April 2018 -

Marketing April 30, 2018 No Comments

Massive extension to HMO licensing comes into force

CHANGES to Government rules mean a huge expansion in the number of HMOs requiring licences. Until this month an HMO (house in multiple occupation) only required a licence if it had three storeys and was occupied by five or more people, in two or more separate households while sharing kitchens/bathrooms.

The new regulations remove the three storey requirement, and Bournemouth council estimates it will have to license an additional 2,500 properties out of an estimated 3,000 previously unlicensable properties across the borough.

A report from the council’s private sector housing team to the communities scrutiny committee states that “2018/19 promises to be another exceptionally busy year”.

“The following key projects and service developments will be delivered,” the report says.

“The Extension to Mandatory HMO Licensing which could mean that the number of licensed HMOs will increase to approximately 2,500.

“The Housing and Planning Act has come into force which will bring further significant changes to our enforcement powers with Banning Orders for rogue landlords.”

Until April, council figures show there were 601 licensable HMOs across Bournemouth and Poole, of which 529 were in Bournemouth.

Bournemouth estimated there were 3,000 non-licensable HMOs in the borough, however in the past officers have often stated that it can be difficult to keep track of unlicensed properties.

Of these, 1,800 were believed to house students.

The new regulations bring in mandatory conditions relating to minimum sleeping room sizes, maximum number of occupants and provision of refuse facilities.

Licenses last for five years.

The private sector housing team, which among its duties is charged with ensuring landlords maintain their properties in good condition, dealt with some 2,600 service requests over the past financial year, according to its annual report.

There were 786 complaints relating to such issues as damp, lack of heating, lack of fire safety and overcrowding.

The team also lodged 11 prosecutions, and by the end of the year had three successes, through which some £2,300 was collected in fines and costs.

Also, the borough’s team has carried out an inspection of the nine mobile home parks in the area to ensure compliance with licence conditions. Together these parks house some 500 mostly elderly people.

One site, which is not identified, was prosecuted for non-compliance and the council collected £850 in fines and costs.

Source: Bournemouth Echo

Marketing April 23, 2018 No Comments

Massive £182,000 fine for buy to let investor after string of HMO offences

A buy to let investor has been found guilty of 35 HMO offences – and has to pay a total fine of £182,314.90, thought to be one of the largest penalties ever for an individual landlord.

Leila Amjadi, of Sutton Coldfield, was found guilty at Birmingham Magistrates Court of failing to obtain HMO licences and for breaches under the HMO Management Regulations.

The offences were in relation to the four properties she owned across Birmingham.

Amjadi was fined £85,000, ordered to pay full costs to the council of £22,974.90 and a victim surcharge of £170. In addition to this, she was ordered to pay a compensation order to 11 of the tenants, totalling £22,000.

Amjadi‘s company, Vertu Capital Ltd was also found guilty of 21 offences relating to two of the HMO properties in Selly Oak and was fined £52,000 plus a victim surcharge of £170.

In 2016, Birmingham council officers became aware that Amjadi’s properties were being let without the appropriate HMO licences.

She has over 10 years’ experience in the property letting industry and was well aware of her responsibility to obtain licences, having previously made HMO licence applications.

The council also received numerous complaints from occupants and local residents regarding the poor maintenance of the properties.

Following inspections by officers, 31 breaches of the HMO Management Regulations were found including missing fire blankets, fire doors that were either missing or inadequate, and smoke detectors which were hanging loose from the ceilings.

The district judge commented that, despite the significant income from her properties, Amjadi was an unscrupulous landlord who did not care for the health and safety of her tenants.

Amjadi was also found to have deliberately used delaying tactics when dealing with both her tenants and the council.

A spokesman for the council says: “This is the largest fine that Birmingham has seen for these type of offences and it sends out a strong message to all landlords that Birmingham city council will use all its enforcement powers to ensure that tenants are protected from rogue landlords who neglect their responsibilities”.

Source: Letting Agent Today

Marketing April 17, 2018 No Comments

Spike in BTL landlords looking to invest in HMOs

New research from OneSavings Bank has found that, in the last six months, around 51% of UK based brokers have been approached by landlords looking to diversify their portfolios.

According to the data, of those brokers who had been approached by landlords about diversifying, 56% of enquiries were about diversifying into Houses with Multiple Occupants (HMOs). HMOs can generate a higher yield for landlords which will help to mitigate against the additional costs that they now face. Indeed, research by Mortgages for Business found that the average yield of a HMO could be 3.3% higher than a property with one tenancy agreement. However, changes to HMO regulations following a government consultation, due to be implemented from October, could introduce additional regulation in this area.

Landlords are also increasingly diversifying into commercial and semi-commercial properties in the wake of the recent PRA regulations and the changes to tax treatments for buy-to-let properties. The research found 14% of brokers said they had been approached by landlords wanting to increase the level of commercial property within their portfolio. In addition, 9% reported that landlords wanted to diversify into mixed-use properties. Unlike residential buy-to-let property, landlords holding only commercial property will not be affected by the reforms to mortgage tax relief. In addition, commercial or mixed-use properties will not incur the same amount of stamp duty as purely residential buy-to-let properties would.

