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Massive £182,000 fine for buy to let investor after string of HMO offences

A buy to let investor has been found guilty of 35 HMO offences – and has to pay a total fine of £182,314.90, thought to be one of the largest penalties ever for an individual landlord.

Leila Amjadi, of Sutton Coldfield, was found guilty at Birmingham Magistrates Court of failing to obtain HMO licences and for breaches under the HMO Management Regulations.

The offences were in relation to the four properties she owned across Birmingham.

Amjadi was fined £85,000, ordered to pay full costs to the council of £22,974.90 and a victim surcharge of £170. In addition to this, she was ordered to pay a compensation order to 11 of the tenants, totalling £22,000.

Amjadi‘s company, Vertu Capital Ltd was also found guilty of 21 offences relating to two of the HMO properties in Selly Oak and was fined £52,000 plus a victim surcharge of £170.

In 2016, Birmingham council officers became aware that Amjadi’s properties were being let without the appropriate HMO licences.

She has over 10 years’ experience in the property letting industry and was well aware of her responsibility to obtain licences, having previously made HMO licence applications.

The council also received numerous complaints from occupants and local residents regarding the poor maintenance of the properties.

Following inspections by officers, 31 breaches of the HMO Management Regulations were found including missing fire blankets, fire doors that were either missing or inadequate, and smoke detectors which were hanging loose from the ceilings.

The district judge commented that, despite the significant income from her properties, Amjadi was an unscrupulous landlord who did not care for the health and safety of her tenants.

Amjadi was also found to have deliberately used delaying tactics when dealing with both her tenants and the council.

A spokesman for the council says: “This is the largest fine that Birmingham has seen for these type of offences and it sends out a strong message to all landlords that Birmingham city council will use all its enforcement powers to ensure that tenants are protected from rogue landlords who neglect their responsibilities”.

Source: Letting Agent Today

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Spike in BTL landlords looking to invest in HMOs

New research from OneSavings Bank has found that, in the last six months, around 51% of UK based brokers have been approached by landlords looking to diversify their portfolios.

According to the data, of those brokers who had been approached by landlords about diversifying, 56% of enquiries were about diversifying into Houses with Multiple Occupants (HMOs). HMOs can generate a higher yield for landlords which will help to mitigate against the additional costs that they now face. Indeed, research by Mortgages for Business found that the average yield of a HMO could be 3.3% higher than a property with one tenancy agreement. However, changes to HMO regulations following a government consultation, due to be implemented from October, could introduce additional regulation in this area.

Landlords are also increasingly diversifying into commercial and semi-commercial properties in the wake of the recent PRA regulations and the changes to tax treatments for buy-to-let properties. The research found 14% of brokers said they had been approached by landlords wanting to increase the level of commercial property within their portfolio. In addition, 9% reported that landlords wanted to diversify into mixed-use properties. Unlike residential buy-to-let property, landlords holding only commercial property will not be affected by the reforms to mortgage tax relief. In addition, commercial or mixed-use properties will not incur the same amount of stamp duty as purely residential buy-to-let properties would.

In addition, 6% of brokers said landlords were looking to diversify into student accommodation. Brokers also pointed to other options, such as holiday lets and serviced accommodation, being brought up by clients.

Recent regulatory and tax changes are thought to be the driving force behind a growing number of landlords moving into new property markets. In particular, reforms by the Prudential Regulation Authority (PRA) introduced stricter underwriting standards for portfolio landlords with four or more properties, whilst reforms to mortgage tax relief have reduced the amount of mortgage interest landlords could offset against rental income. These are in addition to the 3% stamp duty surcharge for second homes that was introduced in 2016.

Adrian Moloney, Sales Director at OneSavings Bank, said: “Landlords are on the hunt for greater yields, and, in the face of regulatory and tax changes, diversifying into commercial property or more complex residential options such as HMOs can offer this. With the buy-to-let market becoming increasingly complex, there is an opportunity for informed brokers to support landlords seeking new niches. However, these brokers must in turn be supported by specialist lenders who can offer the flexible lending needed to finance the growth of these segments of the market.”

Source: Property Reporter

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Swindon Borough Council To Crackdown On HMOs

Swindon Borough Council is planning a crackdown on HMO investments, with new rules coming into force in October.

The change in regulation will require buy to let property investors to obtain a licence for all houses in multiple occupation (HMOs) which are home to five or more residents. This is likely to result in a five-fold increase in the number of HMOs that require a licence.

