HMO Mandatory Licensing

HMO laws in England changed in October 2018 by changing the requirements for mandatory licensing. This has brought a huge number of extra properties into scope for mandatory licensing in England. It is probable that many landlords of these properties are still wholly unaware of this and of the fact that they are in breach of the law and liable for penalties.

If you rent to sharers - you need to read this.

What is an HMO?

HMO stands for House in Multiple Occupation and is generally used to describe a situation where people who are not members of the same family, share living accommodation.

These types of property are generally perceived to be higher risk, and so special rules apply.

For example, as regards health and safety.

However, it is important to realise that there are several types of HMO:

?? The 'standard' HMO. This an HMO as defined by s254 onwards in the Housing Act 2004. It is where one or more units of accommodation (which are not self-contained flats) are occupied by three or more persons who do not form a single household (discussed below), who pay rent, use (in most cases) the accommodation as their main residence and who share basic amenities such as cooking, personal washing and toilets - or the property does not have these amenities.

?? Section 257 HMO's. This is section 257 of the Housing Act 2004 which is the governing act for most of our HMO legislation. Here a property will be an HMO if it has been converted to multiple dwellings, the conversion does not accord with the building regulations 1991 and one third or more of the properties are not owner-occupied.

?? HMOs for Council Tax purposes. When talking about HMOs in the context of Council tax, there is an entirely different definition which comes under the Finance legislation (note this was written in 2014 but the law has not changed materially since then).

?? HMOs under the planning legislation. Again, this was written in 2014 so do not rely just on this - take advice if you have a planning issue.

What all this means is that you need to know the context in which HMOs are being discussed. So, if you are told by the Council that your property is not an HMO for Council Tax purposes - this does not necessarily mean that it will not be an HMO under the Housing Act 2004 or that your property will not be subject to mandatory licensing.

Households and HMOs

I mentioned above a standard HMO is where units of accommodation are occupied by three or more persons who do not form a single household.

So, what is a household? It is where:

People are family members, including:

Partners (people living together as man and wife or same-sex partners)

Full blood relatives e.g. brothers and sisters, parents and children, grandparents, cousins, uncles and aunts etc (but not in-laws)

Half-blood relatives as bove

Stepchildren and foster children

Or one of the following non-relatives:

People who perform a paid domestic service where they live in the property as part of their job, such as au pairs or a live-in nanny

The tenant's carer if they are in receipt of care

Some HMOs landlords will need to obtain a license from their council as a condition of being allowed to operate. There are three types of licensing:

?? Mandatory licensing - this is where, if your property meets the criteria, you must get a license. I discuss the criteria below - note that the standards are different in England and Wales

?? Additional licensing - this is where a local authority requires landlords to obtain a license where they are operating some type of HMO which is smaller than that required for mandatory licensing

?? Selective licensing - this is where the Council have a scheme which requires all landlords (whether the properties are HMOs or not) to obtain a license in a specific area - for example if this area has been experiencing problems with anti-social behaviour.

For items 2 and 3, the licensing requirements will vary from Local Authority to Local Authority. So, you should always check with your Local Authority to see what the situation is in your area.

Local Authorities need permission from the government to run additional and selective licensing schemes. The application process requires a consultation exercise with local landlords - so watch out for this. If you are an HMO landlord, it is often a good idea to belong to a Landlords Association as they will normally keep you informed.

Or if you are in London, sign up to get mailings from London Property Licensing.

Mandatory Licensing

This is where the landlord (or property manager) must obtain an HMO license from the Council. The circumstances under which you need to apply for a license is different depending on whether the property is in England or Wales.

If the Property is in England:

You will be subject to mandatory licensing if your property has:

Five or more occupiers, who form two or more households

If the Property is in Wales:

You will be subject to mandatory licensing if your property has:

Five or more occupiers, who form two or more households, and the property consists of three or more storeys.

