Marketing No Comments

Plans to restrict HMOs in St Andrews to be debated

New restrictions on houses in multiple occupation (HMOs) in St Andrews have been proposed to control the number of student lets in the town centre.

If approved, thresholds would be set and no new licences issued where the number of HMOs has reached its limit.

Townspeople and councillors have called for years for a new policy to deal with applications for new HMOs in the university town.

A proliferation of HMOs, which are typically let to students, has been blamed for creating areas with few permanent residents and problems with rubbish, neglect and antisocial behaviour.

Following an independent probe by North Star Consulting and Review, Fife Council’s housing service has advised that the threshold policy be adopted and will ask the north east Fife area committee on Wednesday to recommend it to the housing services committee.

A report by housing manager Vania Kennedy states: “The demand for HMO accommodation is particularly high in St Andrews from students, young professionals and people working away from home.

“A moratorium was introduced under planning policy to achieve a balance between the competing demands for accommodation and the need for a balanced community.

“Research suggests that the recent increase in the number of HMOs in St Andrews indicates it is not having the desired impact and an unintended consequence has been to push the provision of HMOs for students out from the centre to surrounding areas.”

Since the moratorium was introduced in 2011 the number of HMOs has increased by more than 11%.

The housing service rejected thresholds proposed by North Star, which it said had drawbacks, and came up with its own, dividing the town into three zones.

The policy would permit 18% to 22% of properties in the town centre to be HMOs, 6% to 10% in the east and 4% to 7% in the west.

The report said: “The aim is to protect traditional residential areas which are most favoured by the family market and permanent residents, and allow a certain level of HMOs in each part of the town.

“In practice, where the existing provision at the time of determining a proposal exceeds the threshold limit set, current licence holders would still be able to renew their licence and exemptions would also apply to the policy.

“However, there would be a general presumption that no new applications would be granted a HMO licence on grounds of overprovision where the thresholds have been exceeded.”

Consultation would be required before the new policy was adopted, and the current town centre moratorium would remain in place until then.

Source: The Courier

Marketing No Comments

Make the most of HMO regulation changes

Regulatory changes have been a consistent characteristic of the buy-to-let market in recent years and 2018 is proving to be no different.

At the beginning of April, new minimum energy efficiency standards were introduced for privately rented property and the government is extending the scope of licensing for HMOs this October.

At present, a mandatory licence is required for properties with three or more storeys that are occupied by five or more people from two or more households. From 1st October, a licence will be needed for HMOs occupied by five or more people from two or more households, regardless of the number of storeys. The Residential Landlords Association claims this change means that an additional 177,000 HMOs will become subject to mandatory licencing, and there is no limit to the potential fine for renting out a qualifying HMO without a licence.

Licences are issued by the local council and valid for a maximum of five years. Landlords of licensed HMOs must make sure the house is suitable for the number of occupants and that the manager of the property – which could be the owner or an agent – is considered to be ‘fit and proper’. This excludes people with a criminal record or a previous breach of landlord laws or code of practice.

Owners must also send the council an updated gas safety certificate every year, install and maintain smoke alarms and provide safety certificates for all electrical appliances when requested, as well as any other conditions imposed by the local council.

In addition to these requirements, the government has also proposed a minimum room size for bedrooms in licensed HMOs. At the moment, some local authorities prescribe minimum room sizes, while others set out advisory standards, and this new approach will dispel confusion with a standard approach to all licensed HMOs.

Landlords must ensure the following:

• single bedroom to be used by one person over 10 years should not be less than 6.51m2
• double bedroom to be used by two people over 10 years should not be less than 10.22m2
• single bedroom to be used by one person under 10 years should not be less than 4.64m2.

Where there is a breach to these minimum bedroom sizes, local authorities may grant a period to rectify the situation, although this will not exceed 18 months.

So, there is plenty to think about for owners of HMOs in the coming months, and this provides you with a great opportunity to revisit your database of HMO clients to make them aware of the upcoming changes and their responsibilities.

Some may need to fund renovations to ensure they meet minimum standards and room dimensions and, even if no renovations are needed, this change in regulation provides you with a chance to make contact and discuss their other funding requirements.

Marketing No Comments

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