The new mandatory licensing rules for Houses of Multiple Occupation (HMOs) introduced on 1 October 2018, were meant to protect tenants from poor living conditions.

But the local authorities charged with communicating, administrating and enforcing the rules are swamped – with two thirds having no idea how many unlicensed HMOs are operating in their patch.

That leaves good landlords confused, rogue landlords unchecked, and tenants no better off than before...

HMO licensing headlines:

At Simple Landlords Insurance we found that 85% of landlords weren’t aware of the looming HMO regulations in the months running up to their implementation.

A month on, we wanted to see exactly what landlords were facing on the ground, and received Freedom of Information responses from 90 local authorities in the most densely populated areas in England.

We found that:

Two thirds (60/90) of local authorities don’t know how many unlicensed HMOs are operating in their area.

Do you know how many more HMOs will require a license from 1st October 2018?

Pie chart showing how many HMOs require a license from October 2018

Over one third (31/90) have no idea how many properties are now in scope and require a license.

Do you know how many HMOs required a license but didn't have one under the outgoing rules?

Chart showing how many HMOs required a license but didn't have one under the outgoing rules

There were only 103 HMO licences rejected at application over the last 12 months, versus a total of 18,881 licenses granted.

Chart showing how many licenses were granted and rejected

Of the local authorities who were able to estimate how many extra HMOs would require a license from 1 October, four of the largest increases are in London.

  Number of HMOs with mandatory license before 1 October Estimated number of HMOs that will will require a mandatory license after 1 October 2018 HMO licenses required Expected increase
Greenwich 147 3250 2111%
Bexley 39 525 1246%
Merton 158 2000 1166%
Sandwell 48 440 817%
Havering 63 400 535%

What does it all mean for landlords?

Historically, private landlord have never been required to be on any sort of register, and the rules and how they’re enforced have very much been interpreted on a local level.

Local authorities in England are largely reliant on good landlords to come forward and apply for licenses. But bad landlords – the criminal element regulation is trying to stamp out – simply won’t do so. And now local authorities will be spending more time processing the good licences - and have less time and resource to identify, pursue, and prosecute the bad ones.

Why don’t local authorities know what kind and how much housing is in their area?

Following the privatisation of the Building Research Establishment (BRE) in 1997 and the abolition of a requirement for local authorities to conduct a stock condition survey every four years, councils have had to invest in predictive modelling services, such as those provided by the BRE, to map out the extent of the unlicensed HMO problems their areas face.

Some councils have invested in data modelling services, but others have knowledge gaps.

What does the Government say?

We took our findings to the Ministry of Housing, Communities & Local Government.

“We have given local authorities strong powers to crack down on the small minority of landlords who knowingly flout their responsibilities and we expect them to use them. “Most local authorities have welcomed these new powers and many are already using them effectively. “We recently announced a new £2 million fund that will further strengthen councils’ enforcement work to tackle rogue landlords and ensure that poor-quality homes in their area are improved, making the housing market fairer for everyone.”

Government spokesperson

What do the experts say?

“Most local authorities simply do not fully understand the housing stock in their area, and they are kidding themselves if they claim that they do. “Trying to identify an HMO from scratch is an incredibly challenging job, made harder by the failure to join up systems like council tax and benefits registers, and immigration databases. Those who are determined to break the law do not apply for a licence in the first place. “Once they have been identified, dealing with criminal HMO landlords will be yet another problem. Pursuing a prosecution – or applying for a banning order – takes time, stretches resources and is not guaranteed. Many local authorities will opt for issuing fines, but there’s no guarantee that these will be paid without going to court, and that’s another resource and cost-heavy process.”

Paul Fitzgerald - Environmental Health Officer and Chair of the National HMO Network

“It’s a big worry that local authorities don’t seem to have the resources available to manage this new workload. Many local authorities are now faced with at least twice as many licences to process and check with the same amount of human resource - leaving even less time for enforcement. The major conurbations will be swamped. “What’s more, the new rules are going to be practically impossible to enforce. The government is essentially relying on honest landlords coming forward to apply for a licence - leaving the so-called rogue or down-right criminal landlords that really need to be identified - out of scope. “The £2m promised a month on from the start of the new scheme shows the government knows this is an issue, but the truth is given how stretched councils are, this amount stretched over all of England is literally a drop in the ocean. And it’s not even tackling the real problem. “The bottom line is that the Housing Act, in its current form, is no longer fit for purpose and the government need to prioritise helping local authorities know who is renting property in their areas and what type of properties are being let. I believe a central government funded national register would be a major step forward.”

Carl Agar - Founder of the Home Safe Scheme and managing director of property management company Big Red House

“The HMO licensing changes may be well-meaning, but a failure to support local authorities to communicate about them and enforce them is bad news – for good landlords and for tenants. “Traditionally, landlords can be resistant to regulation as it can make daily landlord life more difficult. But many are increasingly seeing the lack of structure and national standards as part of the problem. “We want to see the emerging class of professional landlords supported by central government and local authorities – and that might well mean we need to see more effective regulation and resource.”

Richard Truman - Head of Operations at Simple Landlords Insurance

What ARE the new HMO rules?

HMOs containing five or more people in two or more households, with shared facilities such as a kitchen, bathroom or toilet - must now be licensed.

To gain a license, landlords must now pass a ‘fit and proper’ test as well as providing proof of compliance with fire safety regulations and provide tenants with a written statement of the terms of their occupancy.

The rules were widened on 1 October, removing a minimum three storeys high requirement whilst new conditions on minimum room size and waste collection were imposed.

Insuring Houses in Multiple Occupation

Why are Houses in Multiple Occupation different?

If your property is deemed an HMO, the terms of your insurance policy will be different to a single property and you will need to register the address as an HMO. If you don’t do this your HMO insurance cover may be jeopardised. Beware of sublets too, the majority of insurers won’t cover this, so it’s worth keeping in touch with your tenants so that they communicate any plans to sublet, with you.

HMO building insurance

HMO buildings cover protects against a number of risks, including burst pipes, fire and storm damage. Risks posed by tenants, such as accidental and malicious damage can also be covered.

HMO contents insurance

The contents a landlord provides within the building can also be included. Communal areas such as hallways, receptions and shared living spaces may have furnishings provided by the landlord. Tenants’ contents will need to be protected on their own tenants' insurance policy.