Applying for a license

If your property requires licensing, you will have to apply for a license from your Council. As part of the process you will need to:

· Complete a form, and

· Pay a fee to the Council (which will vary from council to council)

It is important that you get your application submitted promptly. If your property is tenanted and comes within the HMO definition you will be committing an offence unless you

· Have a license, or

· Have applied for a license

Here are a few tips:

· Always keep a copy of the form

· Don't rely on the post - send it recorded delivery or hand-deliver it and get a receipt

· Or apply online

· You should include the payment with the application and then check (if you paid by cheque) that the cheque has been cashed

Note that at the time of making your application you should also notify

· Your mortgage company

· Any superior landlord (e.g. your freeholder if you hold the property on a long lease)

· Anyone else with an interest in the property

What happens next

After your application has been submitted it will be considered by the Council (this may take a while) and will eventually either be granted or refused.

The two main things that the Council will consider when deciding whether to grant a license are:

· Whether the property is reasonably suitable for the number of permitted occupiers, and

· Whether the named manager (i.e. either the landlord or his property manager) are fit and proper people to manage the HMO and the management arrangements are suitable.

You will eventually be notified of the Council's decision - which will be one of the following

?? The application is refused. This could instantly put you in breach of the law if your property is tenanted - meaning you could be prosecuted or fined. You should take advice if this happens - particularly if you think the license has been wrongly refused.

?? The application is granted. The first thing you should do here is to read it! It will set out the conditions under which your license is granted. You need to know what these are.

License Conditions

All HMO licenses will be subject to conditions. For example:

· That certain specified improvement works be carried out (usually health and safety-related).

· That you comply with the gas and other safety legislation

· That the property meets the fire safety standards

· That (in England) all bedrooms comply with the minimum room sizes.

· That the numbers of occupiers are limited to the number given in the license

Not all Council Officers are wholly familiar with the HMO legislation and it is not uncommon for licenses to be issued subject to conditions which are inappropriate.

If you are unhappy about the conditions in your HMO license you can appeal this (within the time limits - which will be set out in the paperwork). Of if you do not appeal in time it may be possible to apply to vary the license.

Before doing this, you should take advice from a lawyer specialising in HMO legislation as this is a complex area of law.

Once your HMO is up and running, it is important that you manage it properly and ensure that you are complying with the HMO regulations and the conditions in your license (if your HMO requires a license).

In this context, we should briefly mention the HMO Management Regulations. These are special health and safety-based regulations which apply to all HMOs - whether they require a license or not.

I am not going to discuss these regulations in detail,

However, the important thing to bear in mind is that unlike the disrepair laws (which apply to all tenancies with a term of fewer than seven years), where you are not liable (in most cases) until you have been given notice of a problem - under the HMO management rules, you are liable immediately a problem arises. HMO properties need active, not reactive management.

So, if a Council Officer visits the property and finds, for example

· bicycles cluttering up the fire escape

· rubbish strewn all over the front garden, and

· damage to the common parts - maybe a broken bannister on the stairs

you will immediately be vulnerable to prosecution and penalties. You will not be able to deny liability for the poor condition of the property just because the tenants have not told you about it.

This means that it is very important that you inspect the property regularly and keep proper records.

Quarterly inspections for HMOs are really the minimum. But for many HMOs, you will need to inspect once a week (or maybe even more often). You should keep full records of all inspection visits (including photographs taken) and details of all contact with tenants (for example follow up emails requesting tenants to act or refrain from doing something) - so you can prove what you have done.

This is a very important aspect of managing your HMO and is why HMO properties involve so much work for the landlord.

Penalties and prosecutions

If your Local Authority has been in touch about a problem at your HMO - don't ignore it. They are not going to go away!

It may take them some time to deal with it (as most Local Authorities are understaffed) but deal with it they will. Note also that they are legally entitled to ask you for information about the property - you cannot refuse because of 'data protection' for example.

If you do not co-operate with your Local Authority, here are some of the unwelcome things that could happen:

?? Prosecution in the Magistrates Court. Remember that fines are unlimited.

?? Penalty charge notices - these can be for up to ￡30,000 PER OFFENCE

?? A banning order - if you are successfully prosecuted, plus you may go on the rogue landlord's database.

Your tenants (or the Local Authority if your rent is paid by some sort of benefit) may also be able to apply to the First-Tier Tribunal for a Rent Repayment Order

If you are contacted by the Council about a problem at your property - in most cases your best course of action will be to take legal advice as soon as possible. Do not attend any interviews with Council Officers until you have obtained advice.

Conclusion

This is a brief overview. The HMO legislation is complex and there is a lot of it. If you need any help in this area, I’m more than happy to assist.