Houses in Multiple Occupation – a legal bombshell in the making

This is the 13th post in my 2017 Legal Update series.

It’s been my opinion for some time that HMOs are an enforcement bonanza waiting to happen. If I were head of a Local Authority Enforcement Team in any large city I would be rubbing my hands with glee. Bearing in mind the issues discussed in this post.

The trouble is that many HMO landlords have no idea that they are HMO landlords. Viz:

HMO Landlord: I’m not an HMO landlord you know.

LA Officer: Do you rent to three or more tenants who are not family members?

HMO Landlord: Er, yes, I rent out to four friends. But they all signed the same tenancy agreement, we don’t use one of those individual HMO agreements. And they all eat together and live as a family.

LA Officer: Signing the same tenancy agreement does not stop the tenancy being an HMO neither does the fact that your tenants share their meals. If they are not related then they are not treated as being part of the same ‘household’. If there are three or more tenants and two or more households the property is an HMO. See s254 onwards of the Housing Act 2004.

HMO Landlord: Oh. Right. But even if we are technically an HMO – that doesn’t mean anything if we don’t need a license, does it?

LA Officer: Yes, it does. There are the HMO Management Regulations – where’s your notice under section 3? That’s a breach for a start. And who says you don’t need a license? Our borough introduced an additional licensing scheme two years ago.

HMO Landlord: I didn’t know that. How I am supposed to know that?

LA Officer: That’s your problem, mate. It’s your duty to find out.

Etc, etc.

The reason why this sort of thing does not happen more often is because Local Authority Enforcement Depts have been cut to the bone by Austerity and haven’t been able to get out there enforcing. However, with the new income from penalty charges and rent repayment orders, that’s probably going to change.

So, let’s take a step back and consider the law on HMOs. First:

What is an HMO?

There are actually four definitions of HMOs:

1 Where there are three or more tenants in two or more households who share living accommodation.

This is the ‘normal’ HMO type. The one we all think about when we think of HMOs. You can read more about the definition here.

2 Some flat conversions

This is where a building has been converted to flats and the building does not comply with the Building Regulations 1991, and ⅓ or more of the flats are rented on leases of less than 21 years.

The type of HMO is the reason why some freeholders may not give you consent sublet your long lease flat. Read more about this here.

3 The Council Tax HMO definition.

This is set out in Regulation 2 of the Council Tax (Liability for Owners) Regulations 1992. I am not going to look at it in detail but you can find out about it here.

People are often at cross purposes when speaking about Council Tax and HMOs if they don’t realise that both are governed by different definitions.

4 Planning.

Again, I am not going to go into this but you can read more about this here.

Important things to know about HMOs

HMO law and practice is a big topic and I don’t have space to do much here other than hit the highlights. However here are some important points:

Licensing

At the moment, mandatory licensing is only required if an HMO has five or more tenants in two or more households in a property which has three or more storeys.

However, mandatory licensing is not the whole picture. Some Local Authorities have introduced additional licensing schemes where other, smaller HMO properties must be licensed. There are also some areas which have introduced selective licensing where all rented properties need a license whether they are an HMO or not.

If you don’t get a license where a license is required:

• The Local Authority can issue a penalty charge fine of up to £30,000
• You can be prosecuted and fined in the Magistrates Court
• The Local Authority (if tenants are on benefit) or your tenants (if they pay rent themselves) can apply for a Rent Repayment Order
• You cannot serve a valid section 21 notice

So, it’s a good idea to make sure you have a license if you need one.

HMO Management Regulations

This is the other important thing you need to know – even if your HMO doesn’t need a license you still need to comply with these regs. They are basically health and safety regs and you are probably complying with them mostly anyway just by good practice as a landlord.

The one you probably aren’t complying with is the one mentioned in the dialogue above. This says:

3. The manager must ensure that—

(a ) his name, address and any telephone contact number are made available to each household in the HMO; and

(b) such details are clearly displayed in a prominent position in the HMO.

Probably the best way to deal with this is have several A4 pages printed with your details, get them laminated and hang them in the kitchen. Do several copies so you can replace it if it’s lost. It’s important that you do this – failure will be a breach of the regs and potentially a penalty of up to £30,000 (although in practice it would be a lot less than this).

Note that you also need to get an electrical check done every 5 years and get a certificate to prove this – as the Local Authority may ask to see it.

The future

Its best to get your HMO properties up to speed as there are plans afoot to extend the scope of licensing – so that in a couple of years or less all two storey or even all one storey properties may need a license.

It’s not known exactly when this will happen, but it is coming – so watch out.

Further information:

I did a series on HMOs on my Landlord Law Blog in 2014 with David Smith which you will find here.

The 2017 Conference included an update talk on HMOs which is well worth watching. Even if you believe you are not an HMO landlord.

You will find more information about the Conference Course here.  There is a discount voucher for Property118 readers which is pp118cc30 – apply this on the checkout page and it will reduce the payment by 30%.  Note however that the coupon will expire after 16 September.

There is also quite a lot of information on my Landlord Law site plus members can always ask me questions in the members forum.

You can find out more about Landlord Law here

The next post will be on the changes in Wales.

Tessa Shepperson is a specialist landlord & tenant lawyer and runs the popular Landlord Law online information service.

To see all the articles in my series please Click Here

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