Landlords, are you ready for the extended mandatory HMO licensing?
You may well remember back in 2006 when the mandatory Houses in Multiple Occupation (HMOs) licensing for England and Wales came into force. It was designed to enforce standards to landlords with properties of three storeys or more – with five or more people, making up two or more separate households living in them.
Since then, the private rented sector has undeniably grown – and rapidly, currently accounting for 19.4% of the English population.
Despite recent pressures on landlords having to adjust to stricter tax and regulatory changes - resulting in a slowdown of investment in the sector - there is still a growing demand for rental accommodation. Many of these renters continue to look for the most budget-friendly forms of accommodation. This has often been (especially for the more in-demand regions) shared housing – which is where HMOs come into play.
To overcome ‘opportunist rogue landlords’, as coined in the government’s 2018 HMO and residential property licensing reform guidance, the Ministry of Housing, Communities and Local Government have extended ‘the scope of mandatory HMO licensing so that properties used as HMOs in England which house 5 people or more in two or more separate households will in many cases require a licence’. This will be enforced from 1st October 2018.
If you think this may apply to your properties, here are some of the key things you’ll need to know:
Who will be affected by the Houses in Multiple Occupation and residential property licensing reform – and when?
HMO landlords – Government define them as any person ‘managing or controlling an HMO’. Any landlord that falls under the updated HMO definition by the 1st October 2018 and hasn’t applied for a licence or a temporary exemption will be committing a criminal offence.
If an HMO is found to be in operation without a licence, the landlord could be convicted – and the fines for non-compliance are unlimited.
What is the new, extended definition of an HMO?
In April 2018, Parliament approved secondary legislation which reforms the mandatory
HMO licensing regime:
HMO property with one, two, three or more storeys.
It is occupied by persons living in two or more separate households; and meets the standard test under section 254(2) of the Act;
The self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats; or
The converted building test under section 254(4) of the Act.
How is that any different from before?
Most notably, the HMO licence requirement used to be limited to HMOs that were three or more storeys high, with five or more people making up two or more separate households living in them. This will now include buildings with one or two storeys.
Have HMO condition requirements changed?
Yes, the Mandatory Conditions Regulations 2018 introduce the following new conditions:
Landlords of HMOs must ensure there are appropriate facilities for storing rubbish their tenants generate – and this will need to comply with their local authority’s storage and disposal of domestic refuse scheme. Taking the focus off of landlords, government have asked local authorities to be wary that HMOs are residential properties and they should continue to provide free, comprehensive and frequent waste collection services.
Do I need to apply for a new HMO license if I already have one?
If you have an existing licence under a selective licence scheme for your property, it will remain valid, automatically being passported into the mandatory HMO scheme from 1st October 2018. Unless inspection forms part of your licence, your local association will not be required to inspect your property. You do, however, need to think ahead – and your local authority should provide the necessary information about future requirements that will need to be met. When your current licence does expire, you will need to apply for a new license as usual – and the new conditions will be unavoidable.
For a more detailed understand of the new requirements, click here to read the Ministry of Housing, Communities & Local Government’s Houses in Multiple Occupation and residential property licensing reform.
If you currently have an HMO property which may not meet the new mandatory national minimum sleeping room sizes and need property financing to fund the renovations – we may be able to help. Give us a call on 0333 123 4556 or drop us a line today.
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