Selective licensing fees: what the cost really covers, and how to pay less

If you rent out a property in a designated ward, the selective licensing fees cost is one of the few compliance bills you cannot shop around for. There is no national price list, no cap, and no competitor to switch to — your council sets the number, publishes it in a fee schedule, and you pay it. That is precisely why it stings. But the fee is not a tax, and understanding the legal machinery behind it tells you where the negotiating room actually is.

TL;DR

Selective licence fees in England are set locally by each council under section 87 of the Housing Act 2004, so there is no standard figure — published totals range from around £600 to around £1,000 per property in the examples below. The fee is almost always split into two parts: Part A on application (covering processing, usually non-refundable) and Part B on grant (covering running and enforcing the scheme). Because a licence normally expires with the designation rather than five years after grant, applying late in a scheme can mean paying a full fee for a short licence. Discounts for accreditation, good EPC ratings and early application are common and routinely missed. Failing to apply is far more expensive: from 1 May 2026 the maximum civil penalty for a licensing offence rose to £40,000.

The fee is not the expensive part. Not applying is.

What do selective licensing fees actually cost?

Selective licensing fees for landlords in England are set by each local housing authority individually, and the only figure that matters is the one in your own council's published schedule. Two real examples show the spread. Westminster City Council publishes a total selective licence fee of £995, split as £543 Part A and £452 Part B, for its scheme covering privately rented homes in 15 wards (Westminster City Council, licence fees and discounts). Hammersmith & Fulham publishes £597.50 for an additional HMO or selective licence, with an £80 reduction for members of an accredited landlord body (LBHF property licensing).

The fee is charged per property, not per landlord and not per portfolio. A landlord with four terraces in a designated area pays four fees. There is no bulk discount as of right, although some councils offer one for multiple leaseholds within the same freehold block.

Why is the fee split into Part A and Part B?

The two-part fee is not council bureaucracy for its own sake — it is the direct result of case law. Following R (Hemming) v Westminster City Council and R (Gaskin) v Richmond upon Thames LBC, the Local Government Association's guidance on locally set licensing fees confirms that charging an application fee plus a later fee to successful applicants is permissible, whereas a single up-front fee covering all costs is not (LGA guidance on locally set licensing fees). Councils therefore have to separate the cost of processing your application from the cost of running and policing the scheme.

The practical consequence for landlords is blunt: submitting a speculative or incomplete application costs real money. If you apply for a property that turns out not to be licensable, or your application is rejected because the paperwork is wrong, Westminster's published terms state the Part A payment is not refunded. Get the property's licensable status confirmed with the council in writing first.

Can a council legally use licensing fees as a cash grab?

This is the question landlords actually want answered, and the honest reply is: the law constrains what the fee can recover, but it does not constrain how efficiently the council spends it. Section 87(7) of the Housing Act 2004 sets out what a local housing authority may take into account when fixing fees.

That is a cost-recovery power, not a revenue-raising one. The LGA's guidance also records that where fees produce a surplus, both Hemming v Westminster and Cummings v Cardiff require that surplus to be used to reduce fees charged in the following year. So a scheme that over-recovers should, in principle, get cheaper.

The useful takeaway: if you think your council's fee is indefensible, the document to read is not the invoice but the fee-setting report that went to cabinet, and the consultation that preceded the designation. Councils are expected to publish the outcome of their statutory scheme reviews under section 84(3) on their website (MHCLG selective licensing guidance for local authorities). That is where the cost assumptions live, and it is the material any landlord group challenging a scheme will work from.

What does a five-year licence really cost? A worked example

Say a landlord owns three 2-bed terraces in a ward that has just been designated, and the council's published selective licence fee is £800 per property (£450 Part A, £350 Part B) for a five-year scheme. Those are illustrative figures — use your own council's.

• On application day: 3 × £450 = £1,350, payable immediately and non-refundable.
• On grant: 3 × £350 = £1,050.
• Total across the designation: £2,400, or £480 a year, or roughly £13 per property per month.

Annualising is the fair way to look at it, and it makes the number less frightening. But here is the trap that annualising hides.

On tax, most landlords treat a statutory licence fee as a running cost of the property business — expenses must be incurred wholly and exclusively for the purposes of the property business to be allowable (HMRC Property Income Manual, PIM2130). Whether a single fee covering a five-year period should be deducted in one go or spread is exactly the sort of question worth thirty minutes of your accountant's time, particularly if you are close to a higher-rate threshold. Our landlord tax guide to rental income covers the wider expenses picture.

What discounts can landlords claim on selective licensing fees?

Discounts are the one genuinely controllable part of the bill, and they are the most commonly missed. Westminster City Council publishes reductions of 10% of the total fee for accredited landlords, 20% of Part B for a property with an EPC rating of B or above, 10% of Part B for an EPC C, and £125 for multiple leaseholds within the same freehold. Hammersmith & Fulham offers £80 for accredited landlord body membership or £50 for signing its rental charter, but only one discount per licence.

