How to deal with the proposed amendments to HMO licensing in England
Wednesday 27 September 2017
The Government recently published the outcome of their consultation regarding changes to HMO licencing and it is anticipated that amendments will be made in line with their findings. The big question facing landlords is what will these changes to mean for them? Many landlords that are not currently affected by licensing will suddenly require one and I doubt very much that Landlords are even aware!
The current situation
At the moment, properties classified as large HMOs already have to comply with licensing. Your property falls into this category if it is rented to five or more people who are not from one household, it is three storeys high or more and the tenants share bathroom/toilet and or kitchen facilities.
The proposed changes
The Government is proposing the following changes which will increase the number of properties that are subject to licensing:
• Removal of the three-storey rule
• Incorporate flats that are situated above or below commercial premises
• Put in place a minimum size requirement of 6.52sq.m which is in line with the current standard for overcrowding (Housing Act 1985). This size is likely to be 10 Sqm for HMO’s in which all tenants have their own bathroom but share other facilities such as a kitchen.
The driver behind this is to provide tenants with a better standard of accommodation and prevent the sort of problems that exist at the moment with sub-standard quality of accommodation and overcrowding. In order to support this further they are looking at putting in place additional proposals which include the following:
• In order for landlords to obtain a license, they will now have to undergo a Fit & Proper Person Test
• Landlords must provide sufficient storage facilities to deal with the holding and disposal of all household waste
How could it affect you?
Whilst it is worth noting that these are proposals only at this stage, they are likely to take from April 2018. At this point, it is expected that landlords will have a grace period of six months, providing them with time to make changes to their properties so that they comply with the rulings. After this, those that do not comply will be subject to a fine of up to £30k as well as possible criminal prosecution.
Whether you already own an HMO or are thinking about purchasing one, you need to be prepared to deal with the new rulings. Under-resourced Local Authorities are also going to find themselves struggling to manage the increased workload as it is estimated that the number of properties requiring a license will double. It is also likely that additional licensing schemes will still go ahead capturing the multi-lets with only four occupiers, not five. If you already hold a selective license, switching it to a mandatory one should not be a problem.
The good news
On a more positive note, if you are looking to get into the HMO rental market by purchasing a new property, the banks and mortgage companies seem to be looking upon these types of licensed properties more favourably.
By providing all landlords in the UK with plenty of advance warning, the Government are hoping that the changes will not be too difficult to comply with and will increase the quality of HMO accommodation generally.
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