In addition, 6% of brokers said landlords were looking to diversify into student accommodation. Brokers also pointed to other options, such as holiday lets and serviced accommodation, being brought up by clients.

Recent regulatory and tax changes are thought to be the driving force behind a growing number of landlords moving into new property markets. In particular, reforms by the Prudential Regulation Authority (PRA) introduced stricter underwriting standards for portfolio landlords with four or more properties, whilst reforms to mortgage tax relief have reduced the amount of mortgage interest landlords could offset against rental income. These are in addition to the 3% stamp duty surcharge for second homes that was introduced in 2016.

Adrian Moloney, Sales Director at OneSavings Bank, said: “Landlords are on the hunt for greater yields, and, in the face of regulatory and tax changes, diversifying into commercial property or more complex residential options such as HMOs can offer this. With the buy-to-let market becoming increasingly complex, there is an opportunity for informed brokers to support landlords seeking new niches. However, these brokers must in turn be supported by specialist lenders who can offer the flexible lending needed to finance the growth of these segments of the market.”

Source: Property Reporter

Marketing April 15, 2018 No Comments

Swindon Borough Council To Crackdown On HMOs

Swindon Borough Council is planning a crackdown on HMO investments, with new rules coming into force in October.

The change in regulation will require buy to let property investors to obtain a licence for all houses in multiple occupation (HMOs) which are home to five or more residents. This is likely to result in a five-fold increase in the number of HMOs that require a licence.

The changes have been welcomed by the local council, who have drawn attention to the fact that areas such as Broadgreen and Eastcott are home to many house-shares. Residents in these areas have expressed concerns about problems associated with shared housing, such as anti-social behaviour, fly-tipping and parking shortages.

In the current regulatory environment, HMO landlords only require a council licence for shared homes that are at least three storeys high and are let to five or more people who share a toilet, bathroom or kitchen. The new rules, set to come into force on October 1, will get rid of the height requirement, meaning that many more HMOs will need to be licensed.

There are currently 120 licensed HMOs in Swindon. However, council officers estimate that between 600 and 800 could end up being licensed under the new rules.

Borough housing chief Mike Ash said: ‘Due to the nature of Swindon’s housing stock and market, the great majority of HMOs in Swindon will fall under a licensing scheme following these changes, and this will allow for much more effective regulation of the sector.’

A spokesman for Swindon Borough Council added: ‘When the extension becomes law, the council will look to prosecute any landlords that wilfully fail to apply for a licence. Persistent offenders may also be banned from involvement in renting property, and also entered onto the national Rogue Landlords Database, which is currently being set up by the government.’

Source: Residential Landlord

Marketing April 12, 2018 No Comments

HMO plans for “eyesore” office space in Wrexham

“Dilapidated” and “eyesore” office space in Wrexham could soon be converted into a HMO.

In an application submitted to Wrexham Council it has been proposed that the disused office space at Unit C on Maesgwyn Road is converted into a six bedroomed House Multiple Occupancy.

Previously the offices were home to the Wrexham tram depot before being used as a bus depot. In recent years it has been used as a garage and repair shop. However they have since been vacant for a number of years and have been subject to vandalism.

As a result the applicants state that the aim of the plans is to “ensure this vacant unit can become usable”, with office space located at the front of the building proposed for HMO use.

Documents submitted to Wrexham Council show that the office space on the ground floor would be used for an open plan kitchen, dining and living area, along with a separate kitchenette, bathroom and one bedroom with living area.

A further five bedrooms, two of which would have living areas, two bathrooms and a landing would be located on the first floor.

Further details in the application’s design and access statement adds that the proposed conversion would be “sympathetic to the existing structure”, with the removal / replacement of windows and the creation of a new opening proposed to provide bin storage for the exterior of the building.

The design and access statement concludes: “We feel this planning application should be looked favourably upon as the intention to provide additional accommodation within the town centre ideally suited to young professional’s seeking work or employment in the area.

“The building is prominent to existing dwellings and is currently in a dilapidated state where vandals have targeted windows and walls within the building.

“At present the building is an eyesore to local residents, by allowing this conversion to take place the building will be revamped and be a secure building ensuring vandalism won’t occur.

“By allowing us to convert the existing offices to provide a HMO we are retaining the existing characteristics of the building, reducing its impact on the current parking arrangements and ensuring parking issues aren’t magnified should the unit be refurbished as an office.”

The application will be considered for approval at a later date.

Source: Wrexham

Marketing April 7, 2018 No Comments

Changes In Landlord Legislation For This Year

There are some years which seem to be dominated by changes in landlord legislation and 2018 seems to be one of those years. Some of these have been talked about for a long time and landlords have had time to prepare, but others seem to have been sneaked in. The main landlord legislation changes are listed below.

Energy Efficiency Standards

From 1st April 2018 properties that are rented out in the private rented sector will need a minimum energy performance rating of E on an EPC certificate. The new rules cover all new lets from that date and will be extended to all tenancies from 1st April 2020.

