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HMO Reforms Expected in 2018

The Government has indicated that new rules relating to houses in multiple occupation (HMOs) will be brought into force in October 2018. The key reform is the extension of mandatory licensing of HMOs. There are also new provisions regarding minimum room sizes.

What is a HMO?

In simple terms, a house or flat is a HMO if it is occupied by three or more tenants who form two or more households and the tenants share some or all of the toilet, bathroom or kitchen facilities. There are an estimated 500,000 HMOs in England.

If your rental property is a HMO you will need to comply with legislation relating to the management of HMOs. Depending on the size of your HMO you may also need a licence to operate your HMO.

Mandatory and Additional Licensing – The Current Rules

Currently mandatory licensing applies to “large” HMOs, meaning those that comprise three or more storeys and are occupied by five or more people. Licences to operate HMOs are obtained from the local housing authority.

Additional licensing applies if the local housing authority has designated an area as subject to additional licensing of HMOs. This means that a licence is required for the types of HMO specified in the designation, not just those fitting the description of a large HMO. Additional licensing may be introduced to address problems caused by ineffective management of HMOs in the particular area.

There are serious consequences for landlords and letting agents who do not obtain licences for licensable properties. These include unlimited fines for criminal offences, civil penalties of up to £30,000, rent repayment orders and, from April 2018, the possibility of banning orders.

Why Extend the Scope of Mandatory Licensing?

The Government has decided that smaller HMOs need to be brought within the mandatory licensing scheme. This is because HMOs are particularly attractive to so-called rogue landlords who exploit vulnerable tenants by charging high rents but failing to manage their properties properly. Overcrowding, health and safety issues and a failure to deal with anti-social behaviour are common problems.

What Will Be the New Scope of Mandatory Licensing?

The storey requirement will be removed, meaning that all HMOs with five or more occupiers living in two or more households will require a licence.

Mandatory licensing will also apply to purpose-built flats where there are up to two flats in the block and one or both are occupied by five or more people in two or more households. Each flat, if occupied as a HMO, will require a separate licence.

The new rules will affect around 160,000 houses.

How Will the Licensing Changes be Implemented?

The extension of mandatory licensing is expected to be implemented in two phases. Phase one will last for six months. During this period, landlords who are new to the mandatory licensing regime should apply for a licence. However, they will not be prosecuted if they fail to do so. (But they will be unable to serve a valid Section 21 Notice seeking possession if they have not applied for a licence.) During phase two, landlords can be prosecuted and have rent repayment orders made against them if they have not applied for a licence.

Conversion from Additional or Selective Licensing to Mandatory Licensing

If your HMO is currently subject to additional licensing, your licence will be passported into the mandatory licensing scheme at no cost and with no alterations to the licence conditions for the remaining period of the licence. The Government has indicated that similar conversion arrangements will be made for properties currently affected by a selective licensing scheme (a scheme which requires all private rented properties, including HMOs, in a designated area to be licensed).

National Minimum Room Sizes

Currently there are no mandatory HMO conditions or prescribed standards relating to room size. This is set to change. It will be mandatory for a HMO licence to specify which rooms in a HMO are suitable for sleeping accommodation, and by how many adults and children.

  • A room for a single adult or child aged 10 or over must have at least 6.51sqm of usable floor space.
  • A room for two adults or children aged 10 or over must have at least 10.22sqm of usable floor space.
  • A room with a usable floor area between 4.64sqm and 6.5sqm may be occupied as sleeping accommodation by a child under the age of ten.

These are minimum standards and local authorities may impose higher standards. It will also be for local authorities to make rules about room sizes for rooms occupied by more than two people.

How do These Reforms Affect You?

Are you a landlord or tenant affected by the proposed HMO reforms? Do you agree that they provide a much-needed tightening up of regulation in this area, or are residential landlords being excessively regulated? Do you have any concerns about the implementation of the new HMO licensing regime? Please share your thoughts with us.

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