New HMO Licensing Rules:
Since mandatory licencing was introduced by the 2004 Housing Act, and landlord with a property housing 5 or more unrelated occupants over 3 or more stories has had to apply for a licence from their local authority to operate a multi-occupied letting.
This licence sets down strict safety standards to which landlords must comply, and these premises are covered by two pieces of legislation specific to them:
- The Management of Houses in Multiple Occupation (England) Regulations 2006 – applies to all HMOs – Bedsits and shared houses.
- The Licensing and Management of Houses in Multiple Occupation (Additional Provisions) (England) Regulations 2007 apply to buildings converted into self-contained flats not complying with Building Regulations 1991 or later.
However, another category of House in Multiple Occupation (HMO), which does not currently need a licence, and is not subject to quite the same strict safety criteria, is one of two stories or less which has 3 or more unrelated occupiers, commonly known as a house share. These are very commonly used for student housing, where students have their own rooms in a standard house, sharing bathroom and kitchen.
But, from next year (likely April) it is expected that there will be a much tougher regime for these types of lettings. This is when some new HMO licensing rules are expected to be introduced. This change is likely to come as a surprise to many landlords as it will almost certainly require them to do work in their properties.
Whereas existing mandatory licensing applies to around 60,000 properties up and down the country, the new rules could apply to many more than this. It is thought that around 175,000 properties will be involved in the new mandatory licensing scheme.
The New Mandatory Licensing Rules
These new rules, which are really aimed at rogue landlords who are abusing the lettings system, will impose tough new standards, with the objective of improving the overall standard of lettings in England. Minimum room sizes and rules governing refuse disposal and its storage are likely to be imposed.
A Government consolation exercise has been ongoing on proposals for England only to remove the 3-story rule and draw up limits on minimum room sizes. For example, it is proposed a room must be a minimum of 6.52 square metres for one person, and 10.23 square metres for two people. The measurement of these rooms cannot include areas where the ceiling is below 1.5 metres in height.
In this scenario it is proposed that mandatory licensing will apply to all shared homes with five or more occupants, if at least two of them are unrelated (from different households). This would also take in any flats above or below shops and other business premises meeting this criteria.
Any landlord applying for a license will need to prove that they are a “fit and proper person”, a test which is to be tightened up under these proposals, and will likely include criminal record checks. Fines for not obtaining a license for an HMO will possibly by unlimited.
The changes are intended to improve the overall standards and safety of lettings in England generally. There is likely to be a grace period for landlords to catch up with these standards.
Although more landlords with properties meeting the above criteria will pay more in fees to their local authority, working to improved standards in their properties may result in more favourable mortgage applications.
The government’s drive to improve letting standards comes after much bad press involving rogue landlords and health and safety, and combined with a national housing shortage, the government want to get “onto the front foot” with rented housing.
Housing and planning minister Gavin Barwell has said:
“In order to build a country that truly works for everyone, we must ensure that everyone has somewhere safe and secure to live.
“These measures will give councils the powers they need to tackle poor-quality rental homes in their area. By driving out rogue landlords that flout the rules of business, we are raising standards and giving tenants the protection they need.”
Houses in multiple occupation and residential property licensing reforms – here
Extending mandatory licensing of houses in multiple occupation and related reforms – here