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Huge Fine For HMO Licence Breach Landlord

A criminal landlord has been hit with a huge fine of £35,000 after being found guilty of breaching House in Multiple Occupation (HMO) management regulations.

Landlord David Greene, 64, was prosecuted at Birmingham Magistrates Court on August 30. The rental property that he was letting was described by council officers as the ‘worst they had seen in the last 10 years.’

The landlord had owned a three-storey property, which included ten self-contained flats, since 1986. He pleaded guilty to breaching HMO regulations through his rental property.

Birmingham Council officers visited the building and found smoke detectors hanging form the ceiling, as well as poorly fitted fire doors. There were also blocked fire exits which would have seriously hindered tenants’ opportunity to escape in a fire, rendering the property a serious danger for human habitation. There were also broken and boarded up windows. The tenants who lived in the building had no access to hot water or heating. The front and rear doors of the building were insecure, leaving the property open to the elements which would have caused real issues in winter.

The council had attempted to contact Greene on several occasions to resolve the poor conditions. However, he neglected his responsibilities as a landlord and as a result and put the lives of his vulnerable tenants in danger.

As a counter argument, Greene claimed that he had issues gaining access to the flats. However, he was still charged with the huge fine of £35,000 as well as costs of £1,941 and a victim surcharge of £170.

Cabinet member for homes and neighbourhoods at Birmingham City Council, Councillor Sharon Thompson, spoke out about the huge fine, saying: ‘Mr Greene has shown a callous disregard for his responsibilities as a landlord. This fine sends out a message to all landlords who ignore the law that Birmingham City Council will pursue anyone who lets out substandard accommodation.’

Source: Residential Landlord

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Southampton could see 10,000 HMO homes by 2023

SOUTHAMPTON is expected to see more than 10,000 HMO licensed homes in the city by 2023, after civic chiefs gave the go-ahead to extend the scheme by another five years.

Since its inception in 2013, the legislation, which covers homes in Bevois, Bargate, Portswood, and Swaythling wards, has resulted in 4,800 licences being issued.

Now, the authority estimates up to 5,500 more homes will require licensing over the next five years.

Council leaders have branded the HMO (House in Multiple Occupation) legislation, which allows three or more occupants from different families to live together, “much needed” and a “huge success”.

Student houses are one of the main users of the licence.

The council also says the scheme has dealt with issues of poor property conditions, bad management and anti-social behaviour.

Steven Hayes-Arter, HMO licensing manager at the council, said: “This ensures safe, good quality private rented accommodation is available to meet housing needs in the city.

“The scheme has enabled that concerns and complaints about conditions and the impact of the property on the local community can be addressed effectively and promptly, such as noise nuisance and anti-social behaviour.

“The numbers of complaints about HMOs have fallen since the additional scheme was introduced in 2013.”

When it was first proposed in 2013, the plans were hit with heavy resistance from opposition councillors.

But civic chiefs pushed them through regardless, which they say was the “right thing to do”.

Former housing chief at the council, Councillor Warwick Payne, said: “At the time, it seemed quite a radical idea. Now it is seen as the norm.

“We had resistance to it in 2013, but this time around we have seen much less, which shows that it has been successful.”

Council leader Chris Hammond added: “Despite changes to the way HMOs are regarded, this is still needed in these areas.

“The impact it has had on these neighbourhoods has helped our communities for the better.”

It is estimated that there are between 6000-7000 HMOs in the city but not all HMOs require licensing.

Source: Daily Mail

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Court Case Legal Precedent For Landlord Challenges To HMO Licensing Cost

A recent court case may have set a legal precedent enabling landlords to challenge the cost of HMO licences set by their local authorities.

The court case of Mr Peter Gaskin v LB Richmond Upon Thames [2018] EWHC 1996 (Admin) has called into question the validity of certain licensing costs. Currently, by law local authorities are able to set the cost of HMO licences at their own discretion. The topic has gained traction recently as new rules for HMO licensing will come into effect from October 1st. It is estimated that a further 177,000 more landlords will need to obtain a licence.

