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HMO licensing reform

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The private rented sector (of which Houses in Multiple Occupation (HMOs) form part has undergone significant growth in recent years and is now the second largest tenure in the UK. New regulations came into effect on 1st October 2018 and expanded mandatory licensing requirements.

Since the Housing Act 2004 came into force, it has been a requirement that large HMOs are licensed, and until recently, these licensing requirements applied nationwide to HMOs that:

  1. Comprise 3 or more storeys;
  2. Are occupied by 5 or more people living in 2 or more single households; and
  3. The occupiers share basic amenities such as washing and cooking facilities.


New Requirements

From 1st October 2018, mandatory licensing requirements for Houses in Multiple Occupation were expanded so mandatory licensing now applies to:

    1. 5 or more people in 2 or more separate households, regardless of the number of storeys. Effectively this means that the storey requirement will be removed from the current definition.
    2. Purpose built flats where there are up to 2 flats in the block, and one or both of the flats are occupied by 5 or more persons in 2 or more separate households. This will apply regardless of whether the block is above or below commercial premises. This will bring certain flats above shops on high streets within mandatory licensing as well as small blocks of flats which are not connected to commercial premises.
    3. New minimum sized rooms for sleeping.
    4. New refuse disposal requirements.
    5. Most purpose-built student accommodation will be covered.

Properties already licensed will be passported into the mandatory licensing scheme without any cost to the landlord and the existing licence conditions will remain until the licence expires.

 

Implementation

To be done in 2 phases:

    1. This will last for 6 months. Local authorities will publicise, process new applications and issue licenses. Landlords that did not require an HMO license before the change of rules will not be prosecuted during phase 1 for failure to license a licensable HMO. However, landlords will be expected to apply for a license during the 6 month grace period.
    2. Once the 6 month grace period is over, any landlord without a license will be subject to the full range of penalties for failing to comply.
    3. It is important to note that landlords who currently require a license under a local authority or selective licensing scheme and who are not licensed will not be able to benefit from the 6 month grace period just because their property has fallen within the new mandatory licensing category. These landlords could face enforcement action at any time.

If a licence is renewed that is not compliant with a condition related to a room size, the landlord will have up to 18 months to comply.

 

Penalties for non-compliance

There are serious consequences for landlords and letting agents who do not obtain licenses for licensable properties.

    1. The prosecution in the Magistrates’ Court – unlimited fines under the Housing Act 2004.
    2. Local authorities are also able to issue landlords with civil penalty notices of up to £30,000 instead of prosecution.
    3. Repeat offenders may also be subject to a banning order prohibiting them from letting property once these are brought into force.
    4. The landlord will be prevented from using the section 21 procedure to obtain possession if they have no licence.

 

If you have any questions, please contact Natalie Mallin of our Valuation & Advisory Services team.