The changes have been welcomed by the local council, who have drawn attention to the fact that areas such as Broadgreen and Eastcott are home to many house-shares. Residents in these areas have expressed concerns about problems associated with shared housing, such as anti-social behaviour, fly-tipping and parking shortages.

In the current regulatory environment, HMO landlords only require a council licence for shared homes that are at least three storeys high and are let to five or more people who share a toilet, bathroom or kitchen. The new rules, set to come into force on October 1, will get rid of the height requirement, meaning that many more HMOs will need to be licensed.

There are currently 120 licensed HMOs in Swindon. However, council officers estimate that between 600 and 800 could end up being licensed under the new rules.

Borough housing chief Mike Ash said: ‘Due to the nature of Swindon’s housing stock and market, the great majority of HMOs in Swindon will fall under a licensing scheme following these changes, and this will allow for much more effective regulation of the sector.’

A spokesman for Swindon Borough Council added: ‘When the extension becomes law, the council will look to prosecute any landlords that wilfully fail to apply for a licence. Persistent offenders may also be banned from involvement in renting property, and also entered onto the national Rogue Landlords Database, which is currently being set up by the government.’

Source: Residential Landlord

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HMO plans for “eyesore” office space in Wrexham

“Dilapidated” and “eyesore” office space in Wrexham could soon be converted into a HMO.

In an application submitted to Wrexham Council it has been proposed that the disused office space at Unit C on Maesgwyn Road is converted into a six bedroomed House Multiple Occupancy.

Previously the offices were home to the Wrexham tram depot before being used as a bus depot. In recent years it has been used as a garage and repair shop. However they have since been vacant for a number of years and have been subject to vandalism.

As a result the applicants state that the aim of the plans is to “ensure this vacant unit can become usable”, with office space located at the front of the building proposed for HMO use.

Documents submitted to Wrexham Council show that the office space on the ground floor would be used for an open plan kitchen, dining and living area, along with a separate kitchenette, bathroom and one bedroom with living area.

A further five bedrooms, two of which would have living areas, two bathrooms and a landing would be located on the first floor.

Further details in the application’s design and access statement adds that the proposed conversion would be “sympathetic to the existing structure”, with the removal / replacement of windows and the creation of a new opening proposed to provide bin storage for the exterior of the building.

The design and access statement concludes: “We feel this planning application should be looked favourably upon as the intention to provide additional accommodation within the town centre ideally suited to young professional’s seeking work or employment in the area.

“The building is prominent to existing dwellings and is currently in a dilapidated state where vandals have targeted windows and walls within the building.

“At present the building is an eyesore to local residents, by allowing this conversion to take place the building will be revamped and be a secure building ensuring vandalism won’t occur.

“By allowing us to convert the existing offices to provide a HMO we are retaining the existing characteristics of the building, reducing its impact on the current parking arrangements and ensuring parking issues aren’t magnified should the unit be refurbished as an office.”

The application will be considered for approval at a later date.

Source: Wrexham

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Changes In Landlord Legislation For This Year

There are some years which seem to be dominated by changes in landlord legislation and 2018 seems to be one of those years. Some of these have been talked about for a long time and landlords have had time to prepare, but others seem to have been sneaked in. The main landlord legislation changes are listed below.

Energy Efficiency Standards                                                                                                                                        

From 1st April 2018 properties that are rented out in the private rented sector will need a minimum energy performance rating of E on an EPC certificate. The new rules cover all new lets from that date and will be extended to all tenancies from 1st April 2020.

HMO room size regulations

Research has found that 16 per cent of landlords rent to people in HMOs, and though some has been to a reasonable size standard, it is this portion of the sector that has been seen in the past to have the poorest size standards, so legislation that will improve this is to be welcomed.

From October 2018, a minimum space standard will be introduced for bedrooms in Houses in Multiple Occupation. Rooms to accommodate one person must be a minimum of 6.51 square metres; for 2 persons, it must be a minimum of 10.22 square metres; rooms to accommodate a child under 10 years old must be at least 4.64 square metres.

The HMO licence must specify the maximum number of people resident in the property. Landlords who do not comply with the new requirements could face a fine of £30,000, though landlords of existing properties will have 18 months to make any changes to allow compliance.

GDPR

From 25th May, General Data Protection Regulations will be introduced to replace the Data Protection Act. From that date, landlords will have to ensure that their businesses are GDPR compliant. A data protection policy is needed, together with a privacy notice for customers. A new change is that registering with the Information Commissioners Office will become a statutory requirement.

Extension of mandatory HMO licensing

An extension of mandatory HMO licensing will come into force from 1st October 2018. The reason will always be that this will raise standards, but the private landlord’s view will be that it is the revenue it raises that be of most concern to the local authority.