However, in the recent court case it was ruled that licence fees can only cover the cost of the licensing scheme and not other costs such as enforcement. This was due to the fact that the Administrative Court decided that Mr Gaskin, a HMO landlord, was providing a service within the meaning of EU law, by the private letting of accommodation. As Mr Gaskin had met the requirements for providing a service, the court determined that the fee charged by the local authority had to be structured in such a way which complied with EU law.

The property in question is situated in Richmond Upon Thames in London. Under the Housing Act 2004 Mr Gaskin was required to obtain a HMO licence from the London Borough of Richmond before he was permitted to let out rooms in the property. HMO licences need to be renewed every five years and when the time came for Mr Gaskin to renew his he was told by the council that he would need to pay a fee which covered the costs of processing his application but also contributing towards the authority’s costs of running the HMO licensing scheme. Mr Gaskin refused to pay the amount requested, instead offering a lower sum.

The landlord was prosecuted in the Magistrates’ Court for operating an HMO without a licence. However, under EU Directive 2006/123/EC (“the Services Directive), there is a provision in its article 13(2), that where a charge is imposed for someone to apply to have access to a service activity, the charge is not permitted to exceed the cost of the authorisation procedures. The Administrative Court handed down judgment on July 31st, 2018, and stated that Mr Gaskin was providing a service within the meaning of EU law. Which therefore deemed that the London Borough of Richmond Upon Thames’s fee for an HMO licence was unlawful as the charge covered costs beyond the cost of processing the licence application. The council was therefore not entitled to demand the fee which it had demanded.

Chief executive at Commercial Trust Limited, Andrew Turner, said: ‘This is an interesting case which may set a precedent for some landlords and could have the potential to save HMO landlords hundreds of pounds, if some local authorities have been charging more than they were legally entitled to, for HMO licences. This is a matter of law and I would urge any HMO landlords that believe they may have been overcharged, to seek professional legal advice.’

Source: Residential Landlord

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What does the future look like for HMOs?

On top of the punishing stamp duty and section 24 changes of 2017, HMO landlords are now being clobbered with a national extension of HMO licensing, navigating a proposal to introduce three-year tenancy agreement. Is the future bright? Is the future still HMO?

Proposed three year tenancies

 Cities up and down the country have bid their student cohorts farewell for the summer and left (some) landlords picking up the rubbish or the one-year-only appliances slapped with the post-it note “works fine but we don’t want it!” – another toaster is added to the tip collection.

And it’s a busy time for student landlords to say the least. I recently drove down the street in Sheffield where we own several HMO’s and it looked apocalyptic! The strewn rubbish of hastily vacated digs of now ex-occupiers heading off to Ibiza, festivals and a break from university.But new government proposals aim to force landlords to offer tenants a minimum three years contract – with tenants able to leave earlier (break clause) should they wish.

The proposal comes at a time when home ownership is at its lowest in 30 years, some 14.3m households (of a total 22.8m) are owner occupied in England (62.9%), according to the English Housing Survey, produced by the Department for Communities and Local Government (DCLG). According to the same report, the private rented sector now accounts for 4.5m households, double the 2.3m in 2004, or 20% of total households as opposed to 10% of total households back in 2004.

While home ownership levels have remained relatively unchanged in the last three years, the private rented sector is a different story, particularly when paired with the latest demographics seeking entry to the current property market.

In 2005-06, 24% of 25-34 year olds were privately renting, that figure is now 46% in 2017. In the same period, 25-34 year olds buying a home with a mortgage dropped from 53% to 35%.

The proposal, which seeks to lengthen the common six-month to 1 year tenancy agreements (currently thought to be around 80% of all contract lengths), looks to give tenants more control, security and longevity in their houses.

Extensions to mandatory HMO licencing scheme – October 2018

 While the UK housing market depends on the private sector investing in houses, it is also bumping up price inflation with knock on economic effects. As a measure, the government has sought to curtail the tax relief that BTL investors have enjoyed, forcing many out of the market and reducing the sector to a sustainable size. But there’s more to come. Long in the cross-hairs of government, the HMO sector has seen particularly heavy regulation with an extension to mandatory licensing requirements, tightening up on the number of storeys loophole as well as new minimum room sizes (see below).

