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New HMO rules for landlords set to take effect from October 2018

The government will implement new regulations for houses in multiple occupation (HMOs) from 1 October 2018 after a mandatory HMO licensing extension was confirmed in Parliament last week, which spells big changes for some landlords.

It has been more than two years since the issue of mandatory licensing for HMO properties was discussed by the government, and a date has now been set for the new rules to come into effect. It will mean that mandatory conditions and licences will apply to all HMOs that fall under the stated criteria, and the landlords who own them, further tightening up the market and minimising the number of unfit properties and rogue landlords in operation.

What are the licensing changes?

The new mandatory licensing policy from October 2018 will apply to HMOs that are occupied by five or more people, comprising individuals living in two or more separate households – frequently but not exclusive to groups of cohabiting adults – regardless of the number of storeys. The property is also classed as an HMO if it is not made up of self-contained flats, the people who live there treat it as their main residence, and two or more of the occupying households share one or more of the basic amenities. More detailed information can be found here.

Owners of properties that fall under the above criteria will need to obtain licences when the new regulations take effect, which is expected to bring an additional 177,000 HMOs under the mandatory licensing scheme in England. Where selective or additional schemes are already in place for landlords, which accounts for about 20,000 HMOs, the new scheme will replace existing licences.

Current licensing rules already apply to large HMOs, where five or more people rent rooms in the property from more than one household, if the building is more than three storeys high.

What if landlords don’t comply?

The Ministry of Housing, Communities and Local Government has confirmed that landlords are legally required to submit their applications for mandatory HMO licensing by the deadline of 1 October 2018, with no allowance for a grace period after this date. The government is expected to publish guidance in the coming months on the issue to make local authorities aware of the obligation, but landlords who fail to apply for the correct licence will be in breach of the law.

Will there be any other changes?

Implementing a minimum room size rule has been part of the talks, and more specific details on this are still to be announced. The minimum sizes will apply to rooms that are slept in, and local authorities will be required to enforce this by specifying appropriate rooms in HMOs, and the number of people allowed to occupy them. If the conditions are breached, the local authority will issue a warning to the landlord to remedy the situation, after which point legal action can be taken.

Another condition of the licences will relate to refuse disposal and storage facilities, with minimum numbers of bins and storage facilities for waste expected to be set out by the government.

Source: Buy Association
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Agents claimed to be sub-letting home as HMO without landlord’s knowledge fined nearly £40,000

A letting agency and several of its personnel who were involved in renting a property in order to then sub-let it as a HMO without the landlords’ knowledge have been slapped with fines totalling tens of thousands of pounds.

Easy Let Agency in Brent, London, whose personnel also operate under the name Focus Property Management Ltd, has been prosecuted at Willesden Magistrates Court for licensing and housing offences.

Both firms and several individuals associated with the businesses have been handed penalties in two separate court hearings last month, according to Brent Council.

In the first case, the owners of a five-bedroom terrace house in Gowan Road, Willesden, rented out their property to Claudio Crisafulli who was working as a freelance estate agent for Easy Let.

Crisafulli then illegally sub-let the house as an HMO behind his landlords’ backs.

Neighbours in Gowan Road complained to Brent Council about lots of people coming and going from the property.

Investigating officers found it difficult to track down the people responsible because Easy Let Agency was listed under a false address.

Easy Let company director Marcio Da Silva was fined £2,000 for failure to licence and a further £2,000 for breach of management regulations as well as £1,670 in costs on January 25.

Fellow director, Marcio Auriello Do Prado, was fined £3,000 for failure to license and £3,000 for breach of management regulations alongside £1,670 fines.

Claudio Crisafulli was fined £400 for failure to license and £400 for a breach of management regulations on top of £40 costs.

The agency itself was also hit with a £5,000 fine and £170 in costs.

The total fines and costs for the case amounted to £19,180.

In a separate sentence hearing on January 30, Focus Property Management Ltd was fined a total of £20,229 for management regulation and licensing breaches for another rented property in Tower Road, Willesden Green.

The matter is still subject to court proceedings and so few further details are available.

