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HMO Legislation, Mandatory Certificates and Proposed Changes

Landlords of student and professional house share accommodation all over the UK have a number of legal obligations to fulfill, and depending on the type of property you let or exactly where it is, there may be some additional considerations to take into account. This article is intended to serve as a brief reminder to HMO landlords and covers some of the legal responsibilities, although the list isn’t exhaustive. I felt obliged to collate some of the important considerations because it surprises me how many of our landlords are still unaware of their obligations. We invest and manage student property in a number of cities but you should always check with your local council as there are regional variations and additional requirement to some of these.

GAS SAFETY CERTIFICATE

Badly fitted and poorly serviced gas appliances can cause gas leaks, fires, explosions and carbon monoxide poisoning, so this stuff shouldn’t be taken lightly by student landlords or any student letting agent. Carbon monoxide is a poisonous gas which can kill quickly with no warning and some of the symptoms are headaches, dizziness and nausea – you can see why students might mistake this feeling for a hangover… so don’t risk it!

As a landlord, you have full responsibilities for the gas safety, and you’ll certainly need it for your license. By law, you must keep all of the gas appliances you supply in good condition and you must arrange a Gas Safe Inspection every year! The Gas Safe Register is now the official list of gas and heating engineers who are qualified to work safely and legally on your appliances and it replaced the CORGI registration. So, when you need any work done on your boiler or other gas appliances or it’s time to renew your annual Gas Safety Certificate, make sure you only get a Gas Safe registered engineer who will be insured and able to sign it off! It should cost around £50-£60 and is quick and easy! Find out more about the gas safety register here.

ELECTRICAL SAFETY CERTIFICATE

Landlords have a legal duty to ensure that their rental property, and any electrical equipment and appliances provided, are safe before a tenancy begins, and remain safe throughout the duration of a tenancy. This means you need a NICEIC electrical safety certificate, and the HMO license team will require this too. Unless you want to risk a potential fire, a hefty fine and even going to prison if the worst case happened, you need to ensure that the electrical system in your property is checked by a NICEIC registered electrician every at least every 5 years or when modifications are made to the system. It should cost around £140 and is quick and easy! To find out more about the NICEIC scheme and to find a contractor near to you, then please click here.

FIRE SAFETY CERTIFICATES

Fire safety has never been more important. Exactly what you require will depend on the type of property you have, the number of bedrooms and whether it is subject to HMO licensing policy. You might also need emergency lighting and whether or not you do, will depend on the same things. A good starting point would be the LACORS  guidance – the purpose of this guidance is to provide a common set of guidelines for each type of property, buy your local council team will be able to confirm this for you when you apply for a new license or need to renew.

LEGIONELLA CERTIFICATE

Legionella is a potentially fatal disease caused by a bacterium that has a tendency to grow in warm, stagnant water. As a landlord, you have a responsibility to ensure that you take steps towards minimising the risk of allowing legionella bacteria to grow in your property, primarily by ensuring a Legionella Risk Assessment (LRA) is completed for each property. A landlord can carry out the LRA themselves but unless they are competent as defined by the HSE (who are the people that will be suing them if they get it wrong), then they are wasting their time. So long as the recommendations detailed in the L8 ACOP are followed, landlords should be able to demonstrate that they have fulfilled their obligation to ensure their property is safe. For further reading, visit the HSE website here. Most landlords I come across outsource this certificate requirement for obvious reasons.

ENERGY PERFORMANCE CERTIFICATE (EPC)

The Energy Performance Certificate (EPC) gives tenants and landlords information on the energy efficiency of their property. It gives the building a standard energy and carbon emission efficiency grade from ‘A’ to ‘G’, where ‘A’ is the most efficient. From the 1st April 2018, there will be a requirement for any property rented out to have a minimum energy performance rating of E. If your property is currently less than E, part of your EPC report will list the potential rating that the building could achieve with a few recommendations on how to do it. You can read more about the EPC regulations here.

PLANNING PERMISSION AND ARTICLE 4 DIRECTION

In 2010 the Government introduced a new Use Class of ‘C4’ for any ‘House in Multiple Occupation’ (HMO) and generally speaking, it is permissible for any property owner to change their property from a C3 (Dwelling House) to a C4 (HMO) without the need for planning permission. However, the government also gave local councils the power to remove this permitted development right at their discretion by means of an ‘Article 4 Direction’. Councils have used this to designate limitations on the number of HMO’s in certain areas, so it’s important to establish whether your property sits within one. If it does, you’ll need planning permission and whether or not you will get it depends on a number of factors determined by the local planning policy. If you owned and used a property as a HMO before your local Article 4 direction was introduced, you may just have to present the historic evidence of if you are ever asked (or want to sell with the planning permission) – the local planning department will be able to issue you with a certificate of lawful use. You can read more about Article 4 Directions here and local council websites will usually have a map of any article 4 direction in place. Local authorities enforce this rigorously and mortgage lenders will often ask to see it too on application of lending.

