#hmo licensing

HMO Licensing Rules Extended From October 2018 the scope of mandatory licensing in England will be extended, which means an estimated 177,000 properties will need to be licensed for the first time says David Lawrenson of www.LettingFocus.com. From October 2018, the government is extending the scope of mandatory HMO licensing rules in England. (See below for the differences in the other countries of the UK). Since 2006 HMO licensing has only applied to properties of at least three storeys, housing at least 5 people from two or more “households”, but from October the “over three storeys” rule will be removed so it will now be extended to cover ALL properties that house five or more people from more than two households, whatever the building size is. Some have criticized this, arguing that when mandatory licensing was started, it was all about safety – for example, making sure there were enough fire escapes. Safety is obviously more of an issue for properties that are set over three levels or more, so it made sense to target these taller buildings. Yet, as there was no record of problems with, for example, fire safety, for two storey and single storey buildings, it made sense to exempt them from mandatory licensing. The National Landlords Association (NLA) is opposed to the extension for these reasons. Also, it complains that there has never been a full review of the existing HMO licensing system anyway, so it’s hard to say whether the system has achieved the goals set out for it. This problem is exacerbated because many local authorities have been busy over recent years, busy bringing in additional and selective licensing in their areas anyway, where they think it is needed. Selective licensing is the policy option that is already in place and available to deal with “rogue” landlords and low housing demand. They are being used where required, so it’s not clear what this latest extension to HMO licensing regime is supposed to achieve. The NLA cite the example of Hammersmith and Fulham, where all landlords who let properties to three people from two or more separate households, (i.e. HMOs), already require a license, (a process called “Additional Licensing”). And on some streets in the same borough, some houses require a license whether they are HMOs or not – a separate system called “Selective Licensing”. Some boroughs have gone further – putting in place Selective Licensing for their whole areas – for example Newham in London, which was the first borough to have all-borough licensing, affecting all houses being rented out. It’s thought that the new extension to HMO rules will bring in another 177,000 new properties into mandatory licensing. The cost of a license fee varies by borough from around £300 to around £1200. HMO Licensing Rules Changed and Extended– Room Sizes There are also minimum room sizes for the rooms in HMO properties, which is intended to reduce overcrowding. For a single room, the minimum room size is 6.51 square metres and for a double it will 10.22 square metres. As a requirement of licenses, landlords have to remember to provide the right facilities for rubbish storage as set out by their local authority and meet various other standards. Licenses are valid for five years. There could be implications for landlords with buy to let mortgages as some lenders will be reluctant to lend against licensable properties. Interest rates on HMOs tend to be higher. HMOs can still work for landlords – and the fact that increased regulation may put other landlords off may reduce the competition you face – but there are a lot more things to know and to comply with. My book, “Successful Property Letting” – see link below has more information on how to make them work for you. Or contact me for a consulting session. Differences in Other UK Countries on HMO Licensing Scotland is similar to England in that an HMO license is already needed for any property which is lived in by three or more people from three or more different households. A separate scheme requires all let properties to be registered with their local authority. In Northern Ireland, the scheme operates much the same as for Scotland and landlords must register with the Northern Ireland Executive. In Wales, in addition to Rent Smart Wales’s registration requirements (effecting all landlords of any property), local councils continue to run HMO licensing in line with the 2006 regulations for now. ABOUT LETTINGFOCUS Services for Private Landlords We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk. Our advice is completely independent. 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