Cllr Harbi Farah, cabinet member for housing and welfare reform, said: “We will pursue estate agents and sub-letters who operate outside the law all the way to court.

“Sadly, we have seen that rogue operators in the private rented sector disrupt neighbourhoods and make tenants’ lives a misery.

“Brent Council will do everything to improve the standard of living in Brent.”

Source: Property Industry Eye

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Landmark ruling against landlord in ‘back garden shanty town’ case

A council has claimed a legal first after it used the Proceeds of Crime Act (POCA) against landlords for breaches of licensing conditions, in a landmark ruling.

A Crown Court judge ruled yesterday that POCA could be used to recover criminal assets that a family obtained from cramming 31 tenants into a single four-bedroom property.

The man who collected around £112,000 in rent from the tenants may also be ordered to repay any financial benefit he gained under the same POCA ruling.

The case centres around the Shah family, who contravened the Management of HMO Regulations 2006 and breached licensing conditions as a result of squeezing so many tenants into a property on Napier Road in Wembley, London.

Brent Council has previously described the property (pictured) as a “Slumdog Millionaire-esque shanty home”.

Council officers discovered one woman living in lean-to shack next to the four-bedroom property during a raid in July 2016.

The shack had no lighting or heating and was made out of wood offcuts, pallets and tarpaulin.

Harsha Shah, daughter Chandni Shah and brother-in-law Sanjay Shah now face paying a confiscation order for financial benefit as a result of those breaches.

The order also covers repairs they neglected to fix and financial gain made from their racketeering.

It comes after Sanjay Shah lost his appeal against the charge of aiding and abetting the breaches of a term of the selective licence attached to the property on January 5 this year.

He also lost his appeal against his conviction for contraventions of the Management of HMO Regulations 2006.

Jaydipkumar Valand, who has previously been described in some press reports as an agent, and who collected rent from tenants for the Shah family in 2015 may also be ordered to repay any financial benefits he made.

Cllr Harbi Farah, cabinet member for housing and welfare reform, said: “This is a landmark legal decision for our zero tolerance policy against rogue landlords.

“We will use all the powers we have to put an end to tenants living in misery, and this includes the Proceeds of Crime Act.

“We want to work with landlords and agents to improve the standard of living in the private rented sector, and we urge those responsible to licence their properties and comply with licensing conditions.”

Edmund Robb, counsel from Prospect Law who represented Brent in the hearing, said: “This judgment represents a landmark ruling from the Crown Court which allows local authorities to initiate confiscation proceedings under POCA 2002 for criminal offences linked to safety and amenity regulations.

“Rogue landlords cannot now hide behind previous case law to avoid being required by the courts to pay back rents and other benefits obtained whilst their tenants lived in squalid and dangerous conditions.”

Source: Property Industry Eye

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Company director loses court appeal following claims of ‘significant overcrowding’ at Leominster property

A LANDLORD who allowed ‘significant overcrowding’ at a Leominster property has lost her appeal following a two-day trial.

Mayya Kostyuk, 58, of Bishopstone, Hereford, along with her company Herford Housing Solutions Limited, had appeals against eight housing-related offences under the Housing Act 2004 dismissed at Hereford Crown Court earlier this month.

Officers from Herefordshire Council’s Environmental Health Housing team gave evidence as to how Company Director Kostyuk and Herford Housing Solutions Limited had breached conditions of their licence for the House in Multiple Occupation (HMO) at Broad Street in Leominster.

The court heard that council officers obtained a warrant and entered the property in March 2015. They found significant overcrowding, a person sleeping in a prohibited room, and failure to maintain the protected means of escape in case of fire.

The case was originally brought by Herefordshire Council’s Environmental Health and Trading Standards Service to Herefordshire Magistrates Court in May 2017, but was subsequently appealed by Kostyuk and Herford Housing Solutions Limited.

Recorder Judge Brand, Q.C. heard the defence contend that the property was a hotel and not an HMO.

Kostyuk was initially ordered to pay a £1,750 fine and £1,750 costs.

