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HMOs and the Law of Unintended Consequences

HMOs and the Law of Unintended Consequences




From the 1st October 2018 the regulations of what properties required HMO Licences went through a significant change, many of which Landlords are unaware of and how these will affect both their current portfolio of properties and any new possible purchases.


What were the changes to HMO mandatory licencing regulations?


The new HMO regulations have removed the previous 3-storey requirement which means all properties will fall within the mandatory licensing regime if:

  1. It is occupied by 5 or more persons from two or separate households.
  2. Must have minimum room sizes of the following:
  • Single bedroom for a person under 10 years old minimum size of 4.64sq mtrs
  • Single bedroom for any person over 10 years old minimum size of 6.51sq mtrs
  • Double bedroom for any people over 10 years old minimum size of 10.22sq mtrs

In addition to mandatory licencing there are two further common types of licencing:

  • Additional Licensing
    A local authority can impose a license on any category of HMO in its area which is not subject to mandatory licensing. The council can do this if it considers that a significant percentage of these HMOs are being managed inefficiently, causing problems for the occupants or members of the public.
  • Selective licensing
    Local authorities have the power to introduce selective licensing schemes in relation to privately rented housing that is not a house in multiple occupation (HMO) in an area. Selective licensing is available only where the authority believes that it would reduce or eliminate specific housing problems.


What are the impacts of these HMO regulations?


The new regulations will now mean that over 177,000 additional properties will now require mandatory licences. Landlords owning these properties may not be aware of the new HMO regulations, but if they have not registered their property and obtained their HMO Licence, they could face a substantial fines of up to £30,000 from the council and their tenants reclaiming the rental income paid to the Landlord back as far as 1st October 2018.

These Landlords will face higher costs due to the requirement of mandatory licence, additional improvements the property may require to meet licencing standards and the possibility of a lower income if the room sizes do not meet the minimum requirements.


How can brokers assist Landlords?


To assist their landlord clients the broker should be checking the following:

  • Has the client applied for an HMO Licence if not then get the application submitted.
  • Does the property needs any special planning requirements to be used as an HMO possible due to implementation of Article 4 restrictions.
  • An appropriate valuation will be required to ensure the subject property meets all the new HMO regulations.
  • Where the client is purchasing the property ensure they apply for Part 1 of the HMO licence immediately.


If you have a HMO case that you are looking to place with us and need some help then visit our FAQ page or call us on 0345 148 9086 to speak with one of our internal business managers.