That could be as many as 177,000 HMOs becoming subject to mandatory licensing in England, according Residential Landlords Association research.

From October 2018, the main change to HMO legislation will be the removal of the three storey rule. In the majority of cases, a property occupied by 5 or more individuals forming two or more households will become licensable, irrespective of the number of floors in the property. Landlords will also have to adhere to a new minimum room size standard. Especially for landlords with attic rooms, it’s important to note the ‘size’ will only be considered where there is 1.5m in celling height.

  • Minimum double room size: 10.22sqm
  • Minimum single room size: 6.51sqm

There will also be a mandatory requirement for landlords to adhere to council refuse schemes to ensure that HMO properties have adequate waste management facilities.

Will the three year tenancy proposal affect HMO landlords?

There shouldn’t be a direct effect. The proposal is considering making student accommodation exempt as the sector clearly follows academic turnover and, indeed, the higher education sector relies more heavily on private accommodation than many others – this is already the case in Scotland. There is less clarity around the young professional house share market though.

Of more concern is what it does to other BTL landlords. Those who have not already sold off part of their portfolios to afford mortgage repayments following the newly introduced tax pressures, could now face even greater reluctance from lenders.

David Smith of the Residential Landlords Association responded cautiously to the new proposal: “We would warn against making it a statutory requirement to introduce three year tenancies. Many tenants simply do not want to be tied to a property long term.

“It is vital that the market is able to provide the flexibility that many need in order to swiftly access new work and educational opportunities.” says Smith.

While the proposal allows landlords to increase rent once a year to reflect interest rate changes, it does not however provide a repossession clause. This may make many lenders reluctant to shoulder the added risk (should the landlord default and the property not repossessed for three years) and may lead to even higher interest rates on Buy-To-Let mortgages.

This could mean more BTL landlords dropping out of the market altogether or, more landlords turning to the exempt sectors, such as student accommodation, actually making the HMO market more competitive.

Source: Property118

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Sneinton Landlord Prosecuted For Aggressive Behaviour

A Sneinton rogue landlord has been prosecuted by Nottingham Magistrates Court for acting aggressively towards his tenant.

Landlord Sahfaqat Ali Sadiq threatened to throw his tenant’s belongings onto the street. Nottingham City Council became aware of his behavior following a complaint from a tenant who claimed to have been ‘forcibly removed’ from a house despite paying rent and not causing any damage to the property.

The council discovered that the tenant had not received any paperwork from Sadiq, of Vicarage Avenue, Derby, after paying his deposit and rent in cash. It was also reported that the landlord had let himself into the Sneinton house on a number of occasions in pursuit of money that did not belong to him.

The tenant also claimed that Sadiq had acted aggressively towards him by shouting and threatening to throw his belongings into the street. The landlord then placed kitchen items into bin bags.

Upon inspection, it was discovered that the Sneinton house did not have the correct licensing for a house in multiple occupation (HMO).

Sadiq was found guilty of aggressive practices, failing to protect a tenancy deposit and operating a House of Multiple Occupation (HMO) without a licence at Nottingham Magistrates’ Court on Friday. He was fined £1,750.

Nottingham City Council stated that the three offences fell beneath the Housing Act 2004 and Consumer Protection from Unfair Trading Regulations.

Sadiq denied assaulting one of his tenants. He also stated that he had submitted an application for a HMO licence which he assumed was being processed as he had not heard of its progress.

Portfolio holder for housing and planning, Councillor Jane Urquhart, said: ‘Landlords are required to manage their property in accordance with the law. Failing to secure tenants’ deposits and acting aggressively towards them is not acceptable. This case shows that Nottingham City Council will take robust action through the courts to prosecute rogue landlords.’

Portfolio holder for community protection, Councillor Toby Neal, added: ‘This is a great result for the council, showing the importance of different teams working together and using consumer protection legislation to protect vulnerable tenants.’

Source: Residential Landlord

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New powers to tackle rogue landlords unveiled

Private sector landlords operating in Cheshire East are being warned of tough new penalties to crack down on poor housing standards.

Cheshire East Council has amended its housing enforcement policy to include new powers, which could see the most serious offenders banned from letting properties altogether or entered on to a national database of rogue landlords.