HMO room size regulations

Research has found that 16 per cent of landlords rent to people in HMOs, and though some has been to a reasonable size standard, it is this portion of the sector that has been seen in the past to have the poorest size standards, so legislation that will improve this is to be welcomed.

From October 2018, a minimum space standard will be introduced for bedrooms in Houses in Multiple Occupation. Rooms to accommodate one person must be a minimum of 6.51 square metres; for 2 persons, it must be a minimum of 10.22 square metres; rooms to accommodate a child under 10 years old must be at least 4.64 square metres.

The HMO licence must specify the maximum number of people resident in the property. Landlords who do not comply with the new requirements could face a fine of £30,000, though landlords of existing properties will have 18 months to make any changes to allow compliance.

GDPR

From 25th May, General Data Protection Regulations will be introduced to replace the Data Protection Act. From that date, landlords will have to ensure that their businesses are GDPR compliant. A data protection policy is needed, together with a privacy notice for customers. A new change is that registering with the Information Commissioners Office will become a statutory requirement.

Extension of mandatory HMO licensing

An extension of mandatory HMO licensing will come into force from 1st October 2018. The reason will always be that this will raise standards, but the private landlord’s view will be that it is the revenue it raises that be of most concern to the local authority.

Banning Orders

Banning orders will be introduced on 6th April with the intention of tackling criminal landlords and agents. The Housing and Planning Act 2016 introduced banning orders; an individual convicted of certain offences can be barred from renting out properties for a minimum of one year. Could the penalties be avoided by transferring ownership to a partner? However, the changes will now impact all tenancies, including those that were established BEFORE 1st October 2015.

Extension of Section 21

October sees the extension of Section 21 which were implemented by the Deregulation Act. Section 21 was changed and applied to all tenancies or renewals that started on or after October 1^st, 2015.

All landlords are legally required to supply their tenants with the ‘prescribed documents’ of gas safety certificate, tenancy deposit protection information, energy performance certificate, tenancy agreement and the government document ‘How to Rent’ before the start of the tenancy. As this has been required procedure for some time, it seems unnecessary to further legislate.

Gas Safety

There will be some flexibility for Landlords around dates of annual gas safety checks.

Landlords will be able to make compulsory checks any time in the two months leading up to the renewal date. This means that, if the check was due on May 31, the check could be carried out any time in April or May and still retains the 31st May renewal date for future renewals. This may be helpful for landlords who find it more convenient to have their full portfolio of property checked at the same time.

In summary, there is plenty of landlord legislation changes for private landlords to think about this year and some will struggle to keep out of trouble. Check with local authority accreditation schemes and landlord associations for any training that is available to ensure that you are able to implement any landlord legislation changes required, and your reputation as a landlord remains unblemished.

Source: Residential Landlord

Marketing April 1, 2018 No Comments

What do the new HMO regulations mean for landlords?

Last year the UK government announced plans to review regulations surrounding Houses in Multiple Occupation (HMO) although this was delayed by the snap general election. However, on 23 February 2018 the government announced details of changes to HMO regulations which will come into effect on 1 October 2018. While many of the changes are subtle they will force many landlords to apply for HMO licences and potentially fund changes to their properties.

SUMMARY OF HMO REGULATORY CHANGES

As of 1 October 2018 the following changes to HMO regulations will apply:

Definition of an HMO property

At this moment in time an HMO property is defined as one which is occupied by five or more people, forming two or more separate households and comprises of three or more stories. The new definition is much simpler and any property occupied by five or more people forming two or more separate households will require an HMO licence.

Floor space requirements

While the vast majority of HMO landlords offer floor space which is more than adequate for single rooms and those sharing, there have been many cases of bad practice highlighted in the press. As a consequence, the new guidelines will recommend floor space of no less than 6.51 m² for a single tenant and 10.22 m² for two adults sharing. At this moment in time it is unclear when this guidance will become law.

Properties previously exempt from an HMO licence

There are many HMO properties in the UK which do not currently require a licence under the old HMO definition. Those that fall under the criteria for the new HMO definition from 1 October 2018 will need to apply for a licence from their local authority. It is also worth remembering that a licence is required for each individual property as opposed to individual landlords.

Impact on landlords

Until the new regulations are brought onto the statute books nothing is actually set in stone but the indications are that around 170,000 additional properties will be impacted by the new HMO regulations. This is on top of the existing 60,000 properties already under licence. Those who fail to comply with the new regulations will be open to potentially unlimited fines.

Additional funding requirements

There is some debate at this moment in time as to whether the minimum room requirements will be guidance or firm regulations when the changes come in on 1 October 2018. It is likely that many landlords will at some point need to make changes to the layout of their HMO properties. Depending upon the type of property this could have a serious impact upon long-term rental income as well as requiring additional capital to fund changes.

PLANNING FOR THE FUTURE

At this moment in time the HMO changes will only relate to England although it is highly likely that Scotland, Wales and Northern Ireland will adopt their own form of regulatory changes in due course. We know for a fact that the definition of HMOs which require a licence will change and at some point the minimum room size guidance will become law. There is still plenty of time for HMO landlords to review their own individual investments and consider how the changes will impact their assets and their income.

Source: Property Forum

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