County Durham shared house
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County Durham landlords encouraged to check licences

Landlords with properties in County Durham are being encouraged to check whether they need a licence ahead of upcoming changes to legislation.

Rules around Houses in Multiple Occupation (HMOs) are set to extend to more properties from 1 October 2018 – and the changes may be particularly relevant for landlords of student houses.

From that date, a HMO licence will be required if a property is occupied by five people or more in two separate households, regardless of the number of storeys in the building. Previously, this only applied if the property was three storeys or more.

A single household means either an individual (including a student) or a family unit.

The rules apply to any HMO which is a building or a converted flat where householders share basic amenities like a toilet or cooking facilities, and purpose built flats where there are up to two flats in the block and one or both are occupied as a HMO.

Landlords whose property now requires a licence must apply before Monday 1 October and are being warned there is no grace period after this date.

However, those landlords who already have a current license under a local authority mandatory or additional licensing scheme, as well as landlords who have a selective licence, will not need to apply for a new license until their current license expires even if that is after 1 October 2018.

Joanne Waller, head of environment, health and consumer protection, said:

“This new legislation will bring many more properties under the HMO licensing regime and we would remind all landlords in the county to check whether they now need to be registered. 

“We take our duty to regulate HMOs very seriously as we know licensing leads to improved property conditions for residents living in this type of accommodation”

Source: Sun FM

Leicestershire landlord Brent landlord
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Leicestershire Landlord Prosecuted For Faulty Investment Property

A Leicestershire landlord was prosecuted after he converted a home into three flats without planning permission and without a fire escape.

Landlord Satwinder Singh Phull converted a Glenfield property into three flats ‘without planning permission or building regulations approval.’The home was ‘considered to be’ a house in multiple occupation (HMO). It was inspected by Blabby District Council’s environmental health team in October last year, with a follow up visit some days later from a prevision office from Leicestershire Fire and Rescue service (LFRS).

Three live exposed electrical conductors were revealed in one flat, with two of these at a reachable height. Mr Phull was also unable to state which electricity supply fed lights in communal areas as well as which fed the boiler. There were also ‘insufficient’ waste disposal facilities and no ‘adequate fire escape’ for any of the flats should a fire occur. This led to fire officers declaring that that the property ‘posed an imminent risk of serious harm to any occupants due to the inadequate fire escape’.

Two emergency prohibition orders were subsequently issued and two of the flats were ‘immediately prevented from being used as residential accommodation’.

At Leicester Magistrates’ Court, Mr Phull’s barrister defended him, claiming that his client was ‘not a professional landlord’.

Mr Phull had also since carried out work on the property in order to ensure that the prohibition notices were removed. However, he was fined £4,250 after being convicted of four offences under the Housing Act. Mr Phull was also told to pay council costs of £867 as well as a victim surcharge of £125. The total fines amounted to £5,242 to be paid in £500 instalments.

Portfolio holder for leisure and regulatory services at Blaby District Council, Iain Hewson, stated: ‘This ruling once again highlights our message to landlords that we will not tolerate poor living conditions in the district. As the owner of a hotel Mr Phull should be fully aware of fire safety, particularly in the wake of terrible tragedies such as the Grenfell Tower incident. We urge anyone living in rented accommodation that thinks may not comply with the law to contact us so we can investigate.’

Source: Residential Landlord

HMOs
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All change for HMOs

As new rules come into force for landlords letting out Houses in Multiple Occupation (HMOs), the focus is on the move to professionalism, says Peter Foulds MRICS, chief valuer and head of risk at Allied Surveyors and Valuers.

There is no doubt that landlords, particularly the amateur and accidental landlords are feeling the pinch. Many have exited the market and new entrants are fewer as the stamp duty hike for investors is proving an effective barrier to entry.

HMRC’s phasing out of mortgage interest relief has meant that many landlords who have not explored limited company opportunities are, in reality, sleep walking into a negative return position.

The capital value to rent ratio, especially in the South had led to many investors seeking more adventurous opportunities. In the last few years, we have seen a flight to the North as investors chase yields. This has played a part in underpinning capital values but this model is heavily reliant on the diligence of local managing agents. Different areas have different challenges: managing a portfolio 100 miles away is very different to managing one in your home town.

