Prostitution is legal in England and Wales

But it must be in private, no public street solicitation. They only allow individual providers not brothels but one can freely advertise unless its too graphic. Actually this sounds quite reasonable to us.

Under the Street Offences Act 1959, it is an offence for a common prostitute to loiter or solicit in a street or public place for the purposes of prostitution. In order to count as a 'common prostitute' and be charged with loitering or soliciting, you must have received at least two 'street cautions' in the last year. A street caution is given verbally on the street, and on the evidence of two or more police officers, and is kept on police records.

Likewise the Kerb crawling law prohibits men from soliciting a women for prostitution on the street or in a public place. The only penalty is a fine. The purpose seems to make sense to avoid harassment of women on the street who are not prostitutes.

It is legal to provide sexual services in a house or flat as long as there are no more than 2 ladies selling sex. If there are more than that, the premises classify as a brothel and you may be at risk from SOA section 33.

It is not illegal to advertise sexual services, although if the ads are extremely graphic and are likely to 'deprave or corrupt ' persons likely to see them, they may fall foul of the Obscene Publications Act 1959.

The Basics - from May 2004

The introduction of the Sexual Offences Act 2003 means there have been several changes.
Age
It is now illegal to pay for otherwise legal sex with someone who is 16 or 17. Controlling someone under 18's prostitution is a more serious offence - no element of gain is necessary and the penalties are up to fourteen years in prison.
Streetwork
The laws on working on the street have become 'gender neutral'. Anyone, male or female, on the street (or on a balcony or in a window) can be found guilty of soliciting for the purpose of prostitution.
Streetwork is one of the few areas where clients of adult workers can get into trouble too - anyone kerb-crawling (approaching other people from or near a vehicle they've just got out of for the purpose of prostitution) is particularly at risk, not least as their vehicle can now be seized.
In fact it is illegal in general to persistently solicit anyone on the street for the purposes of prostitution, but this is much less frequently prosecuted, not least because if they are in fact prostitutes, they don't count for this law!

Working alone indoors, or for an agency or in a brothel
All remain legal. Provided the worker is at least 18, buying sex from them is also legal.

'Pimping', running an agency or brothel
All remain illegal.
But controlling another adult's prostitution is now only illegal if you gain from it (or know that someone else does). Looked at another way, gaining from someone else's prostitution is now legal: it's the control for gain that's illegal.
So sex workers' families should now be free of the risk of being charged with "living on the earnings of prostitution", however owners of escort agencies and brothels as well as 'pimps' will still be at risk.
In addition, it is specifically illegal to own or run a 'disorderly house' or brothel - anywhere more than two women or men resorts to for non-marital sex. As this doesn't necessarily have to be at the same time, or involve sexual intercourse or, indeed, any payment, a very wide range of places are therefore 'brothels', including many hotels. (Remember that it's legal to be a sex worker at a brothel provided you don't assist in its management.)
The penalties for owning or running a brothel involving prostitution have been increased.

Prostitution and related offences: Public Interest Considerations
At all times, you should bear in mind the following general objectives of the legislation involving prostitution, namely:

• To keep prostitutes off the street to prevent annoyance to members of the public;
  
  
• To prevent people leading or forcing others into prostitution;
  
  
• To penalise those who organise prostitutes and make a living from their earnings;
  
  
• Generally the more serious the incident the more likely that a prosecution will be required;
  
  
• The age of the prostitute and the position of those living off the earnings will clearly be relevant;
  
  
• When considering a child accused of prostitution, reference should be made to the policy document Safeguarding Children Involved in Prostitution elsewhere in this guidance, and the child should generally treated as a victim of abuse. The focus should be on those who exploit and coerce children. Only where there is a persistent and voluntary return to prostitution and where there is a genuine choice should a prosecution be considered.

... so people working for themselves, off the streets, are clearly not a priority.
Indeed, indoor work is generally targeted less than street work, and single brothels are targeted less than chains, but patterns of law enforcement vary at different times and in different places.

•   Find out what laws the police are currently enforcing in your area and try to work within those boundaries - some forces say they have 'zero tolerance' of brothels etc, while other forces will call around to check that everything is ok at brothels in their area.
  
  
•   Keep your activities low-key to avoid attracting attention - the neighbours can't complain about things they don't know about.

A few years ago, a brothel operated in a flat in the same block as the home of one of our staff. It was several months before other residents caught on to what was happening, but once they did, it was quickly closed down.
Whatever your set-up, police involvement is more likely where there are under age or illegal immigrant workers, or where there is drug dealing, money laundering, violence or 'exotic' services such as bondage or SM, on the premises.

More information can be found here: http://www.homeoffice.gov.uk/documents/cons-paying-the-price/