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New HMO rules for landlords set to take effect from October 2018

The government will implement new regulations for houses in multiple occupation (HMOs) from 1 October 2018 after a mandatory HMO licensing extension was confirmed in Parliament last week, which spells big changes for some landlords.

It has been more than two years since the issue of mandatory licensing for HMO properties was discussed by the government, and a date has now been set for the new rules to come into effect. It will mean that mandatory conditions and licences will apply to all HMOs that fall under the stated criteria, and the landlords who own them, further tightening up the market and minimising the number of unfit properties and rogue landlords in operation.

What are the licensing changes?

The new mandatory licensing policy from October 2018 will apply to HMOs that are occupied by five or more people, comprising individuals living in two or more separate households – frequently but not exclusive to groups of cohabiting adults – regardless of the number of storeys. The property is also classed as an HMO if it is not made up of self-contained flats, the people who live there treat it as their main residence, and two or more of the occupying households share one or more of the basic amenities. More detailed information can be found here.

Owners of properties that fall under the above criteria will need to obtain licences when the new regulations take effect, which is expected to bring an additional 177,000 HMOs under the mandatory licensing scheme in England. Where selective or additional schemes are already in place for landlords, which accounts for about 20,000 HMOs, the new scheme will replace existing licences.

Current licensing rules already apply to large HMOs, where five or more people rent rooms in the property from more than one household, if the building is more than three storeys high.

What if landlords don’t comply?

The Ministry of Housing, Communities and Local Government has confirmed that landlords are legally required to submit their applications for mandatory HMO licensing by the deadline of 1 October 2018, with no allowance for a grace period after this date. The government is expected to publish guidance in the coming months on the issue to make local authorities aware of the obligation, but landlords who fail to apply for the correct licence will be in breach of the law.

Will there be any other changes?

Implementing a minimum room size rule has been part of the talks, and more specific details on this are still to be announced. The minimum sizes will apply to rooms that are slept in, and local authorities will be required to enforce this by specifying appropriate rooms in HMOs, and the number of people allowed to occupy them. If the conditions are breached, the local authority will issue a warning to the landlord to remedy the situation, after which point legal action can be taken.

Another condition of the licences will relate to refuse disposal and storage facilities, with minimum numbers of bins and storage facilities for waste expected to be set out by the government.

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Extension of mandatory HMO licensing set for October 2018

The Government has confirmed that the extension of mandatory HMO licensing is due to come into force form 1st October 2018, subject to Parliamentary approval.

The regulations bring purpose built flats where there are up to two flats in the block, into the scope of mandatory licensing. They also remove the three storey rule -at present mandatory licensing applies to HMOs of at least three storeys and five occupants comprising of two or more family units.

How will it affect me?

Research from RLA PEARL has found that 16% of landlords rent to people in HMOs.  It is estimated that an additional 177,000 HMOs will become subject to mandatory licensing in England as a result of this extension.

Properties will be subject to mandatory licensing if they meet the following criteria:

  • It is occupied by five or more persons;
  • is occupied by persons living in two or more separate households; and
  • meets—
    • the standard test under section 254(2) of the Act;
    • the self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats; or
    • the converted building test under section 254(4) of the Act.

The Order, which can be read here applies to HMOs in England, but does not apply to converted blocks of flats, to which section 257 of the Act applies. These are buildings that have been converted into and consist of self-contained flats where the building work undertaken in connection with the conversion did not comply with the appropriate building standards and still does not comply with them, and less than two-thirds of the self-contained flats are owner-occupied.

Six month grace period

There would be a grace period of six months to give landlords time to comply and local authorities time to process licences.

The RLA believes many of the changes are unnecessary and says they will put a huge strain on local authorities. The Association made its points in its formal response to the Government consultation.

Source: RLA