Migration to HMOs

We have also seen investor migration to Houses in Multiple Occupation (HMO) investment opportunities. However, the HMO market can catch the unwary and further legislative changes this year will challenge the robustness of the investment class even further.

When interest rates rise, despite the ‘like of like’ provisions for existing mortgages, the PRA changes will result in some portfolio landlords struggling to remortgage away from their existing lender to take advantage of more favourable rates elsewhere.

Meanwhile, however well presented the HMO, the mantra ‘location/location/location’ is particularly relevant.
The most successful HMO operators are actively involved in their portfolios and are aware as soon as an issue presents itself, such as a non-paying tenant or a repair issue. More importantly they will also be aware of issues such as a new build student block coming on line, which will impact on the student supply chain.

Unaware landlords

Article 4 areas, which restrict the change of use from C3 to C4 (small HMO), continue to grow across the country. The number of landlords who are unaware of the requirements until they want to refinance alarms me. They then face the question of whether the property has a certificate of lawful use or relevant planning consent.

Similarly, the complexities of licensing – Mandatory, Additional and Selective – come as a very nasty surprise to many investors. Currently, Mandatory licensing applies to properties of three storeys and over with five or more occupants; Additional licencing is required for any HMO in an area designated by the local authority; and Selective licencing applies to any buy-to-let property (not just HMOs).

So, for example, from August 2018, most of Nottingham will be subject to a Selective licensing scheme and it will apply to the whole of the private rented sector. This will require landlords to supply full certification and to pay £780 per property to obtain a five-year licence. Compliance will be checked by the random selection of properties for inspection. So landlords face £780 for the licence plus the potential cost of obtaining insurance to cover for the provision of alternative accommodation for the tenant.

The October changes to Mandatory licensing will remove the three-storey rule, thus any property with five or more unrelated occupiers will require a licence. Thus, owners of previously unlicensed houses will have to pay a licence fee and potentially costs to upgrade the accommodation in order to achieve a licence.

Minimum room sizes

Alongside that change is the imposition of minimum room sizes meaning it will be illegal to let a room that is less than 6.51 m2 for single occupancy. This increases to 10.22 m2 for double occupancy.

Even this, however, could be trumped by individual local authorities who often require significantly larger rooms than that specified in the new minimum room sizes. This will result in some rooms in HMOs having to be taken out of use, with the consequential loss in rental income and capital value.

Furthermore, depending on the overall size of the bedroom accommodation, local authorities will also require a separate communal ‘living room’ to be provided.

MEES

The final consideration is that of the Minimum Energy Efficiency Standards (MEES), which are now in force, and give real meaning to Energy Performance Certificates (EPCs). Some landlords assert they are exempt because their lettings are on a room by room basis but this is certainly open to challenge.

Depending on circumstances, there should be an EPC for the building if a landlord requires to gain possession at the end of the term of the assured shorthold tenancy (AST). Moreover, if the EPC rating is an F or G then the tenant will be able to claim the landlord’s notice is invalid, remain at the property and demand upgrading to at least an E rating.

More than ever, let property has to be considered an opportunity for a professional business approach and not merely an investment. And the HMO asset class is certainly not one for the faint hearted – be that investors or lenders!

Source: Mortgage Finance Gazette

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Havering Council Clamps Down On Rogue Buy To Let Behaviour

Havering Council has distributed £55,000 in penalty charges to rogue buy to let investors in the borough over the last two months.

Havering Council has initiated a clamp down on rogue landlords operating inadequate houses in multiple occupation (HMOs). Council officers and enforcement teams have been fulfilling this.

Since March, £55,000 has been issued in fines from eight financial penalty notices served to landlords. These came through the borough’s Landlord Licencing Scheme, which started in 12 wards across the borough earlier this year. The scheme requires private landlords of HMOs to apply for a licence. The programme was introduced to improve the poor management of private rented homes and hopes to curb anti-social behavior problems in the area.

One landlord was served two fixed penalty notices by Havering Council which totaled £20,000. The notices were issued as the landlord had been operating an unlicensed HMO in serious disrepair in Rainham. The property had no heating, exposed electrical wiring, and a dangerous outdoor staircase, which lead to the roof. This acted as an entrance to the HMO and put tenants at serious danger through the landlord’s irresponsible management of the property.