Three patterns worth knowing:

1. Accreditation usually pays for itself. If a council offers 10% off a £995 fee across three properties, that is roughly £300 — more than most accreditation memberships cost.
2. EPC-linked discounts are becoming common. If you are already planning improvement work ahead of the minimum energy efficiency deadlines, sequencing the works before the licence application can pay twice. See our guide to EPC rating requirements for rental property in 2026.
3. Early-bird windows close. Several councils apply reduced fees for a limited period after a scheme starts, and some add a surcharge to late applications. The discount is a deadline, not a permanent feature.

What happens if you don't apply for a selective licence?

Operating a licensable property without a licence is an offence under Part 3 of the Housing Act 2004 (see Part 3, Housing Act 2004). A council can prosecute — with an unlimited fine on conviction — or impose a civil penalty as an alternative. Under MHCLG's statutory guidance, the statutory instrument raising the maximum financial penalty under section 249A of the Housing Act 2004 from £30,000 to £40,000 came into force on 1 May 2026, alongside the Renters' Rights Act provisions (Civil penalties under the Renters' Rights Act 2025 and other housing legislation).

Two further points landlords underestimate. First, penalties are generally imposed per property and per offence, so a portfolio in a designated area multiplies the exposure. Second, a licensing offence opens the door to a rent repayment order, which the Renters' Rights Act strengthened — our rent repayment orders guide sets out how those claims work. Against that backdrop, an £800 fee is cheap insurance.

Crucially, under the Act you commit no offence if a valid application has been duly made and remains effective. Applying — even at the last minute — is the thing that protects you, not holding the licence certificate in your hand.

Does the Renters' Rights Act database replace selective licensing?

No. The Private Rented Sector Database created by the Renters' Rights Act is a separate, national registration requirement that sits alongside local licensing, not instead of it. The Government's own guide confirms landlords will be required to pay to register on the database, with a stated intention that the fee be "proportionate and good value" (Guide to the Renters' Rights Act). Landlords in a designated ward should therefore plan for both costs. Our guide to registering on the landlord property portal covers the database side, and the HMO and selective licensing pillar covers which scheme applies to which property.

How to keep your licensing costs down

1. Confirm licensable status in writing first. Ask the council to confirm whether your specific address is in the designated area and not exempt. Part A is generally non-refundable, so a wasted application is a wasted fee.
2. Read the full fee schedule, not the headline. Look for variation fees, change-of-licence-holder fees (which often require a fresh application), and any late-application surcharge.
3. Claim every discount before you submit. Accreditation, EPC band, rental charter, multiple leaseholds — most are applied at application, not retrospectively.
4. Apply the day the window opens. Early-bird reductions expire, and a duly made application is what stops the clock on the offence.
5. Diary the designation end date, not the grant date. Your licence almost certainly expires with the scheme. Put that date in the same place you keep your CP12 and EICR renewal dates.

Frequently Asked Questions

Are selective licensing fees refundable if my application is refused?

Generally no for the Part A element. Westminster City Council, for example, states that where an application is refused, rejected or withdrawn, the Part A payment will not be refunded. Part B is only payable once the council decides to grant, so it is not charged on a refused application.

Can landlords claim selective licensing fees as a tax-deductible expense?

Most landlords treat a statutory licence fee as a running cost of the property business, and HMRC's Property Income Manual requires expenses to be incurred wholly and exclusively for the purposes of the property business to be allowable. Whether a fee covering a five-year designation should be deducted in one year or spread is a question for your accountant.

Do I need a selective licence if my property already has an HMO licence?

No. Councils operating both regimes confirm that a property already licensed under a mandatory or additional HMO licensing scheme does not need a separate selective licence for the same property — Croydon Council states this explicitly for its 2026 scheme. You still need to hold the correct licence type for how the property is actually occupied.

How long does a selective licence last?

A selective licensing designation lasts a maximum of five years under Part 3 of the Housing Act 2004, and in practice most councils issue licences that expire on the designation end date. Leeds City Council, for instance, states that all licences under its scheme starting 9 February 2026 expire on 8 February 2031, regardless of when they were granted.

Can I challenge my council's selective licensing fee?

You cannot negotiate the published fee, but the fee-setting report and the statutory consultation are public documents, and councils are asked to publish the outcome of scheme reviews under section 84(3). If you believe the fee recovers costs the Housing Act 2004 does not permit, that is a matter for a solicitor with housing licensing experience — this article is general guidance, not advice on your scheme.

This article explains the general position in England as at 29 July 2026. Selective licensing fees, discounts and designations change frequently and vary by council — always confirm the current figures with your local housing authority before you apply, and take legal advice on anything fact-specific.