Large HMOs are now licensed by local councils

HOUSES in multiple occupation (HMOs) often offer good quality reasonably-priced accommodation to people who cannot afford to buy their own homes and are not eligible for council housing.

However, despite many being run to a high standard, they have never had the greatest image, scarred by a minority of ‘rogue’ landlords and associated with student “ghettoes”.

It is now more than a year since new Government regulations overseeing licensing came into force and introduced fresh legal requirements and heavier penalties for failing to meet them.

In England and Wales you must have a licence from your local council if you’re utilising what is defined as a large HMO where the property is rented to five or more people who form more than one household, with some or all tenants sharing toilet, bathroom or kitchen facilities.

Legislation stipulates that bedrooms are a minimum size and have a maximum number of occupants to prevent overcrowding.

The manager of the house – the landlord or agent – must be ‘fit and proper’; for example, they must have no criminal record.

They must send the council an updated gas safety certificate every year, install and maintain smoke alarms and provide safety certificates for all electrical appliances when requested.

A licence is valid for a maximum of five years.

You need a separate licence for each HMO you run.

You could face a civil penalty or an unlimited fine for each breach of the rules.

If you disagree with any conditions the council sets, you can appeal to the First-Tier Tribunal.

A tenant can claim back 12 months’ worth of rent where the landlord has unlawfully evicted or harassed the occupier, failed to comply with an improvement notice, controlled or managed an unlicensed property, breached any banning order made.

However, there is also a smaller class of HMO, one where the property is lived in by at least three people who do not form a household but who share amenities.

If you want to turn a family home into one of these, councils can, should they choose to do so, demand that you seek planning permission.

The practice has been widely adopted across the country.

The idea is to control the density of HMOs in a given area and follows public concern about the ‘studification’ of parts of our cities where the undermining of community cohesion leads to all sorts of issues – from parking to anti-social behaviour.

Property Investments UK comments: “Student populations rise year-on-year and in most of our cities, there are areas that feel abandoned during the holidays and can be chaotic and unkempt during term times.

“One can only imagine that such places must often not be too pleasant to live in for normal homeowners and their families.

“But the laws of supply and demand are still in force. While many councils are doing a fantastic job in encouraging the development of purpose-built student accommodation so too are there many places where there simply aren’t enough places for students to live. With growing student populations this is putting a huge amount of pressure onto local markets.”

Critics would argue that to discriminate against students and young people wanting to live in small groups is unfair.

Overall, the message is twopronged.

For larger HMOs, landlords need to be fully conversant with the licensing regulations. For those who mess up it could get very expensive.

And the strategy of acquiring a residential property in order to turn it into a small HMO is now a much more difficult proposition than it once was. It should be approached with caution.

It’s worth taking professional advice if you’re not sure.

Trevor Law is managing director of Eastcote Wealth Management, chartered financial planners,

based in Solihull. Email: tlaw@eastcotewealth.co.uk

The views expressed in this article should not be construed as financial advice