Following the case Marc Willimont, Head of Regulatory and Development Management Services for Herefordshire Council, said: “This was one of the worst cases of overcrowding our officers have seen in a licensed House in Multiple Occupation – one tenant was even found sleeping in a prohibited boiler cupboard with no windows.

“Both the company and the director Mayya Kostyuk put profit before the lives of their vulnerable tenants.

“Herefordshire Council is taking housing crime seriously, and this result sends a clear message to other criminal housing landlords that they cannot hide behind their company and such behaviour will not be tolerated.

“We will continue to protect tenants’ safety and the livelihood of our decent housing landlords, by ensuring criminal landlords are brought to justice.”

It was Herefordshire Council’s first housing conviction of the director of a company, under offences by bodies corporate, meaning Kostyuk was also personally liable for the actions of the company.

Source: Hereford Times

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Northampton Borough Council Considers Increasing Housing Enforcement

Northampton Borough Council could impose fines of up to £30,000 on rogue landlords and letting agents for misconduct in future.

Northampton Borough Council is planning to increase its housing enforcement team in order to better crack down on unsafe privately rented accommodation. The Borough Council has confirmed that the new fines are set to be imposed to ensure that privately rented accommodation is ‘safe, well managed and fit for purpose.’

The council also met last night to decide on whether to enforce a ‘section 4’ rule which would mean that landlords are required to obtain planning permission before converting family homes into houses in multiple occupation (HMOs).

A HMO is defined as accommodation with over three separate tenants. HMOs have received poor publicity from residents groups and communities as they occupy family homes. There have also been complaints that they lead to rubbish strewn streets and excessive amounts of cars.

Northampton borough council claims that their current private sector hosing enforcement team is ‘too small’ to be able to deal with the vast numbers of substandard, unlicensed and badly managed privately rented homes.

Council cabinet member for housing, Councillor Stephen Hibbert, said: ‘The Government has given local authorities the power to impose fines on landlords and managing agents, as an alternative to prosecution which can be more expensive and take a long time. Our housing enforcement team has already identified almost 500 properties which it knows or suspects are HMOs and should be licensed. The team is also aware of other substandard privately-rented accommodation in the borough which it doesn’t currently have enough time to tackle.’

Additionally, new government legislation also allows for an extension of rent repayment orders. This could result in up to a year’s rent being returned to those who paid it, be that the tenant or the council in the case of those whose rent is met by housing benefit. This is also likely to shake up the buy to let sector in Northampton.

Source: Residential Landlord

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Tough New Laws To Stamp Out Rogue Landlords

Tough new laws for shared housing landlords will come into force from April 2019, says Housing Minister Alok Sharma.

Although the rules will need clearance from Parliament, the measures will curb overcrowding in houses in multiple occupation by demanding landlords offer tenants more sleeping space.

The rules will cover all private rented homes in England where five or more tenants from two or more separate households live.

From April, local councils will have to licence an extra 160,000 shared homes. Councils are already responsible for licensing 500,000 homes in England.

Bedrooms sleeping one adult will have to measure at least 6.51 square metres, while those for two adults should be no smaller than 10.22 square metres.

Rooms for children up to 10 years old must be 4.64 square metres or more.

Unscrupulous landlords

The new HMO licence will state how many people can live in a room and the total occupancy for a property will specify how many people can stay in a home as a way of halting overcrowding.

The new measures will also specify several criminal offences that will bar landlords from letting out shared homes.

Landlords will also gain a duty to manage refuse disposal and recycling for HMO properties.

“Every tenant has a right to a safe, secure and decent home. But far too many are being exploited by unscrupulous landlords who profit from providing overcrowded, squalid and sometimes dangerous homes,” said Sharma

“Enough is enough and so I’m putting these rogue landlords on notice – shape up or ship out of the rental business.

£30,000 fines for breaking new laws

“Through a raft of new powers, we are giving councils the further tools they need to crack down these rogue landlords and kick them out of the business for good.”

These new measures add to action by the government to improve safety and standards in the private rented sector.

Recent action includes bringing in fines of up to £30,000 for dodgy landlords, protections for tenants from revenge evictions and £12 million funding for councils to take enforcement action in hotspot areas.