Cabinet member for environment, Councillor Osman Dervish, spoke out about the scheme’s success in clearing up the buy to let sector: ‘In Havering, we are targeting irresponsible landlords as we are seeing the rise of inadequate HMOs and we will not tolerate it. These rogue landlords are taking advantage of local families in the community with overcrowded and poorly maintained properties.’

The Councillor continued: ‘We’re being proactive in our efforts to crack down on this issue now, before it increases. We are one of the few boroughs who have this scheme in place and I’m pleased with what we have achieved so far, but there is more to do! Landlords of HMOs should take note and licence now to avoid such financial penalties.’

Source: Residential Landlord

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Immingham Landlord Fined For Licence Breach On Investment Property

An Immingham private landlord is facing a bill of £1380 after he was found to be renting his investment property out as a house in multiple occupation (HMO) without the correct licence.

Yordan Kaloyanov, 37, of Immingham, was taken to court by North East Lincolnshire Council. Housing enforcement officers and Humberside Police raided his rental property and discovered that he had been renting it to multiple people without a licence. The property also contained several other issues.

Upon entering the property it became apparent to officers that several people were residing there. Many of the rooms had multiple beds in them and there were far more shoes at the entrance of the property than there should have been. Although here was no one in the property when officers arrived, it appeared as though some residents had recently left the property as a freshly cooked lasagne and garlic bread was found in one of the bedrooms.

In addition to the licensing breach, the property failed to meet the standards required for a HMO. It had no interlinked fire alarms and there was no evidence that fire alarms worked or had been tested recently. There were also no fire doors, intumescent strips or self-closing arms on the kitchen or bedroom doors. Finally, the property also lacked emergency lighting and exit doors did not have the required thumb turn locks.

Kaloyanov also did not have the required locks to the rear final exit door and the front door of the property. This meant that so that they could be opened from the inside without the use of a key. This did not meet regulations stating that escape routes must be free from obstruction.

Portfolio holder for housing, Councillor Peter Wheatley, said: ‘A large number of local people rely on rented accommodation and landlords are expected to uphold high standards. Unlicensed and poorly maintained houses are not acceptable. Not only are they exploitative in nature, they could also put people’s lives at risk. The Council wants to work with landlords to ensure that they are on the right side of the law. If landlords are unsure of what they should be providing for their tenants, they can contact our housing team via our website for more information.’

Following the inspection, the house was issued with an Emergency Prohibition under the Housing Act. Yordan Kaloyanov was prosecuted and was found guilty of six offences under the housing act and handed fines of £100 per offence. He was also made to pay additional costs of £750 and a victim surcharge of £30.

Source: Residential Landlord

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HMO plans for former cafe recommended for approval despite local opposition

Plans to convert  into a 12 bedroom HMO could be given the go ahead next week, despite opposition from local community councils.

Members of Wrexham Council’s Planning Committee will debate the plans to convert the restaurant /café on 79 Holt Road into a ‘one person one room’ house multiple occupancy (HMO).

Plans for a change of use of the property were submitted to Wrexham Council in April 2018.

At present the existing property consists of a restaurant / cafe on the ground floor and five flats on the first and second floors.

A layout plan submitted by the applicant at the time shows that the 12 bedrooms would be be based across three storeys – with five bedrooms and a kitchen on the ground floor, four bedrooms on the first floor and three bedrooms and a smaller kitchen on the second floor.

Despite the plans being recommended for approval by the council’s head of environment and planning, the application has received opposition by both the local community council and by the adjoining Caia Park Community Council

Three objections were put forward by the community council, who say that the proposed use will result in a “very dense and over concentrated use of the site” and that the change of use will “increase pressure on the limited nearby off street parking and may result in vehicles reversing onto Borras Road.”

They also add that: “The proposed HMO and its associated use by tenants will result in an increase in noise and
potential to impact and cause nuisance to other nearby residents due to noise, crime and antisocial behaviour impacting on Community Safety.”

Caia Park Community Council also argue that “given the numbers proposed and the potential for resident’s vehicles it is felt that the scale of development is inappropriate.”

However comments submitted by the council’s highways department say that “the site is served by an existing access with adequate visibility in both directions” and that “it is therefore considered that the proposed development would in theory have a reduced demand compared to the existing dwelling/café.”

The application will be discussed by planning committee members on Monday 4th June at 4pm. For those unable to attend the meeting it will be webcast on the Wrexham Council website.

