The Stupidity of Article 4 and HMO Restrictions

David Lawrenson suggests local authorities are being lazy when they opt to use Article 4 restrictions to limit the numbers of shared houses (HMO) in their area. But it presents opportunities for landlords.

Article 4 and HMO Restrictions

Ever since the noughties, when Tony Blair decreed that 50% of all kids had to go on to study at a university, universities and colleges have had to get ever bigger.

And increasing numbers of landlords saw the opportunity to let accommodation to the increasing numbers of students, often switching from doing family lets to letting to student sharers instead in houses in multiple occupation, often snappily called HMOs.

As a result, the character of some inner city locations started to change and quickly develop a more student feel and vibe.

But along with that came the noisy parties, the charming pavement pizzas, the discarded mattresses and the shopping trolleys left in the street after a night ferrying a drunken student friend back home in one. Plus a load of other delightful stuff that some students often go through as part of their “rite of passage” to adulthood.

But instead of dealing with the less attractive aspects of student recreational life by using  their normal powers against antisocial behaviour, some local authorities decided to just stop the proliferation of these sorts of house shares dead by using a new planning power they had just been given by central government, which came under what’s known as the “Article 4” planning restrictions.

Article 4 Restrictions

Under Article 4 rules, many local authorities now required planning permission for landlords who want to turn their property into a house in multiple occupation (HMO). (Previously, special planning applications were needed only for HMOs that housed more than 6 people).

This directly affected any landlord who say wanted to change a property that was previously let as a home to a single family to one where it was to be let to just three sharers of which at least two of whom were related (a small HMO).

The thinking behind this is a bit of nimbyism really: People did not want a student lifestyle engulfing their neighbourhoods. And local authorities preferred to use their new planning restrictions rather than “doing the hard yards” and dealing with antisocial behaviour by students.

But no one, in central or local government, has really explained where those seeking house shares were going to go. Though it is quite clear that government thinks that students should be housed in shiny purpose built tower blocks built by the like of Unite and other big companies – a more “vanilla” experience for the students and one that keeps them away from living next to ordinary people in ordinary streets. (I am glad Article 4 was not around when I was a student in 1904! as I rather liked living next to non-students).

Increased Demand for HMOs Meets Low Supply

In areas where article 4 is in place and not enough of the shiny new blocks have yet been built, it means that the lack of HMO accommodation will likely already have increased rents in the sharers market, making it much harder to all those seeking rooms in shared houses to find a home at a reasonable price – whether they be students or non-students.

This squeeze will also not have been helped by the government also decreeing that all single people under 35s who are benefit dependent will only get enough housing benefit for a room in shared accommodation. So, yet more demand on rooms in shared houses, making the need to Article 4 HMO restrictions even more bizarre.

Yes, this is just another example of the stupidity of government housing policy that does not seem to be joined up. I will look at other examples in coming weeks.

Opportunity in HMO

If you are a landlord, and you think Article 4 will be applied in your area soon, (your local authority will tell you – and the info may be on their website), then it gives you an incentive to get in before the restriction applies.

After it comes into force, your rooms will be in demand as a likely increased demand for rooms meets a supply of house-share houses that will be almost stopped dead in its tracks. This will push up room rents.

The government’s policy on HMOs is stupid as we can see from the use of Article 4 restrictions. But this means that there is money to be made!

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David Lawrenson, founder of LettingFocus also writes for property portals, speaks at property events and is regularly quoted by the media.

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