In addition, landlords will have to ensure their properties comply with a minimum energy efficiency standard or face a fine of up to £5,000.

These new powers add to the enforcement options already available to the council, which include civil penalties of up to £30,000 and rent repayment orders for certain housing offences – both of which were added to the policy in August 2017.

Since last year, the council has issued fines totalling almost £25,000 against five landlords, all of whom had failed to apply for a licence for a house in multiple occupation (HMO).

Councillor Ainsley Arnold, Cheshire East Council cabinet member for housing, planning and regeneration, said: “There are many responsible private landlords in Cheshire East, who offer well-managed accommodation that is of a good standard, helping to ensure the welfare of tenants.

“Disappointingly, though, there are a small number who either do not understand their legal responsibilities when providing housing or deliberately ignore their duties.

“This council is committed to challenging poor-quality housing and will proactively work with landlords to improve standards, where they fall short.

“But, where landlords fail to take the necessary action, we will make full use of the enforcement options available to us.”

The updated housing enforcement policy now includes a guide for landlords of HMOs, outlining the amenities, property and management standards expected of them and details a stronger ‘fit and proper person’ test.

It also includes the revised definition of HMOs that require a licence. From 1st October, all HMOs where there are five or more occupants – living in two or more separate households – must be licensed.

Cllr Arnold said: “Operating without a licence is a criminal offence and landlords could face an unlimited fine. That is why we are urging landlords of HMOs, who have not already done so, to apply for one as soon as possible.”

Source: Alderley Edge

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Landlords warned over housing rules as £16,000 fine dished out in

Warnings have been issued to rogue landlords in Wolverhampton after council officers issued a £16,000 penalty to a homeowner flouting the rules.

Wolverhampton council handed a Whitmore Reans landlord the huge financial penalty for running a house in multiple occupation (HMO) without a licence.

It is the first time the council’s housing team issued a civil penalty to a landlord for failing to abide by its rules.

Deputy council leader Councillor Peter Bilson said the case should serve as a warning to landlords across Wolverhampton.

The cabinet member for city assets and housing added: “This is a stark warning to private sector landlords that they must comply with the HMO rules in the Wolverhampton.”

The council said the fine, which will be reduced to £10,600 if paid in full within 28 days, signals the start of a tougher approach to managing private sector landlords.

Powers are now in place to enforce civil penalty notices of up to £30,000 per offence, and new licensing rules for HMO will come into force on October 1.

Government officials will bring in the changes to HMO licensing in a bid to improve standards of housing across the country.

Key changes will include needing to obtain licences for some properties occupied by five or more residents, living in two or more separate households and sharing amenities.

It will apply to single and two-storey properties, as well as purpose-built, self-contained flats in a block of no more than two self-contained flats.

Councillor Bilson added: “Through our Rent with Confidence framework we continue to work closely with private landlords across the city.

“It is important they are fully aware of the new government regulations that come into effect from October 1 and that we will be doing everything in our power to enforce them.

“Rent with Confidence supports responsible private housing businesses in the city and aims to improve the quality and choice of housing for private sector occupiers.

“We are here to advise landlords on the new changes and we will continue to work with landlords, agents, owners and service users by providing a range of information and guidance through the Rent with Confidence scheme.

“Providing further protection of health, safety and welfare rights for tenants in the city is vital.”

Last year, the council announced it would be extending enforcement powers handed to its officers so they could dish out fines of up to £30,000 to landlords breaking housing laws.

But the council may reduce the charge if rogue landlords agree to work to address issues.

They will need to agree to be registered with the Rent with Confidence scheme – a five-star rating system – and achieve at least a three star rating.

Source: Express and Star

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HMO Licence Rule Changes On The Way

HMO licence rule changes are on the way as the criteria for properties that need an HMO licence becomes broader.

At the present time you are only required by law to obtain a Houses in Multiple Occupation (HMO) licence if the rental property is:

1) Rented to five or more people from more than one household

2) At least three storeys high

3) Having tenants using the same facilities

Though individual councils are able to set further rules.

However, from the first of October this year, any property occupied by five or more people from two or more households will be considered an HMO, regardless of its height or the available facilities.

