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HMO 2018 License – No “Period of Grace” for Landlords After Oct Deadline!.

April 20, 2018
HMO Property License 2018

1st October 2018 – if you are a landlord, it’s a deadline that you really need to be aware of and must act upon in advance. It’s when the government will implement new regulations for Houses in Multiple Occupation (HMO). There is to be no allowance for a “period of grace” for landlords to comply after this date and an unlimited fine could be imposed for renting out an unlicensed HMO. Mortgage lenders are also now refusing applications from landlords if the licence has not been issued.

What’s it all about then, you may be asking. Your lettings management agent should have informed you by now! On the first day of October, The Licensing of Houses in Multiple Occupation (England) Order 2018, will replace the 2006 Order. Under the new regulations, the government is to extend the scope of HMO mandatory licensing to cover buildings with one storey or more, which up until now had been limited to a minimum of three storeys or more.

 

New scheme to replace existing licences

There are is also to be a specified minimum room size for a privately let HMO, which is to be no smaller than 6.51 square metres for one adult, 10.22 square metres for two adults and 4.64 square metres for children aged up to 10 years.

A property will also be classed as an HMO if two or more of the occupying households share one or more of the basic amenities – even if the property is not made up of self-contained flats and is treated as a main residence. Landlords of properties falling under this criteria will also need to obtain the new licence, which is expected to bring a further 177,000 properties under HMO licensing. The new scheme is also to replace existing licences for around 20,000 HMOs, where selective or additional schemes are already in place for landlords.

Refuse disposal and storage facilities will also come under the new licensing conditions with a minimum number of bins for waste expected to be set out by the government.

 

Far reaching changes…

The changes coming in will be far reaching because it could affect 1 in 5 of UK households. Currently, the private rented sector is the second largest type of tenure after home ownership, accounting for 4.5 million or 20 per cent of households in England (Department for Communities and Local Government (English Housing Survey 2015-16).

There are an estimated 508,000 HMOs across the country. Since the Management of Houses in Multiple Occupation (England) Regulations 2006, only large HMOs of three storeys or more, and occupied by five or more persons in two or more separate households, have been subject to mandatory licensing.  As a result, it is generally considered that licensing has been largely successful in improving HMO management and safety standards.

However, there has also been a significant increase in the use of smaller properties, notably two storey houses – originally built for families – and the use of flats as HMO accommodation. Although some of these HMOs are licensed under local HMO licensing schemes, many are not.

 

Prosecutions against landlords in breach of HMO more than doubled

The momentum for extending the scope of HMO licensing has been building for some time. Reports have increasingly surfaced of rogue landlords exploiting the present system by renting sub-standard, overcrowded and dangerous accommodation. Among the “poor practices” found were housing illegal migrants, failing to meet the required health and safety standards, permitting overcrowding and ineffective management of tenant behaviour.

According to a recent local government report, the number of successful council prosecutions against landlords in breach of HMO (House in Multiple Occupation) regulations has more than doubled over a two-year period. Redbridge Borough was one of the councils asked to participate in the report, which provided details of 24 cases in total.

Of the different types of offences relating to poor housing conditions:

 

  • 17 of the 24 prosecutions were for breaches of the HMO Management Regulations.
  • 2 were for failing to licence an HMO.
  • 4 were for failure to comply with an improvement notice.
  • 1 was for overcrowding in an HMO.
  • 2 were for breaches of Emergency Prohibition Orders (both in Redbridge).

 

If an HMO property is not licensed, a landlord could be issued with a civil penalty of up to £30,000 or face prosecution in a magistrates court with an unlimited fine. In addition, the landlord could forfeit any profits made while renting the property illegally and required to repay the rent collected. In January 2018, an Ilford landlord was fined £97,400 for operating an unlicensed HMO and breaching regulations.

Th crackdown of rogue landlords who fail to comply with the new HMO licensing conditions could see many more facing prosecution after the October deadline. It is crucial for landlords to seek advice without delay from a reputable property management agency to ensure they are fully informed on all their legal obligations, including gas and electrical safety certificates.