LANDLORDS will bear the brunt of a three-pronged assault from the government aimed mainly at improving neighbourhoods from noise and antisocial behaviour from students living in multiple letting properties.

Article supplied by Student Landlord News – March 2010 – http://www.studenthousing.co.uk

From April, houses in multiple occupation rules change to give councils more control over where new HMO properties can be opened.

The final details of the proposed new legislation have yet to be released. This article is based on information released by the government.

The two tools given to council by the governments to impose more control are:

• Enhanced planning powers
• Extra flexibility to license landlords

Following these changes, the government expects to launch an online rating site for tenants to publish comments about landlords.

The key changes are to planning and licensing that allow councils to dictate where a new multiple letting property can open — and to charge landlords fees to apply for permission to run a business.

Planning Powers

From April, an amendment to the Town and Country Planning Act will create a new planning class for HMOs that will require landlords to apply for permission to change use to open a new letting property that is altered from a family home to a shared house for three tenants who are unrelated and share basic amenities.

The change of use will affect landlords buying a home to let as an HMO and investors who already let a property under a single assured shorthold tenancy agreement who want to convert the property to a multiple let.

Current legislation requires property owners to apply for planning permission when six or more unrelated tenants live in a property and share basic amenities, like a kitchen and bathrooms.

HMOs that already house three or more tenants, will not have to apply for retrospective permission because they already have ‘established’ use from the date new legislation is enforced.

Submitting a change of use planning application affects a landlord in three ways:

• A council will charge a fee of several hundred pounds to cover ‘administrative costs’ of considering the proposal. This increases the cost of entering the market and puts off inexperienced HMO landlords and discourages investors from buying property without at least outline planning permission in place.

• Uplift is a property development strategy that lets speculators cash in on property prices. A profitable speculative move in HMOs would see someone taking over a property on an option to buy subject to obtaining planning and then selling or assigning that option to an investor once planning permission was granted. The uplift would be the difference between the purchase price without planning permission and the increased sale price once the property had the planning go-ahead. If planning was not granted, then the speculator walks away from the option.

• A council can micro-manage HMO development property-by-property in streets or neighbourhoods, enforcing planning conditions or making landlords open new HMOs away from areas the council felt were not appropriate to locate multiple letting properties. Objections will centre on parking, over supply of HMO properties in certain areas arid social complaints from residents about noise, rubbish and drunkenness.

HMO Licensing

This is a sensitive subject for landlords and tenants. HMO landlords or their managers are subject to licensing as ‘fit and proper’ people to run multiple letting properties and the properties must also meet stringent fire, health and safety conditions.

Licensing is certainly an area where landlords could feel councils and the government play fast and loose with the facts.

It is fair to say that generally, one HMO landlord stands in court every day accused of flouting licensing regulations by ignoring health and safety requirements and often not even applying for a licence to run an HMO.

To believe the owners of every one of the 400,000 or so HMO properties in the UK are sticking to every single rule is a little naïve. Statistically, those 400,000 HMOs are probably owned by about, say, 250,000 landlords, so 250 a year in court is only 0.1% of the sector.

If someone works out the math, it’s probable a higher percentage of MPs were fiddling their expenses than there are bad HMO landlords going to the courts.

Nevertheless, the government says 900 responses were received to consultation over HMO regulation and more than 90% of those were in favour of tightening the rules and complained of antisocial behaviour.

Many landlords would have sympathies for residents who are victim of antisocial behaviour in their own neighbourhoods, but have difficulty in working out how they are responsible for how tenants behave.

Licensing restrictions would seem to serve only to displace this behaviour to other areas where residents and lobby groups don’t complain so vocally as those who responded to the consultation.

Many would also point out that homeowners are often guilty of antisocial behaviour as well. Licensing is also seen as a method to deal with improving living conditions.

This does conflict with a recent report published by the same government department responsible for HMOs -Communities and Local Government (CLG) – that found only 11% of private tenants were dissatisfied with the standards of their homes compared to 16% in the public sector.

The other issue is why do tenants who are not happy with their homes stay there and why don’t they use channels already in place to complain to councils about the state of their homes?

Perhaps the low number of landlords ending up in court and the powers councils already have to intervene as the result of complaints show that the system is already working and doesn’t need more demonising of landlords.

Under the new licensing regime, councils can set up discretionary licensing in areas blighted by HMOs of a poor standard.

Currently, a council has to apply to the CLG for these powers. Discretionary licens¬ing comes in two parts:

• A council can extend licensing in a neighbourhood to HMOs that do not meet mandatory HMO licensing requirements. Discretionary licensing already operates in 16 council areas.

• A council can enforce selective licensing to cover all privately rented property in a neighbourhood that is or is likely to become an area of low housing demand and/or significant and persistent anti-social behaviour. The license requires a rental property to meet standards and conditions. Selective licensing is operated in 17 neighbourhoods by 12 councils.

Rate Your Landlord Web Site

This is a contentious proposal that would allow tenants to publicly rate their landlords on an open web site set up by the government. The idea would seem legally unworkable.

Questions arise like who would check out the truth of the comments and who would handle and pay the damages for landlords suing the site for libel.

Defamation laws state that the publisher of the content is just as liable as the writer and that the publisher has a duty of care to check the facts of any material on a web site.

The only assumption is the government has not thought this policy through – and assumes that a landlord would not serve a writ from libel forcing the web site to remove the offending article or prove the truth of what is said in court.

The only winner here would seem to be the lawyers, who must be rubbing their hands in anticipation of such a lucrative pay day.

The odds on this one lasting more than a week on-line are slim.

What The Minister Says:

The minister responsible for HMO legislation and the web site idea is Housing Minister John Healey, MP for Wentworth, Rotherham, who said:

“I am giving councils more local powers to crack down on the worst landlords and stop the spread of high concentrations of shared homes where it causes problems for other residents or changes the character of a neighbourhood.”

“Private landlords play a big part in meeting the housing needs of millions so I want to raise the standards and stamp out the worst landlords that drag down the reputation of the rest.”

“Councils know their communities and are best placed to help tenants facing landlords who rent unsafe or substandard accommodation and take little responsibility for the problems caused for neighbours.”

“It’s also right that tenants have the information they need about potential landlords, and know what to do when things go wrong.”

“The new National Landlords Register I will set up will give them access to this important advice.”

“Everyone deserves a decent and safe place to live and these measures aim to improve standards of the private rented sector at a time when more people look to rent as their first option in the housing market.”

Article supplied by Student Landlord News – March 2010 – http://www.studenthousing.co.uk