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Government urged to hold parliamentary debate on minimum room sizes

Letting agent groups are warning that the private rental sector is set to lose vital stock as the Government presses ahead with plans for minimum room sizes for Houses in Multiple Occupation.

The National Approved Lettings Scheme (NALS) and ARLA Propertymark have both said they understand the changes but have questioned whether they should go ahead.

HMO landlord Dhugal Clark has launched a petition calling for a parliamentary debate on minimum bedroom sizes that are set to be introduced in October through the the Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018.

He warns that the changes – which sets a minimum bedroom size requirement at 6.51 square metres for a person aged ten years or over –  will reduce the number of rooms available for tenants and mean those living in bigger properties will end up paying more council tax as well as higher rents.

David Cox, chief executive of ARLA Propertymark, said the proposals had been consulted on since 2016 and warned it was too late for a parliamentary debate but said the trade body has written to the previous housing ministers to question these changes.

He told EYE: “We have made verbal and written representations with the Government.

“We understand where the Government is coming from. They want everybody to live in good quality accommodation but a lot of older properties have boxrooms.

“There are always people willing to have a smaller room to save money on rent, this is going to take away those rooms and means the costs are shared by fewer people.

“People happy to live in a box room have to pay increased rent to live in a bigger room.

“Why does the Government feel it knows better than an individual making an informed decision based on the size of a room?”

Isobel Thomson, chief executive of NALS, added: “NALS would like to see more parliamentary debate over minimum room sizes in HMOs.

“While we understand Government’s aim is to improve some specific types of HMO accommodation in the sector, it’s important that common sense prevails. As it stands, the proposed changes will remove councils’ discretion to assess a property on its own merits, as they can now.

“This means we’ll lose much-needed accommodation from the PRS in what are otherwise decent and safe properties.”

Source: Property Industry Eye

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Plans to restrict HMOs in St Andrews to be debated

New restrictions on houses in multiple occupation (HMOs) in St Andrews have been proposed to control the number of student lets in the town centre.

If approved, thresholds would be set and no new licences issued where the number of HMOs has reached its limit.

Townspeople and councillors have called for years for a new policy to deal with applications for new HMOs in the university town.

A proliferation of HMOs, which are typically let to students, has been blamed for creating areas with few permanent residents and problems with rubbish, neglect and antisocial behaviour.

Following an independent probe by North Star Consulting and Review, Fife Council’s housing service has advised that the threshold policy be adopted and will ask the north east Fife area committee on Wednesday to recommend it to the housing services committee.

A report by housing manager Vania Kennedy states: “The demand for HMO accommodation is particularly high in St Andrews from students, young professionals and people working away from home.

“A moratorium was introduced under planning policy to achieve a balance between the competing demands for accommodation and the need for a balanced community.

“Research suggests that the recent increase in the number of HMOs in St Andrews indicates it is not having the desired impact and an unintended consequence has been to push the provision of HMOs for students out from the centre to surrounding areas.”

Since the moratorium was introduced in 2011 the number of HMOs has increased by more than 11%.

The housing service rejected thresholds proposed by North Star, which it said had drawbacks, and came up with its own, dividing the town into three zones.

The policy would permit 18% to 22% of properties in the town centre to be HMOs, 6% to 10% in the east and 4% to 7% in the west.

The report said: “The aim is to protect traditional residential areas which are most favoured by the family market and permanent residents, and allow a certain level of HMOs in each part of the town.

“In practice, where the existing provision at the time of determining a proposal exceeds the threshold limit set, current licence holders would still be able to renew their licence and exemptions would also apply to the policy.

“However, there would be a general presumption that no new applications would be granted a HMO licence on grounds of overprovision where the thresholds have been exceeded.”

Consultation would be required before the new policy was adopted, and the current town centre moratorium would remain in place until then.

Source: The Courier

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HMO and multi-unit landlords have highest rental yields

Landlords with houses in multiple occupation (HMO) and multi-unit freehold blocks (MUFB) in their portfolio are reaping the highest rental yields, according to research by Precise Mortgages.

Yields on houses in multiple occupation were typically 7.1% in the first three months of 2018, 1.3% higher than the market average, the study carried out by BDRC Continental showed.

Multi-unit blocks were found to yield 6%, compared to 5.8% across all property types, over the same time period.

However, average yields dipped slightly in Q1 2018 to 5.8% from 5.9% in the last quarter of 2017 and are now at the same level as Q1 2017.

