HMO Licensing Rules Extended

HMO Licensing Rules Extended

From October 2018, the scope of mandatory licensing in England will be extended, which means an estimated 177,000 properties will need to be licensed for the first time, says David Lawrenson of www.LettingFocus.com.

From October 2018, the government is extending the scope of mandatory HMO licensing rules in England. (See below for the differences in the other countries of the UK).

Since 2006, HMO* licensing has only applied to properties of at least three storeys, housing at least 5 people from two or more “households”, but from October the “over three storeys” rule will be removed so it will now be extended to cover ALL properties that house five or more people from more than two households, whatever the building size is.

Some have criticized this, arguing that when mandatory licensing was started, it was all about safety – for example, making sure there were enough fire escapes. Safety is more of an issue for properties that are set over three levels or more, so it made sense to target these taller buildings. Yet, as there was no record of problems with, for example, fire safety, for two storey and single storey HMO buildings, it made sense to exempt them from mandatory licensing. The National Landlords Association (NLA) is opposed to the extension for these reasons.

Also, it complains that there has never been a full review of the existing HMO licensing system anyway, so it’s hard to say whether the system has achieved the goals set out for it. This problem is exacerbated because many local authorities have been busy since 2006, bringing in “additional” and “selective licensing” in their patches anyway, where they think it is needed.

Selective licensing is the policy option that is already in place and available to councils to deal with “rogue” landlords and low housing demand. They are being used wherever they are deemed to be required, so it’s not clear what this latest extension to HMO licensing regime is supposed to achieve.

The NLA cite the example of Hammersmith and Fulham, where all landlords who let any HMO property, already require a license, (a process called “Additional Licensing”). And on some streets in the same borough, some houses require a license whether they are HMOs or not – in the  “Selective Licensing” system.

Some boroughs have gone further – putting in place Selective Licensing for their whole areas – for example Newham in London, which was the first borough to have all-borough licensing, affecting all houses being rented out.

Confused?

I hope not, but as you can see, there is already lots of regulation around!

It’s thought that the new extension to HMO rules will bring in another 177,000 new properties into mandatory licensing.

The cost of a license fee varies by borough from around £300 to around £1200.

HMO Licensing Rules Changed and Extended– Room Sizes

There are also new minimum room sizes for the rooms in HMO properties, which is intended to reduce overcrowding.

For a single room, the minimum room size is 6.51 square metres and for a double it will 10.22 square metres. Rooms occupied by children of 10 and under must be at least 4.64 square metres. However local authorities have discretion to increase sizes, if they wish.

As a requirement of licenses, landlords have to remember to provide the right facilities for rubbish storage as set out by their local authority and meet various other standards.

Licenses are valid for five years.

There could be implications for landlords with buy to let mortgages as some lenders are reluctant to lend against licensable properties. Interest rates on mortgages for HMOs tend to be higher too.

HMOs can still work for landlords – and the fact that increased regulation may put other landlords off may reduce the competition you face – but there are a lot more things to know and to comply with.

My book, “Successful Property Letting” – see link below has more information on how to make them work for you. Or contact me for a consulting session.

Differences in Other UK Countries on HMO Licensing

In Scotland, an HMO license is already needed for any HMO property which is lived in by three or more people from two or more different households – in other words, all HMOs, not just those with 5 or more people. A separate scheme requires all let properties to be registered with their local authority.

In Northern Ireland, the scheme operates much the same as for Scotland and landlords must register with the Northern Ireland Executive.

In Wales, in addition to Rent Smart Wales’s registration requirements (effecting all landlords of any property), local councils continue to run HMO licensing in line with the 2006 regulations for now.

*HMO Definition: An entire house or flat which is let to 3 or more tenants who form 2 or more households, (broadly meaning they are not related), and who share a kitchen, bathroom or toilet. Not all HMOs need a license!

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2 comments

  • Interesting article. Though I understand the HMO and selective license were implemented to stop rouge landlords putting profit over tenant safety, landlords can still get away with illegal practices because enforcement is not always up-to-scratch. The former landlord of my home had a HMO license. But the landlord still managed to have 13 people living in the house including two toddlers!! Worst, the property was being letted by a local real estate agent?! I’ve seen neighbours do a similar thing. I think the idea of the licenses are good, but a comprehensive review is necessary before making it permanent. The prices for the licenses also need to be reviewed as they are too expensive, in my view.

  • You hit it on the head…. Lots of rules and regs and too little enforcement.
    So rogue landlords get away with things and enjoy a cost advantage over the complying, safe landlords

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