A database of rogue landlords convicted of housing offences is due to switch on from April.

Source: iExpats

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New Government powers to ban landlords and additional HMO regulations

From April 2018 any landlord convicted for the criminal offences of blackmail, theft,  handling stolen goods, harassment and stalking will automatically be banned from letting out property and added to the new rogue landlords database.

In addition Housing Minister, Alok Sharma, has introduced new HMO regulations set to be passed by Parliament confirming all properties occupied by 5 or more people from 2 or more separate households will face mandatory licensing.

The new HMO regulations will include:

  • Minimum bedroom size requirements (to prevent overcrowding). Rooms used for sleeping by a single adult will have to be no smaller than 6.51sqm, and those occupied by two adults will have to measure at least 10.22sqm. Rooms slept in by children of 10 years and younger will have to be at least 4.64sqm in size.
  • Responsibility falling on landlords to ensure the council’s rules on refuse and recycling are adhered to.
  • Additional powers to be given to local authorities for cracking down on over-crowded and sub-standard homes.

The government has estimated this will bring 160,000 into the licensing regime.

Alok Sharma said: “Every tenant has a right to a safe, secure and decent home, but far too many are being exploited by unscrupulous landlords who profit from providing overcrowded, squalid and sometimes dangerous homes.

“Enough is enough, and so I’m putting these rogue landlords on notice. Shape up or ship out of the rental business. Through a raft of new powers we are giving councils the further tools they need to crack down these rogue landlords and kick them out of the business for good.”

The RLA policy on this was previously spelt out by David Smith saying: “Councils are already struggling to enforce licensing schemes and the extension will potentially triple the number of homes under mandatory licensing.

“What is the point in introducing extra regulations if there are no resources to enforce them?

“Tenants should not be forced into excessively small rooms, but there are cases where tenants have other space available within their properties, which should be taken into account. By concentrating so narrowly on bedroom size the Government could knock thousands of rooms out of the sector, potentially forcing tenants out of their homes.”

Source: Property 118

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Landlords fined for failing to look after property in Camborne

Two landlords who failed to ensure a house of multiple occupation in Camborne was maintained adequately have been fined £2,000 by the courts.

Anthony Pickering and Alan Short pleaded guilty at Truro Magistrates Court this week to breaching several requirements of the Management of Houses in Multiple Occupation Regulations 2006 (“HMO Management Regulations”).

The charges were brought by Cornwall Council in relation to a property at Pendarves Street, Tuckingmill, Camborne.

On the 19 January 2017, Cornwall Council Private Sector Housing Team visited the premises and found that the communal kitchen and bathroom, staircase, rear out building and garden were poorly maintained.

The pair were given an opportunity to put right the problems but failed to do so.

Pickering, aged 57 of St Francis Meadow, Mitchell and Short, 53 or Hunter’s Gate, Okehampton were facing several charges.

The admitted failing to ensure that the common parts of the premises were maintained in good and clean decorative repair, maintained in a safe and working condition free from obstruction in relation to the kitchen and bathroom amenities and that they failed to ensure all hand rails and bannisters were at all times kept in good repair.

They also admitted failing to ensure that outbuildings, yards and forecourts used by residents of several properties were maintained, clean and in good working order.

Two other offences – failing to ensure that the common parts of that premises were maintained in good and clean decorative repair, maintained in a safe and working condition and free from obstruction in relation to the kitchen amenities and that every window and means of ventilation were kept in good repair were withdrawn.

They were ordered to pay a total of £3,847 – £2,000 for the offences committed, £1,647 in prosecution costs and a victim surcharge of £200.

Cornwall Council cabinet member for homes Andrew Mitchell said: “Well managed multi-occupancy houses are an important part of the housing market in Cornwall. However where the standards of management are poor, it can place tenants at significant risk of serious harm.

“In situations such as this, the Council will take enforcement action to protect the health, safety and welfare of occupiers.”

In 2018 it is anticipated that the Government will widen the coverage of the existing mandatory licensing scheme to cover all rented housing shared by five or more people.

To find out more and keep abreast of changes to the private rented sector, landlords are encouraged to join the free Cornwall Responsible Landlords Scheme.