HMO LICENSE

The Housing Act 2004 applies special rules to be adhered to HMO’s. The HMO licensing is intended to improve standards in properties where it was felt tenants were at ‘highest risk’. Generally speaking, a house with three or more stories, occupied by 5 or more people who form 2 or more households (a household being defined as persons belonging to the same family) is classified as an HMO in England and Wales, and is and subject to licensing.

Licensing Conditions:

The purpose of a HMO licence is to ensure that the property is safe and suitable for the number of tenants and to ensure that the person who is managing the property is ‘fit and proper’ You need a HMO licence if your property fits the governments description of a HMO (see below):

  • It’s rented to 5 or more people who form more than 1 household
  • It’s at least 3 storeys high
  • Tenants share toilet, bathroom or kitchen facilities

A variety of criteria, standards and requirements are enforced by inspection before you can get your HMO license granted. It ranges from minimum room sizes to amenities and evidence of safety certificates. Your local council may also add other conditions to your licence such as improving the standard of some facilities and amenities in your property, but they will let you know this during the process. Even if your property is smaller and rented to fewer people, you may still require a HMO license depending on your local council requirements. I am aware some local councils impose mid-term license inspections and requirements do regularly change.

Proposed changes to licensing conditions

The government is currently undertaking consultation on reforms to the HMO licensing criteria which will likely mean that a further 870,000 rented properties will require a HMO licence. There are a number of suggested reforms such as removing the 3 storey requirement and adjusting the minimum room dimensions. I will report on the subject as the consultation progresses, but assuming this will further pressurise the private landlord, it would be wise to plan ahead if you are considering making some adjustments to your property. You can see some examples of effective HMO designs here.

Applying for a HMO license

To renew or apply for a new licence, you need to contact your local council to request an application form, you can usually do it online. You can apply for the licence yourself as a landlord, or you can use a property management company who might have a better understanding of the process. You’ll be charged a fee which is set by the council, but running the risk of operating a HMO without the necessary application could result in a much bigger fee down the line! In fact, you could get an ‘unlimited fine’ for renting out an unlicensed HMO.  For more information you can read the governments full guide on HMO licensing here.

RIGHT TO RENT

This is the check that the landlord or letting agent must make to ensure that prospective tenants or occupants have a ‘right to rent’. It’s a piece of government legislation, and if the check is not made, and the occupier has no right to rent, there may be a civil penalty to pay. You can download and issue a guide here.

Source: Property 118

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Bath Landlords Fined For Operating HMO Without Licence

Two Bath private landlords have been told that they must pay more than £16,000 due to their failure to obtain the correct House in Multiple Occupation (HMO) licensing.

Elizabeth Vowles, 48, and Hayley Book, 55, both from Weston pleaded guilty at Bath Magistrates’ Court to their licensing failure, deemed an offence under the Housing Act 2004.

The court was told that the two landlords had been caught operating a pair of HMOs in Bath’s designated Additional Licensing Area without the adequate licensing. Their flouting of the regulation was discovered in January 2017, despite the fact that it had been a legal requirement in certain locations in Bath since 2014. The licensing scheme was introduced to enable officers to know the location of HMOs and place conditions on the landlord to enforce minimum standards of safety, as well as making sure that the property’s management is maintained.

The pair of private landlords were also managing a third HMO in the Additional Licensing Area, so both landlords would have been well aware of the additional licences that were required for houses of multiple occupation licensing, the court was told.

Vowles and Book were each fined £4,000 for each property. They were also ordered pay prosecution costs of £550, as well as a victim surcharge of £170. In the Bath designated licensing area, operating a property without a licence is an offence punishable by a fine up to £20,000

Councillor Paul Myers commented on the case: ‘Our Housing Services will try to work in partnership with landlords to improve housing standards wherever possible. Additional licensing helps to ensure that occupants of HMOs are able to live in safe and well managed properties. Where landlords fail to licence their properties such as the case here, they are undermining the objectives of the additional licensing scheme.’

Source: Residential Landlord

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Fresh eviction fear for residents after council refuses Willenhall HMO plans

The saga over a former warehouse which has been used for housing without permission for more than two years has taken another twist after planning chiefs refused plans to make it legitimate.

