HMO licence changes 2018

Here are all the HMO licence changes 2018 that the government is introducing in England from this October.

In 2006, the HMO (Houses in Multiple Occupation) only applied to properties of at least three storeys housing at least five people from two or more households. However, from October the government has removed the ‘over three-storeys’ part of the regulation will be removed so that it covers all properties that house 5+ people from 2+ households, whatever the building size.

This will level a playing field between landlords, so the rogue landlords will be ceased to operate substandard accommodation.

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There has never been a full review of the existing HMO licensing system, so it is difficult to assess whether it has achieved its original goal. On top of this, local authorities are already able to bring in additional licensing in areas where they deem it necessary. There are already measures to address inadequate housing and rogue landlords in a far more targeted manner without the government’s input.

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In Hammersmith and Fulham, for example, where there are many HMOs, landlords who let properties to just three or more people from separate households already need a licence.

And on certain streets in the London borough where antisocial behaviour has been deemed a problem, all landlords need a licence. Hammersmith & Fulham Council is already acting to protect renters and make sure landlords have a level playing field.

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The new rules will bring around 177,000 new properties into mandatory licensing, affecting thousands of landlords. It’s difficult to estimate the extra cost to landlords. In fact, licence fees are fixed by local authorities and can vary significantly across the UK from £300 in Suffolk to £1,100 in Ealing.

With at least five people per property, the HMO licence changes 2018 will improve renting for almost a million people. They will now receive the extra protection of living in a licensed property.

Introduction of the minimum room size for HMO properties addresses the overcrowding issue.

This is a serious problem and increases fire risk. However, it is concerning that specifying room size might have unforeseen consequences for landlords and tenants.

Landlords often offer these smaller rooms at a discounted rate for tenants. If these rooms become out of use, that room becomes vacant. Additionally, chances are it will force rents up in the other rooms in the house to cover the lost rent.

Secondarily, there’s the question of what happens to the room that does not fit the size. If the landlord leaves it vacant, there’s a high chance the tenants might sublet it. In this case, the landlord could struggle to find it out.

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Minimum room sizes

The HMO licence changes 2018 is not putting off everyone, however. Where the minimum room size regulations are affecting, the landlord can convert these rooms into en-suite bathrooms for one of the bedrooms. It will mean less revenue, but rules are rules. At the moment, you may have a 20-bed property on two storeys that don’t need a licence. At the same time, a five-bed over three storeys could do.

The greatest impact of the new regulations will be for landlords who have bought their property on a buy-to-let mortgage and then rented it out as an HMO.

This will create further administrative complications for buy-to-let investors and local authorities, not to mention make accessing finance more challenging as a number of mainstream lenders are reluctant to lend against licensable properties.

Lenders who offer mortgages to HMOs that do not have a licence until the new rules apply can change their criteria to factor in these properties. Altogether, the upshot is that landlords need to be on top of their licences and their paperwork. Any landlord who needs a licence but hasn’t applied for one by 1 October could be liable to prosecution and hefty fines.

Local authorities will be responsible for overseeing the HMO licence changes 2018. So, it’s likely prosecutions and fines will again vary widely between councils.

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What the HMO licence changes 2018 will mean for landlords

  • If you let a property to 5+ tenants from 2+ households, you will need to apply to your local authority for an HMO licence, irrespective of building size.
  • All bedrooms in any such property will be subject to a minimum room size. For a single room, this is 6.51 square metres and for a double, 10.22 square metres. Landlords have up to 18 months to comply with this.
  • Landlords will have to provide suitable facilities for rubbish storage and disposal as stipulated by their local authority.
  • A licence is valid for five years and each HMO property requires a separate licence.
  • Any landlord who hasn’t applied for a new licence by 1 October 2018 will be in breach of the law.

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If you have any questions on property management, please contact Pelin Martin to book a 30-minute free consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk

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