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Any advice on selective licensing ? Please HELP!

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We own a house in the Tunstall area of Stoke on Trent and lived in it for several years until due to work and family circumstances (more babies and a job out of area) we moved and rented a larger property in a different county. Our little house stood empty for a few months while we tried to work out how to pay the mortgage and rent. Our eldest daughter said she wished to remain in Stoke, and so for the last year she has "rented" our house along with a friend who has the other room.

The rent is very cheap (less than the mortgage) and they pay half each. The problems started when the friend lost their job and applied to have their half paid by Housing Benefit. She has a Tenancy agreement and the property is Managed by a letting agent (because we dont live near enough to collect rent, sort problems quickly etc). It is a nice little house which we do a Gas check on, and maintain to a high standard. I must stress, we do not make any profit on this house.

Because of the housing Benefit claim for our daughters friend, we have received a notice that the house is in a selective licensing area and we now have to pay £500 and be inspected in order to comply to the licensing conditions. We cant afford to pay this fee! I lost my job in January, my partner is on minimum wage, the mortgage and expenses for the house cause a loss, and we do not claim any benefits.

Will we have to evict this friend of our daughters? She cannot afford the rent by herself. we arent a business, we are just a family trying to keep our house and all our family housed. What on earth will we do? We filled in the application form last year and had no response for months. then they denied receiving the application, so we rang.....and rang....and rang. We left messages. Now we have a letter saying please contact, but the lady is never in! We dont know who to ask for advice, and feel that surely there must be some exemptions to this policy?

Does anyone please have any suggestions or experience with a similar issue? Thanks for any help.

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