Source: Wrexham

HMO licensing
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HMO licensing – the potential pitfalls for landlords

The change to licensing closes off a major HMO classification loophole regarding the number of storeys a property owns.

An HMO is a property rented out by at least three people who are not from one household (for example, a family) and who share facilities, including the bathroom and kitchen.

Current guidelines state that a license is only required when the property has three or more storeys and five or more tenants from more than one household, collectively sharing the kitchen, toilet or bathroom.

Updates in HMO licensing

Worryingly, however, these criteria have led to some landlords skirting HMO licensing status, particularly evident in student accommodation where landlords squeeze more than five tenants into less than three storeys.

Under the new rules, a property home to five or more people from more than one household, regardless of the number of storeys, will be classified as an HMO.

Landlords will also have an obligation to adhere to rules regarding minimum room sizes.

Single rooms will be required to be a minimum of 6.51sqm and double-rooms a minimum of 10.22 sqm. An extra requirement has also been added for children under 10 years of age, with these rooms required to be at least 4.64 sqm.

Burden for landlords

The new licensing is part of the government’s ambition to encourage more responsible lettings and reduce the possibility of potentially unsafe living conditions for tenants.

However, it will unavoidably place further pressure on Britain’s already stressed landlords.

According to the Residential Landlords Association, 16% of landlords rent to people in HMOs.

It is predicted that once the changes come into effect later this year, a further 177,000 HMOs will be subject to licensing.

Not only will the new rules require these landlords to apply for a license, they’ll also likely lead to some costly upgrades putting their profit margins under pressure.

This could be a result of a reduction in rooms available to let, increased costs to meet regulatory hurdles in terms of room size and subsequent safety measures, or general checks that a property is fit for purpose under the new criteria.

However, forgoing an updated HMO license would result in even greater financial damage, with severe penalties set to be imposed on landlords who fail to adhere.

No grace period

These criteria changes come amid a wave of new legislations, including the updated energy performance certificate (EPC) requirements in April and the various tax and regulatory changes introduced last year.

It seems landlords are being challenged to remain more industry-aware than ever before.

The value of external advice and support through these changes cannot be underestimated, as landlords will have no grace period after the regulation comes into effect on 1st October.

For brokers, this is a chance for them to brush up on the essentials of the new HMO licensing.

It’s the perfect opportunity to build a strong reputation of expertise in regulatory compliance, ultimately creating more business down the line as more landlords look to them for advice.

Source: Mortgage Solutions

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If you rent a home, your landlord may need a licence!

Tenants, landlords, and neighbours are being urged to alert the council to licensable properties. From 1 October 2018 all houses in multiple occupation (HMOs) rented to five or more unrelated people must have a council HMO licence.

As things stand, a licence is only required if the property is three or more storeys high, but the law is changing this.

Landlords seeking an HMO licence will need to demonstrate to an Environmental Health Officer that the property meets national safety regulations.

The law change is designed to make sure that rented shared houses and flats are of a good standard and are safe to live in.
The council will be conducting inspections of properties over the coming months, and as of 1 October any landlord renting out an HMO without a licence will be committing an offence and could be subject to a large fine.

Those knowingly avoiding applying for a licence could be banned from renting out properties altogether.

Cllr Kim Caddy, Cabinet Member for Housing, said: “Don’t leave it to the last minute – any landlord who rents out an HMO without a licence after 1 October will be committing an offence. We’re also asking tenants, neighbours or anyone else who thinks a property could be licensable to get in touch.”

Source: Putneysw15

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Bury Landlord Fined For Unlicensed Property In Poor Condition

A rogue Bury landlord has been ordered to pay nearly £3,000 after being found guilty of several breaches relating to an unlicensed HMO in the area.

Abdul Raza Saddiqui, aged 50, of Parkhill Road, Bury, was fined a sizeable £1,200. He was also ordered to pay £2,452 costs as well as a £30 victim of crime surcharge after being found guilty of 12 housing offences.

The rental property, located on Seymour Road in Crumpsall, M8, failed various minimum safety standards. These included fire safety and gas safety, seriously compromising the safety of the tenants in the property and potentially endangering their lives should there have been a fire.

Council officers also discovered other breaches of management regulations in the property. These included a lack of working fire alarm, damaged fire doors, cluttered escape routes and broken heating facilities. There were also damaged kitchen units, as well as filthy and verminous common areas that rendered the property unfit for human habitiation due to the lack of hygiene.