Anyone managing a property that is considered to be a House of Multiple Occupation needs to apply for an HMO licence.

HMO managers need to be considered a fit and proper person to hold an HMO licence.

The property will also be required to meet further safety obligations with regard to fire, gas and general safety, and the property must be considered suitable for the number of tenants living in it.

Minimum room sizes will also come into play in October. Bedrooms occupied by a single adult will need to measure a minimum of 6.51 square metres, while those occupied by two adults will need to measure 10.22 square metres or more.

Rooms slept in by children of 10 years and younger will have to be no smaller than 4.64 square metres.

In Scotland and Wales, regulations are slightly different. An HMO is any property rented by at least three unrelated people who share bathroom, toilet or kitchen facilities. Your responsibilities and obligations in Wales and Scotland for running an HMO may also vary.

In addition to the new HMO regulations introduced nationwide, many councils are introducing further landlord licensing schemes, so it is important for all landlords to check local regulations.

Source: Residential Landlord

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Why landlords need your help

Our recent research amongst landlords showed that only 21% said they were a full-time landlord. The rest had another job. So it is fully understandable why it is difficult for landlords to keep abreast of the constant flow of regulatory changes. Even those full-time landlords that I know struggle, so just imagine what it is like for the rest.

This is why having a financial adviser is so important for landlords, which is great news. Over the years we have read about perceived threats to the adviser community, from when the internet first begun through to robo advice and a new era of AI. But nothing can be further from the truth and landlords are now wanting a relationship that goes beyond pure advice on their mortgage.

This was reinforced in our research. Of those landlords using a financial adviser, 23% wanted help in understanding how new regulation affects them. There are changes to the licencing rules for houses in multiple occupation (HMOs) in October, for example. This has been discussed a few times within the media, but I suspect many of your landlord clients will be in the dark about this. For some, they may need to raise capital if they need to make any refurbishments and changes to comply with the new HMO licencing rules.

A further 35% of landlords, who use a financial adviser, said they need help understanding the implications of taxation, given the raft of rule changes that have been implemented. It is a complex area and I know some advisers are building reciprocal arrangements with tax advisers to determine if owning a buy-to-let property via a limited company is the right thing to do for the client. Nonetheless, the market is seeing a rise in limited company buy-to-lets. At Foundation Home Loans, over 40% of our buy-to-let applications are under this structure.

The buy-to-let market continues to change and because of this change, your landlord clients need your help more than ever – and there are lots of landlords out there who don’t have a financial adviser and are probably on the lookout for one. So take advantage before someone else does.

Source: Mortgage Introducer

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Thurrock Landlord Fined For Failure To License Investment Property

A Thurrock landlord has been fined £2,252 after failing to license her property and failing to provide acceptable living conditions for her tenants.

Rogue landlord Adeola Makinde was found guilty of failing to licence her rental property in Norfolk Place, Chafford Hundred. The property required a house in multiple occupation (HMO) licence. A trial at Basildon Magistrates Court last week lead to Makinde being prosecuted for her failure to sort this out.

The court was told that Thurrock Council had been requesting a HMO licence application from Makinde since 2014. However, no application was made.

An inspection in July 2017 revealed that the property contained 12 people living in four rooms as well as sharing a single kitchen. It also found that there were inadequate fire safety measures and a number of issues with the condition of the property which rendered it unfit for human habitation. The overcrowded nature of the property could have endangered the health of the tenants who lived inside as well as causing severe problems if a fire were to start and the residents needed to escape.

Makinde pleaded not guilty to the charge of failing to licence the HMO, three breaches of HMO management regulations, failing to return information about the house and failing to return documents. However, magistrates deemed her actions were unreasonable and therefore found her guilty of all six charges.

Councillor responsible for Thurrock housing, Barry Johnson, said: ‘We believe everyone should have a good quality place to live and will continue to take action against those landlords who fail to ensure their properties are safe, well managed and properly licensed. We are currently consulting on a proposed new additional licensing scheme which would mean more landlords who own shared houses and flats have to comply with national health and safety standards and local criteria.’

Source: Residential Landlord