Banning Orders                                                                                                                                                              

Banning orders will be introduced on 6th April with the intention of tackling criminal landlords and agents. The Housing and Planning Act 2016 introduced banning orders; an individual convicted of certain offences can be barred from renting out properties for a minimum of one year. Could the penalties be avoided by transferring ownership to a partner? However, the changes will now impact all tenancies, including those that were established BEFORE 1st October 2015.

Extension of Section 21                                                                                                                                                    

October sees the extension of Section 21 which were implemented by the Deregulation Act. Section 21 was changed and applied to all tenancies or renewals that started on or after October 1st, 2015.

All landlords are legally required to supply their tenants with the ‘prescribed documents’ of gas safety certificate, tenancy deposit protection information, energy performance certificate, tenancy agreement and the government document ‘How to Rent’ before the start of the tenancy. As this has been required procedure for some time, it seems unnecessary to further legislate.

Gas Safety                                                                                                                                                             

There will be some flexibility for Landlords around dates of annual gas safety checks.

Landlords will be able to make compulsory checks any time in the two months leading up to the renewal date. This means that, if the check was due on May 31, the check could be carried out any time in April or May and still retains the 31st May renewal date for future renewals. This may be helpful for landlords who find it more convenient to have their full portfolio of property checked at the same time.

In summary, there is plenty of landlord legislation changes for private landlords to think about this year and some will struggle to keep out of trouble. Check with local authority accreditation schemes and landlord associations for any training that is available to ensure that you are able to implement any landlord legislation changes required, and your reputation as a landlord remains unblemished.

Source: Residential Landlord

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What do the new HMO regulations mean for landlords?

Last year the UK government announced plans to review regulations surrounding Houses in Multiple Occupation (HMO) although this was delayed by the snap general election. However, on 23 February 2018 the government announced details of changes to HMO regulations which will come into effect on 1 October 2018. While many of the changes are subtle they will force many landlords to apply for HMO licences and potentially fund changes to their properties.

SUMMARY OF HMO REGULATORY CHANGES

As of 1 October 2018 the following changes to HMO regulations will apply:

Definition of an HMO property

At this moment in time an HMO property is defined as one which is occupied by five or more people, forming two or more separate households and comprises of three or more stories. The new definition is much simpler and any property occupied by five or more people forming two or more separate households will require an HMO licence.

Floor space requirements

While the vast majority of HMO landlords offer floor space which is more than adequate for single rooms and those sharing, there have been many cases of bad practice highlighted in the press. As a consequence, the new guidelines will recommend floor space of no less than 6.51 m² for a single tenant and 10.22 m² for two adults sharing. At this moment in time it is unclear when this guidance will become law.

Properties previously exempt from an HMO licence

There are many HMO properties in the UK which do not currently require a licence under the old HMO definition. Those that fall under the criteria for the new HMO definition from 1 October 2018 will need to apply for a licence from their local authority. It is also worth remembering that a licence is required for each individual property as opposed to individual landlords.

Impact on landlords

Until the new regulations are brought onto the statute books nothing is actually set in stone but the indications are that around 170,000 additional properties will be impacted by the new HMO regulations. This is on top of the existing 60,000 properties already under licence. Those who fail to comply with the new regulations will be open to potentially unlimited fines.

Additional funding requirements

There is some debate at this moment in time as to whether the minimum room requirements will be guidance or firm regulations when the changes come in on 1 October 2018. It is likely that many landlords will at some point need to make changes to the layout of their HMO properties. Depending upon the type of property this could have a serious impact upon long-term rental income as well as requiring additional capital to fund changes.

PLANNING FOR THE FUTURE

At this moment in time the HMO changes will only relate to England although it is highly likely that Scotland, Wales and Northern Ireland will adopt their own form of regulatory changes in due course. We know for a fact that the definition of HMOs which require a licence will change and at some point the minimum room size guidance will become law. There is still plenty of time for HMO landlords to review their own individual investments and consider how the changes will impact their assets and their income.

Source: Property Forum

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Almost 20 rogue shared houses served with enforcement notices since start of year

The landlords of almost 20 shared houses in Brighton have been told to convert them back into family use since the beginning of the year as the council’s crackdown on rogue HMOs continues.

And the council has also won four appeals by landlords against the council’s decision to refuse permission to convert more homes into HMOs – after all four have already been converted.

Four of the 19 houses served with enforcement notices are in Brading Road off Elm Grove, an area which has experienced trouble with antisocial behaviour in the past.