Saddiqui pleaded guilty to eleven offences of breach of HMO regulations, and one offence of a breach of a condition of his HMO licence at a hearing at Manchester Magistrates’ Court,

Deputy leader of Manchester City Council, Councillor Bernard Priest, took a hard line on rogue landlords in Bury: ‘There’s no place for rogue landlords in Manchester. Landlords have a responsibility to provide their tenants good quality, safe housing and we take the issue of tenant safety extremely seriously. We will continue to pursue enforcement action to defend the rights of tenants and will not hesitate to take legal action against anyone whose property fails to meet the required standards.’

He continued: ‘Our message to landlords is simple – bring your property up to standard, make sure your tenants are safe and get a licence where the law requires one.’

Source: Residential Landlord

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What brokers need to know about looming HMO changes

The new HMO rules for landlords that will come into force in October will extend the licensing requirements and may also affect room sizes. Brokers working within the buy-to-let market have spent the past few years getting their heads around a raft of recent regulatory and tax changes introduced to the market.

And it’s not over yet; new changes that will affect HMO landlords – as well as some landlords that might not consider themselves to own HMOs – are expected to come into force this October.

What do brokers need to know?

Last year, the government launched a consultation looking at HMOs and residential property licensing. The consultation aimed to give councils best practice guidance on standardising living conditions in HMO properties across the country.

The response to the consultation was published last December and this new legislation on licensing of HMOs is expected to pass through Parliament in the coming months, becoming enforceable in October.

Currently, properties with three or more storeys that are occupied by five or more people from two or more households require an HMO licence. However, the new rules coming into force in October will extend the scope of licensing for HMOs. An HMO licence will now be required for all properties with five or more people from two or more households, regardless of the number of storeys in the property, meaning a substantially higher number of properties will require a licence from October.

In addition to extending the licensing requirements, the government is also proposing the introduction of a minimum room size for bedrooms in licensed HMOs. The new guidance will recommend floor space be no less than 6.51 sq m and 10.22 sq m for single use and two adults sharing respectively. These new rules are expected to impact approximately 170,000 properties in addition to the 60,000 that already have an HMO licence.

What should brokers be doing?

Ultimately, brokers with existing or prospective clients with HMOs must ensure they understand fully the incoming changes so that they can support their clients in the best possible way. Brokers will play a vital role in raising awareness among those landlords whose properties will soon be classified as an HMO.

In addition, the changes represent an opportunity for brokers to further advise and support their clients. For example, for those clients affected by room size requirements or looking to convert their properties into HMOs or student lets, brokers can advise on how to access the funding to undertake these changes.

How can bridging finance help landlords?

One such funding route brokers can advise on is bridging finance. This is ideal for landlords needing a short injection of cash to complete conversions quickly. Indeed, some bridging finance providers will allow borrowers to acquire finance from day one before applying for planning permission, and even those that don’t will have shorter turnaround times and greater flexibility than other lenders.

Therefore, for clients needing to make changes quickly, bridging finance could be an invaluable route of accessing funding so that they can get the changes made within the necessary timeframe. This could be particularly beneficial for landlords who have already had to make changes to properties in their portfolios to comply with EPC regulations introduced this April.

The changes also represent an opportunity for brokers to further advise and support their clients

Changes to EPC regulations mean that landlords with properties with an ‘F’ or ‘G’ energy efficiency rating are required to make changes to their properties to improve their rating, or they face significant fines. These regulations affect both commercial and residential landlords and, while residential landlords won’t typically face high costs when making improvements, commercial landlords could face real problems if they aren’t able to improve their efficiency within the short timeframe – often as little as three months.

Things to remember

As mentioned, brokers have a vital role to play in advising their clients on these new regulations. First, this will mean raising awareness to ensure those landlords whose properties are going to come under the umbrella of an HMO are not only aware of the changes but also understand the steps they will need to take in order to get a licence. This will include finding the funding necessary to increase room size if needed.

Brokers will also play a role in advising those clients who want to either convert properties into HMOs or purchase them.

One final thing to remember is that landlords will be required to renew their licence through their local council every five years. Brokers must ensure that landlords are aware of this and also that they have a licence for each individual property in their portfolio.

Source: Mortgage Strategy