Tenants have been living in the premises at 51 to 53 Wolverhampton Street, Willenhall, which is now a house of multiple occupation, since at least 2015.

Last year Walsall Council took enforcement action against the owner Jim Haliburton effectively evicting the residents, but the move was put on hold after he formally submitted an application to ‘change the use’ of the building retrospectively.

Now the authority’s planning committee has refused the proposal and is considering enforcement action once again, meaning residents face fresh eviction fears.

However it may not be the end of the lengthy dispute if Mr Haliburton contests the latest decision.

A council spokeswoman said: “This application was refused for lack of shared parking, limited bin storage and poor outlook for residents all impacting detrimentally on amenity.

“The planning file will now be passed to the Planning Enforcement team who will commence work on taking action to cease the use of the building as a HMO.

“This action though will need to be placed on hold if the applicants appeal to the Planning Inspectorate in Bristol in an effort to overturn the decision to refuse planning permission. If the appeal is dismissed, officers will press ahead with enforcement action.”

Earlier this month Mr Haliburton appealed the council’s decision to turn down planning permission for another of his properties in Butts Road, Walsall, in a very similar dispute.

Source: Express & Star

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Another dent to landlords’ profits

Renting out a house as a multiple-occupancy let can be very lucrative, allowing landlords to rent out rooms on an individual basis rather than via one tenancy. However, government plans to crack down on the sector are about to make this type of investment less attractive than it once was.

The Department for Communities and Local Government published a consultation paper on houses of multiple occupancy (HMOs) last October, setting out its plans to “raise the standards”. The rules are expected to come into effect next spring, later than expected (probably because of June’s surprise general election). But despite the fact that thousands of properties could be affected by the government’s proposals, as many as 85% of landlords are still unfamiliar with the proposed changes, according to a survey by Simple Landlords Insurance.

One of the main aims of the legislation is to widen the definition of properties that require a licence to be legally let. At the moment, a property is classed as being a HMO if three or more people from more than one household live there, and share toilet, bathroom or kitchen facilities. Currently, only houses that are classed as “large HMOs” – properties rented to five or more people (from more than one household) – and set over three or more storeys, need to have a licence. However, the new legislation would mean that all large HMOs – regardless of the number of storeys – would require a licence. The government also plans to extend mandatory licensing to flats above and below business premises. Currently around 60,000 HMOs across the UK require a licence, but the government reckons that a further 174,000 properties will need a licence if the rules come in.

Although the cost of a licence will vary between local authorities, a five-year licence typically costs about £500. Landlords may also be subject to new, enhanced “fit and proper” tests before they can be granted a licence, which, if introduced, would probably require them to submit a Disclosure and Barring Service (DBS) check, at a cost of £25. Note that if your HMO should be licensed, but isn’t, you can be fined and ordered to repay up to 12 months’ rent.

The government also plans to impose a new minimum room size of 6.52 square metres for a single person, in line with the current standard for overcrowding. For couples, the minimum is likely to be 10.23 square metres. Importantly, this new minimum may affect the number of rooms in a home that can be legally let. For example, if a “box room” in a four-bedroom student house falls below the minimum room size, the property would be considered a three-bedroom house. Landlords letting a room smaller than the prescribed dimensions would be liable for an unlimited fine or a civil penalty of up to £30,000. Finally, owners of licensed HMOs will need to provide “adequate” waste-disposal facilities.

Once the rules are confirmed, landlords should be careful to budget for any added expense they bring. The changes also come at a time when many landlords are already under increasing financial pressure, with lenders now required to take a more stringent approach to buy-to-let mortgage applications from those who own four or more mortgaged properties. That’s on top of the recently introduced 3% stamp-duty surcharge on second homes, and the scaling back of mortgage interest tax relief. If you didn’t already have the message, buy-to-let looks like an increasingly risky bet as an investment.

Yours for £25m: a 30ft hole

A Grade II-listed London townhouse with a 30-foot hole in its garden has been put on the market for £25m, says Sean Morrison in the Evening Standard. The Knightsbridge house was once owned by conman Achilleas Kallakis, who ordered the excavation of the home’s “mega-basement”, which was designed to hold a swimming pool, spa and car-lift. However, workers abandoned the job in 2008 when Kallakis was convicted of 21 charges related to his property business, including conspiracy, forgery and money laundering. In December, Kensington and Chelsea council approved plans to build an “astonishing” nine floors of living space, featuring a pool, underground parking and reception areas.

Source: Money Week