In 2015, a man was punched in the face and hit in the head with a can of beer after he complained about noise from a party in Brading Road. This was not one of the houses served with a notice, but other partygoers told neighbours it was a student area so they shouldn’t be complaining.

The university subsequently banned students in two houses in the road from throwing any more parties. A suspect was identified, but police decided there was not sufficient evidence to prosecute and the case was later dropped.

Toxish Doyle, who lived in Brading Road when the assault took place, said she and her disabled mother had eventually been forced to move because of problems with student houses.

She said: “I don’t live there any more for the pure reason that shared houses destroyed the environment and made it unsafe to live there with my disabled mother.

“So I believe it’s a great thing and hopefully the friends we have that live on the street still will get some more peace and quiet

“Every time I complained I was told it was a student area so I had no right to complain and that I should move! Finally we gave in. Luckily we were in a financial position that meant moving was just affordable.

“I just hope the couple of nice people I met student wise that really did respect the area don’t end up without housing. I’ve seen that happen before. The restrictions are a double-edged sword really.”

Councillor Julie Cattell, chair of the planning committee, said: “We are pleased the planning inspector agreed with our decisions. These HMOs did not create decent living space for their occupants.

“We would urge property owners to check whether planning permission is needed before going ahead with work as if permission is refused it could cost them thousands of pounds, both in legal costs and in putting properties back to how they were. The council also takes enforcement action when properties are not returned to their agreed use.”

An application to convert a first floor flat to a small HMO of five rooms and a kitchen at 33 Baker Street was refused but the works had already been done.

In considering the appeal the planning inspector noted that the kitchen could only comfortably hold two people at any one time while the ‘communal space’ for residents was a hallway with only room for a small sofa against one section of wall.

It was found that the communal area was being used to dry clothes and store items as there was not enough space in the rooms themselves.

The outdoor terrace at the property could only be used for part of the year and there was concern about increased noise and disturbance for neighbours.

In upholding the council’s decision, the planning inspector noted that the accommodation was of a poor standard and would be harmful to the living conditions of existing and future residents.

The planning inspector came to a similar conclusion at 33 Hallett Road, a semi-detached house in the Elm Grove area. This has already been turned into a six-bedroomed HMO to house students. The planning inspector agreed with the council that it does not provide satisfactory living conditions for those who will live there, and last week the council served a notice on the owners to cease use as an HMO.

Two properties, 33 Hillside and 2 Plymouth Avenue, in the Moulescoomb and Bevendean area of the city have permission to be smaller HMOs but have been turned into large (seven bedrooms or more) HMOs without planning permission.

The planning inspector upheld the council’s view that permission should be refused on these properties due to the inadequate internal space to provide acceptable living conditions. Both properties have recently had works to increase their size. One is an end of terrace house (Hillside), the other a bungalow.

The other houses served with notices are 103 Halland Road, 9 Isfield Road and 32 The Highway in Moulsecoomb; 1 and 3 Bristol Street in East Brighton; Flat 4, 154 Freshfield Road and 249 Queens Park Road in Queens Park; 27 Coldean Lane and 31 Park Road, Coldean; 9 Old Shoreham Road, Seven Dials; 27 Hollingbury Road, Hollingbury, 81 Washington Street and 9 Whichelo Place, Hanover; and land at 130 Coombe Road.

Outstanding appeals against planning refusal for HMOs are currently being considered for 72 Brading Road (one of the houses served with an enforcement notice), 40 Pankhurst Avenue and 29 Southampton Street.

Reports on recent and current appeals will be noted by councillors at the 4 April Planning Committee.

Source: Brighton and Hove News

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Rogue landlord prosecuted for the second time in six months for HMO offences

An Oxford landlord with a previous conviction for housing offences was fined £10,000 and ordered to pay the City Council £1,535 in costs when he appeared at Oxford Magistrates’ Court on 20 March 2018.

The City Council successfully prosecuted Mr Imtiaz Gulzar for the second time in six months for failing to comply with his responsibilities under the Management of Houses in Multiple Occupation (HMO) (England) Regulations 2006 at a large HMO on Cowley Road, Oxford.

Mr Gulzar, (41) of Cowley Road, pleaded guilty to:

  • failure to keep his property in good order and repair;
  • failure to ensure that all notices indicating the location of means of escape from fire are displayed in positions within the HMO that enable them to be clearly visible to the occupiers;
  • failure to maintain property in good and clean decorative repair, and
  • failure to maintain property in a safe and working condition

After hearing the facts of the case and considering a written statement of mitigation, as well as a notice of intention to cite a previous conviction, the Court proceeded to fine Mr Gulzar £10,000 and ordered him to pay £1,535 towards the Council’s costs.