Source: Cornwall Live

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Council collects £30,000 in housing fines from landlords

£31,606 has been collected in fines by Oxford City Council for housing offences since new financial penalty powers came into force in April 2017 to help clampdown on rogue landlords and protect the safety of renters.

The new powers, granted under the Housing and Planning Act 2016, allow local authorities to impose penalties to a maximum of £30,000 as an alternative to prosecution for various housing transgressions. Councils can keep all the income and spend it on private sector housing enforcement.

In a press release, Oxford City Council outlined the fines they have imposed: “In the biggest of the three fines, a landlord who owns a rented property on Garsington Road received financial penalties totalling £25,298 for failing to licence it as a house in multiple occupation (HMO) and uphold HMO management standards.

“The landlord was issued a financial penalty of £7,149 for failing to licence the property as well as an additional £18,149 for four separate fire safety failures.

“The third landlord was given a financial penalty of £1,234 for renting out an HMO on Iffley Road whose licence had expired in 2014. All three landlords cannot be named for legal reasons.”

Councillor Alex Hollingsworth, Board Member for Planning and Regulatory Services, has spoken on the issue: “I’m pleased that the Council can now take swift action against landlords who break the rules, and do it without the costs of taking a case through the courts. We will continue to use these new powers to drive up standards in the private housing sector and protect tenants from unsafe homes and rogue landlords.”

Source: Oxford Student

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When HMO’s go BAD!

Owning one or preferably several HMO (Houses of Multiple Occupancy) properties can prove to be an extremely lucrative investment strategy.

If managed correctly and fully occupied – then HMO properties are arguable one of the best property types to invest in.

Get it wrong, though, and you will find them unforgiving and potentially disastrous.

I have often said to the enthusiastic newbie HMO investor (often fresh from a training course) that HMOs on paper do look like great investments, but you really need to know your market before you invest and have expert management in place.

What the training provider often misses out of their well-formed courses is the social dynamics that exist within HMOs and the potential impact that can have on the bottom line!

HMOs are also subject to lots of regulation and changing legislation, if you don’t understand this and consequently fall foul, then the fines can be huge.

Here’s just a few examples of how and when a HMO can go BAD:

• Landlord prosecutions
Managing a HMO is far more complex than managing a simple buy-to -let. You must comply with HMO management standards and any applicable HMO Licence, and failure to do so can lead to colossal fines. Landlords need to be conscious of room sizing, amenity provisions and fire safety to name just a few. Not a week goes by in which I don’t read about another HMO Landlord being fined upwards of 20k!

• There’s a higher turnover of tenants in a HMO
By their very nature the tenants of a HMO are transient. Nobody grows up dreaming of settling down in a HMO – for most people this type of accommodation is temporary or a stepping stone, suiting a particular requirement at a specific time. Consequently, tenancies are shorter and void periods are more likely. If you get this wrong, you can find yourself with two or three empties and hovering around break-even point before you know it!

• Saturation
Understanding the local market is essential when buying an HMO, and it’s especially important to look out for any Article 4s that may have been imposed by the local authority restricting the development of further HMOs. This is a prime indicator that an area may be reaching saturation, and in such places you can quickly find yourself with declining rents and increasing voids.

• Parties often cause more damage than the deposits
HMO’s are synonymous with anti-social behaviour. The damage caused by just one wild party can be destructive – and any deposit barely covers the cost of the damage. And therein lies another problem when it comes to HMOs; rarely do young professionals – who tend not to throw wild parties and tend to pay their rent on time – opt for a room in an HMO. The result is, as the owner of an HMO, you can end up with potentially problematic tenants quite a lot of the time, with the typical tenant profile being students and low-income workers.

• One bad apple (or tenant) can upset the entire apple cart
I have seen on many occasions that a healthy 6 bed HMO can be reduced to a single tenant in a matter of days. Typically, one bad tenant can create so much disturbance in a building that the other tenants just leave without notice, leaving the Landlord with the challenge of removing the offending tenant and reoccupying the building simultaneously.

Source: Simple Landlords Insurance