Friday, July 25, 2008
Any landlord who has the unfortunate pleasure of coming across the Housing in Multiple Occupation (HMO) regulations is likely to end up completely confused by reading even past the first couple of paragraphs.
Where do professional landlords go for their landlord insurance?
As is the case with much of the current government's legislation the Housing Act 2004 was poorly drafted. As far as New Labour was concerned, legislation was and is; more about grabbing a headline than creating a more constructive environment for the private rented sector.
Do I have a HMO?
If you have a converted property that is let to more than 3 tenants each with their own separate bedroom then it's most likely that you have an HMO. However, in saying that you do but you don't. What do I mean by this? Well you have an HMO - BUT luckily you as the landlord will probably not need to apply for a HMO licence. This is because mandatory licensing only affects properties with 5 or more tenants and that have 3 or more stories. There is however a chance that if your Local Authority has introduced a licensing scheme that even though your investment property does not require a licence under the mandatory scheme it still might require one under a 'selective licensing' scheme introduced by your local authority. The best thing a landlord can do is to contact their local council's housing department to check with them to see if a scheme exists.
Penalties for not having a HMO licence
One of the penalties as well as a potential £20,000 fine for a landlord that does not have a license with respect to their HMO property is that as stated by s.75(1) of the Housing Act 2004. "No section 21 Notice may be given in relation to [an AST] of a part of an unlicensed HMO so long as it remains such an HMO."
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At least the provision is clear. Just as where a deposit should be protected but remains unprotected, when no s.21 Notice can be served, the same is true where a property should be licensed as an HMO but remains unlicensed.
Serving a section 21 notice (non fault based possession)
This means that the non fault based route to possession is NOT available to a landlord with an HMO property that is not correctly licensed.
HMO landlords - clear as mud!
OK now you are clear about whether as the landlord you still need an HMO licence Well not quite. This only deals with HMO legislation under the Housing Acts. You as the landlord may also need planning permission.
Just to complicate things further there is another piece of legislation concerning the control of HMO properties. This is legislation under the Planning Acts which govern the use of property as well as physical development. This means that ordinary housing is classed as within use class C3. This use class extends to include "use as a dwellinghouse...by a single person, or by people living together as a family, or" [the important bit] "by not more than six residents living together as a single household...". However, any more than six residents or where the planning authority consider that the individual are no longer living together as as single household (in other words sharing facilities such as bathroom, kitchen, etc) they may deem it that there has been a change of use to either a institutional use or the creation of separate units of accommodation. In both these cases they may require a planning application to decide the planning case.
There you go - I did warn you that deciding when a HMO is not an HMO was not straight forward!