In November 2017, Mr Gulzar was prosecuted for failing to comply with the conditions attached to an HMO licence for a property in Iffley Road, Oxford. In that case, he was fined £2,500 and ordered to pay £1,425 in costs.

Councillor Alex Hollingsworth, Board Member for Planning and Regulatory Services, said: “The City Council is committed to ensuring high standards in the private rented sector and protecting tenants against landlords who do not meet their responsibilities under the law. I am pleased that in this second prosecution of Mr Gulzar, the Court imposed a higher fine than in the first case.

“This is one of the last cases to go through the courts as we are now using the new financial penalty powers that came into force in April last year. These powers allow us to issue financial penalties of up to £30,000 for certain housing offences rather than take up cases to the courts for prosecution. On average, we have issued penalties that are nearly four times what the courts used to fine landlords, so we believe the new powers will provide an even greater deterrent against violations of housing regulations by landlords.”

Source: Oxford City Council

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Plan to make family home in St John’s, Worcester an HMO approved despite safety fears

HOMES used as bedsits or as shared ‘student-style’ housing “devalue and degrade a neighbourhood”, according to a councillor. Cllr Alan Amos made the comment about a plan to turn a four-bedroom family home into a five-room house of multiple occupancy (HMO) at Worcester City Council’s planning committee meeting.

Cllr Amos said: “We should enhance a neighbourhood, not damage neighbours’ amenity.”

The application was brought by Martin Kelly who lives in the house in Palmers Green in St John’s with his brother.

He said he wanted to turn the house into a home for five people, adding: “It would not necessarily be students. It’s suitable for professional people as well as students.”

A neighbour, Glyn Harding objected strongly to the plan. He said: “Mr Kelly is a good neighbour but this proposal for an HMO is not suitable for a street full of family homes. An HMO will lead to more foot and vehicle traffic, and this street is dangerous.”

Mr Harding said the street had been built without pavements so people were forced to walk in the carriageway and a series of bends in the road created poor sightlines. He said: “Elderly people, parents pushing buggies and children are all in the road, and this will be unsafe.”

However, Worcestershire County Council’s highways officer Steve Hawley said the road met national standards at 4.5m wide.

He added: “There have been no accidents in the road since it was constructed. The absence of foot-ways is part of the shared space concept and there is no evidence to suggest this proposal would be unsafe.”

Mr Harding was also concerned about ‘clustering’ of HMOs. He said: “There are eight other HMOs within a 200m radius. About 65 percent of HMOs in Worcester are in St John’s. We are well over the tipping point.” The plan was approved by six votes to one against with two abstentions.

Source: Worcester News

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City landlord fined £2,000 for property condition failings

A property management company has been landed with a legal bill of almost £2,000 after admitting that it failed to keep a property in Nottingham in good repair.

Nottingham City Council`s Housing Licensing and Compliance team secured a successful prosecution against ADKAM CIC (Community Interest Company) resulting in a fine of £1000 with costs of £836 and a £100 victim surcharge at Nottingham Magistrates court.

The Council prosecuted ADKAM CIC for five separate Housing Act offences due to the licence holder failing to manage the property in line with the Management of Houses in Multiple Occupation (England) Regulations 2006.

ADKAM CIC pleaded guilty to five separate offences of failing to comply with the Management of Houses in Multiple Occupation (England) Regulations.

Nottingham City Council’s Housing Licensing and Compliance team licence landlords to operate HMOs. The council regularly undertakes risk-based compliance visits to ensure landlords are complying with the law, and on the 7th April 2017 council officers inspected a licensed house in multiple occupation (HMO) on Gregory Boulevard.

The licenced HMO was in a state of disrepair and the landlord ADKAM CIC was failing in its duties to manage the premises in accordance with the law. ADKAM CIC admitted in court that they had failed to keep the property in repair.

Portfolio Holder for Planning and Housing, Cllr Jane Urquhart, said: “Landlords are required to manage their property in accordance with the law. As this case shows, we will take robust action through the courts to prosecute landlords who put tenants’ safety at risk.

“We have powers to revoke the licence of anyone convicted of offences such as these, preventing them from operating premises in future, as well as to impose civil penalties of up to £30,000 against landlords who contravene the law, as an alternative to taking prosecutions through the Courts.”

From April 6th 2018 anyone committing a defined housing related offence such as this may receive a banning order preventing them from owning or operating rented housing.

Source: West Bridgford Wire