basis. So it seems councils take the view that if it has been done before, it doesn't require due diligence, and that naturally leads to errors being compounded. Over the course of time, the norms of these schemes just get further and further from what Parliament has made provision for. But there is no audit function keeping them in check. It is purely up to landlords' associations to stand up for their members' rights when it comes to challenging the actions of local authorities where they have over-interpreted their discretionary powers.

And be careful to define your questions with a precision that does not allow for misdirection in the response – council officers are used to dealing with politicians and use the same tactics as politicians in replying to awkward questions.

About the author

Simon Fletcher has been a landlord since 2006 including for properties subject to licencing since 2013. He is the committee member for Licencing with Portsmouth and District Private Landlords Association.