New Government Consultation On Hmos

Are you aware that the Government has launched a consultation on “Houses in Multiple Occupation and residential property licensing reforms” which runs until 13th December 2016.

The consultation applies to England only and the plan is for it to come into force in 2017, subject to parliamentary approval.

The two core elements are to extend the scope of mandatory houses in multiple occupancy (HMO) and to introduce a minimum room size. This has already been introduced in Nottingham under the Nottingham City Council boundary.

The stated reason behind these changes is that many of the occupants of HMOs tend to be at the lower income end and may well be vulnerable to rogue landlords who exploit them by providing sub-standard, sometimes dangerous, accommodation, which may also be overcrowded.

My view on this is another case of legislative change to address the “bad” minority, that ends up penalising the “good” majority?

The HMO proposals

In general HMO licensing currently applies to properties with three or more storeys. The first proposal is to remove this rule so that all houses, regardless of how many floors, with 5 or more people from 2 or more separate households (families) will be in scope.

The second is to extend mandatory licensing to flats above and below business premises, again regardless of the number of storeys.

Licensing will be required where a flat occupied by five persons or more in two or more households is in a converted building or, in certain circumstances, is in a building where part of the building is used for commercial or other non-residential purposes. Each flat will need a separate licence.

Licensing will also apply in houses being occupied as HMOs, either sharers or ones converted to bedsits, and to buildings used as clusters of rooms being let where one or more basic amenity is shared.

In a building that has mixed occupation for example a combination of bedsits and self-contained flats – the building will need a licence and so will each of the self-contained flats with multiple occupants.

Minimum room sizes

The other component of the consultation is the setting of a minimum room size of:

• 52 square metres for one person. Nottingham City Council is currently 8 square metres.
• 23 square metres for two persons

However, the plans will allow local authorities to set higher standards for landlords if they wish.

The space calculation may only take into account the usable space. Any floor space where the ceiling is below 1.5 metres may not be counted.

A further proposed change will see children and babies counted in the same way as adults when determining the minimum space requirements.

Penalties for non-compliance

If a landlord lets a room that is too small for the number of occupants, and this includes not taking action if the occupiers allow others to move into the room, he will be in breach of the licence and subject to fine of up to £30,000.

Existing HMO licences

Fees will be set by each of the local authorities, so will vary from area to area. As in the past, some may offer discounts for early application.

If a property is already licensed under an additional licensing scheme, it will fall into the new HMO guidelines, the landlord will be able to passport it into the mandatory HMO licensing scheme at no extra charge.

The consultation proposes a six-month grace period for landlords to get their license in place. Tenants will still be liable to pay rent during the grace period.

The stated rationale

There are currently approximately 60,000 licenced 3 storey HMOs and this legislation will add a further 174,000 licensed HMOs. This will mean more HMOs subject to local authority quality control. This will be an interesting one!

Response from landlords

Landlords with several properties are concerned about the additional cost implications, which are likely to impact on rents, as well as those tenants who want a small room to keep their costs down.

There is also the question of the lost income for those smaller rooms that will no longer be rentable, with the cost likely to be recouped from the rent charged for the other rooms.

Further Reading

You can read the full document here.