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Government consultation on expansion of HMO licensing

Saturday, November 7, 2015

On Friday 6 November 2015, the government published an important new consultation paper on changes to the mandatory House in Multiple Occupation (HMO) licensing regime in England.

The consultation follows Prime Minister David Cameron’s announcement on 21 May 2015 that the government would introduce a new mandatory HMO licensing scheme to crack down on unscrupulous landlords who cram houses full of illegal immigrants (read here).

The government has said they are committed to raising standards in HMOs to ensure they are a safe place to live and do not blight local neighbourhoods. However, the consultation paper also recognises that many landlords and agents do an excellent job in managing their HMOs to high professional standards.

The government have said that they intend to introduce the changes in 2016. We have outlined the key proposals below:

Mandatory HMO Licensing

At present mandatory HMO licensing is restricted to properties that are three or more storeys high, containing five or more people in two or more households with shared facilities such as a kitchen, bathroom or toilet.

In 2013/14, local authorities estimated there were about 60,000 properties in England that required licensing under the mandatory HMO licensing scheme, of which 37,182 had been licensed (Source: DCLG). This suggests about 62% of properties had been licensed over nine years after the legislation came into force.

A far higher number of properties already require licensing under additional and selective licensing schemes that can be implemented by local councils, each with different terms and conditions.

For example, over 130,000 private rented properties are subject to additional and selective licensing schemes in London alone, research by London Property Licensing has found. This figure looks set to increase in the months ahead as further licensing schemes come online.

Number of storeys

The Government’s proposals include amending the three-storey criteria for licensing, either by changing it to two-storey or extending licensing to all HMOs containing five or more people.

The consultation also explores whether licensing should be extended to all accommodation above or below business premises, occupied by five or more people,

The government are not seeking to extend mandatory HMO licensing to properties shared by three or four people, although, the consultation does seek views on whether five people is still the correct threshold.

One advantage of the changes would be to create a level playing field and more consistency in how HMO licensing is applied in each local authority area. However, even if the changes are implemented, smaller HMOs could still be caught by an additional or selective licensing scheme adopted by the local council.

Poorly converted blocks of flats

A further unexpected proposal is whether so-called ‘poorly converted blocks of flats’, as defined within Section 257 of the Housing Act 2004, should be brought within mandatory HMO licensing.

This is a particularly complicated area of law as it relates to properties that:

  • have been converted into self-contained flats;
  • the conversion did not comply with the relevant Building Regulations in force at that time and still does not comply; and
  • less than two thirds of the flats are owner occupied.

When working out the relevant building regulations, for properties converted prior to 1 June 1992, they should comply with the regulations in force on that date.

Thus, without expert building regulation advice from a suitably qualified surveyor, it may not be apparent whether a property falls within the scope of the scheme. For the first time, it would also bring long leaseholders within the scope of mandatory HMO licensing and create confusion as to who is responsible for obtaining the licence. 

Having said that, the consultation paper also states the government do not believe there is a strong case for bringing flats in residential blocks within the scope of mandatory licensing. It is unclear if they are referring to purpose built blocks of flats in this respect.

New national minimum room sizes

The consultation paper recognises that most local authorities have developed comprehensive and practical room size standards for HMOs.

However, it also recognises the pressure on council’s to relax these standards and highlights the Clark v Manchester City Council (2015) Upper Tribunal case which ruled that local authorities’ standards are for guidance only and are not binding in all cases.

As such, the government are considering whether to set new national minimum room sizes along the lines of the statutory overcrowding standard in Section 326 of the Housing Act 1985 i.e. around 6.5 m2 for a single room and 10.2 m2 for a double room.

Whilst saying councils would retain flexibility to set their own higher room sizes, this could lead to a reduction in minimum HMO room sizes in many areas.

Simplifying the licence application process

With the changes likely to bring thousands more properties within the scope of mandatory HMO licensing, the consultation paper invites suggestions and makes some proposals for simplifying the licence application process.

Letting to family members

Finally, the consultation paper proposes a slight change to selective licensing criteria by removing the exemption for properties that are let to family members.

The paper notes that some landlords have been abusing this exemption, thereby wasting considerable time whilst council officers investigate the alleged relationship between landlord and tenant.

If this change comes into force, parents purchasing and then letting a property to their children or other family members may then require a selective licence from the council.

Conclusion

The consultation marks the most significant change in HMO regulation since the Housing Act 2004 came into force.

It is an important document that all HMO landlords should read. It will also present a considerable challenge to local authorities that will become responsible for licensing thousands more properties across the country.

The consultation is open until 18 December and comments can be submitted using the government’s online form here.

The full consultation paper can be read here.
 

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