HMO Licensing: all change from October 2018

Introduction

Becket Chambers is based in Canterbury, a city with two universities and over 40,000 students. Consequently, very many of our Landlord clients rent to students and are likely to have properties subject to mandatory HMO (“Houses in Multiple Occupation”) Licensing regulations. Mandatory HMO Licensing was introduced in 2006 as a means of providing some safeguards within the rental market but until now has only applied to properties with at least 3 storeys and accommodating at least 5 people from 2 or more households. Therefore, letting a 4-storey property to a family of 8 would not require a HMO Licence whereas a 3-storey property housing 5 students would do.

However, in a further attempt to prevent overcrowding and substandard housing within the ever-growing rental economy, changes to HMO licensing in England will come into force on 1st October 2018 when the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 takes effect.

The New Rules

From 1st October, all properties housing 5 or more people from 2 or more households will now require a HMO Licence regardless of the building’s size or layout. In addition, all bedrooms in such a property will need to be of a minimum size, for example an adult’s single bedroom will now need to be at least 6.51 square metres. Local authorities will also be able to add conditions to the grant of a licence, limiting the number of people able to live in the property.

It is estimated that an additional 177,000 rental properties in England will now be subject to mandatory HMO licensing and it is therefore crucial that Landlords check the new regulations in case their properties are affected.

Under the new rules, local authorities will still be able to impose conditions on the granting of a licence as well as charge fees for each licence granted. The cost of licence fees varies widely between local authorities and in general a fee is charged as a condition of a licence being granted (although see my recent related article on the issue of licence fees and whether they are in fact lawful).

Landlords renting out properties which do not comply with the HMO regulations will have up to 18 months to put the necessary changes in place. During that period the local authority will not be allowed to withdraw the licence or impose a financial penalty unless a new breach of the rules arises, or the Landlord had already received a conviction for breach of the HMO licensing regulations.

However, what some Landlords might not realise is that they still need to apply for a Licence by 1st October 2018 and a failure to do so will put them in automatic breach of the new rules.

Local authorities can issue a notice of prosecution to a Landlord suspected of being in breach of the HMO Licensing laws and Landlords risk an unlimited financial penalty as well as a court conviction.

Landlords are well advised then to ensure that they understand and comply with the new rules. As so often, pleading ignorance of the law is unlikely to meet with a favourable response from the council or the court and particularly so where a Landlord derives an income from a portfolio of properties.

It may well be that early legal advice will be both necessary and cost-effective. Members of the civil team at Becket Chambers can advise on the law and also represent Landlords facing breach proceedings. If conditions are imposed on the grant of a licence which are felt to be unfair, we can also assist and advise Landlords who are considering challenging those conditions in the First Tier property Tribunal.