Smallest landlord portfolios have lowest yield

The highest average yields of 6.7% were achieved on portfolios of between 11 and 19 properties, underlining the continued rise of the professional landlord.

By contrast those with just one property achieved yields of 4.8%.

On a regional basis, landlords with portfolios in the North West reported the highest rental yields at 6.7% while central London portfolios produced the lowest average yields at 4.8%.

Precise Mortgages managing director Alan Cleary noted that experienced landlords were looking to rebalance their portfolios given changes in the market.

“As HMOs attract multiple tenancies, gross rental income tends to outstrip single lets and rental income is more secure even if one tenant leaves a void,” he said.

Source: Mortgage Solutions UK

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Estate Agency And Landlord Both Fined For Licensing Breaches

A landlord has been ordered to pay more than £10,000 for licensing breaches relating to a property that has also seen an estate agency fined.

Willesden Magistrate Court fined Easy Let agency £20,299 in February for failing to licence a three-storey, semi-detached house that was found to be worryingly overcrowded. Following this, property owner Mohammed Mehdi Ali has also been fined £10,000 due to his failure to licence the property, which had been split into flats. This sum is on top of court costs totalling £3,300.

London’s Brent Council found that Easy Let and Ali were in breach of HMO laws. They had crammed more than 10 people into the ground and first floor rooms. Three children were also living in the property.

Willesden Magistrates Court also heard a second case, involving landlord Stephen Citron, who was ordered to pay £17,273 in fines and court costs. This was due to his failure to comply with licensing regulations.

Brent Council had found Citron renting out undersized bedrooms to tenants. He was letting a two-storey property with five standard size bedrooms and two undersized rooms which prohibited for use under the licence conditions.

The rooms measured 5.1 sqm and 4.8 sqm respectively. The legal requirement minimum requirement for a single room is 6.5 sqm, rendering the rooms clearly undersized and unfit for human habitation.

It was said that Citron ignored repeated warnings to make adjustments to his property in order to comply with legal requirements.

Brent Council’s head of private housing services, Spencer Randolph, said Ali and Citron were given ‘every opportunity’ to comply with regulations.

He stated: ‘Instead they held the council in contempt and ended up in court. If they had cooperated with us, they would have been spared the hefty financial blows and criminal records they were dealt in court.’

Source: Residential Landlord

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Make the most of HMO regulation changes

Regulatory changes have been a consistent characteristic of the buy-to-let market in recent years and 2018 is proving to be no different.

At the beginning of April, new minimum energy efficiency standards were introduced for privately rented property and the government is extending the scope of licensing for HMOs this October.

At present, a mandatory licence is required for properties with three or more storeys that are occupied by five or more people from two or more households. From 1st October, a licence will be needed for HMOs occupied by five or more people from two or more households, regardless of the number of storeys. The Residential Landlords Association claims this change means that an additional 177,000 HMOs will become subject to mandatory licencing, and there is no limit to the potential fine for renting out a qualifying HMO without a licence.

Licences are issued by the local council and valid for a maximum of five years. Landlords of licensed HMOs must make sure the house is suitable for the number of occupants and that the manager of the property – which could be the owner or an agent – is considered to be ‘fit and proper’. This excludes people with a criminal record or a previous breach of landlord laws or code of practice.

Owners must also send the council an updated gas safety certificate every year, install and maintain smoke alarms and provide safety certificates for all electrical appliances when requested, as well as any other conditions imposed by the local council.

In addition to these requirements, the government has also proposed a minimum room size for bedrooms in licensed HMOs. At the moment, some local authorities prescribe minimum room sizes, while others set out advisory standards, and this new approach will dispel confusion with a standard approach to all licensed HMOs.

Landlords must ensure the following:

• single bedroom to be used by one person over 10 years should not be less than 6.51m2
• double bedroom to be used by two people over 10 years should not be less than 10.22m2
• single bedroom to be used by one person under 10 years should not be less than 4.64m2.

Where there is a breach to these minimum bedroom sizes, local authorities may grant a period to rectify the situation, although this will not exceed 18 months.

So, there is plenty to think about for owners of HMOs in the coming months, and this provides you with a great opportunity to revisit your database of HMO clients to make them aware of the upcoming changes and their responsibilities.

Some may need to fund renovations to ensure they meet minimum standards and room dimensions and, even if no renovations are needed, this change in regulation provides you with a chance to make contact and discuss their other funding requirements.