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Landlords warned over housing rules as £16,000 fine dished out in

Warnings have been issued to rogue landlords in Wolverhampton after council officers issued a £16,000 penalty to a homeowner flouting the rules.

Wolverhampton council handed a Whitmore Reans landlord the huge financial penalty for running a house in multiple occupation (HMO) without a licence.

It is the first time the council’s housing team issued a civil penalty to a landlord for failing to abide by its rules.

Deputy council leader Councillor Peter Bilson said the case should serve as a warning to landlords across Wolverhampton.

The cabinet member for city assets and housing added: “This is a stark warning to private sector landlords that they must comply with the HMO rules in the Wolverhampton.”

The council said the fine, which will be reduced to £10,600 if paid in full within 28 days, signals the start of a tougher approach to managing private sector landlords.

Powers are now in place to enforce civil penalty notices of up to £30,000 per offence, and new licensing rules for HMO will come into force on October 1.

Government officials will bring in the changes to HMO licensing in a bid to improve standards of housing across the country.

Key changes will include needing to obtain licences for some properties occupied by five or more residents, living in two or more separate households and sharing amenities.

It will apply to single and two-storey properties, as well as purpose-built, self-contained flats in a block of no more than two self-contained flats.

Councillor Bilson added: “Through our Rent with Confidence framework we continue to work closely with private landlords across the city.

“It is important they are fully aware of the new government regulations that come into effect from October 1 and that we will be doing everything in our power to enforce them.

“Rent with Confidence supports responsible private housing businesses in the city and aims to improve the quality and choice of housing for private sector occupiers.

“We are here to advise landlords on the new changes and we will continue to work with landlords, agents, owners and service users by providing a range of information and guidance through the Rent with Confidence scheme.

“Providing further protection of health, safety and welfare rights for tenants in the city is vital.”

Last year, the council announced it would be extending enforcement powers handed to its officers so they could dish out fines of up to £30,000 to landlords breaking housing laws.

But the council may reduce the charge if rogue landlords agree to work to address issues.

They will need to agree to be registered with the Rent with Confidence scheme – a five-star rating system – and achieve at least a three star rating.

Source: Express and Star

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HMO Licence Rule Changes On The Way

HMO licence rule changes are on the way as the criteria for properties that need an HMO licence becomes broader.

At the present time you are only required by law to obtain a Houses in Multiple Occupation (HMO) licence if the rental property is:

1) Rented to five or more people from more than one household

2) At least three storeys high

3) Having tenants using the same facilities

Though individual councils are able to set further rules.

However, from the first of October this year, any property occupied by five or more people from two or more households will be considered an HMO, regardless of its height or the available facilities.

Anyone managing a property that is considered to be a House of Multiple Occupation needs to apply for an HMO licence.

HMO managers need to be considered a fit and proper person to hold an HMO licence.

The property will also be required to meet further safety obligations with regard to fire, gas and general safety, and the property must be considered suitable for the number of tenants living in it.

Minimum room sizes will also come into play in October. Bedrooms occupied by a single adult will need to measure a minimum of 6.51 square metres, while those occupied by two adults will need to measure 10.22 square metres or more.

Rooms slept in by children of 10 years and younger will have to be no smaller than 4.64 square metres.

In Scotland and Wales, regulations are slightly different. An HMO is any property rented by at least three unrelated people who share bathroom, toilet or kitchen facilities. Your responsibilities and obligations in Wales and Scotland for running an HMO may also vary.

In addition to the new HMO regulations introduced nationwide, many councils are introducing further landlord licensing schemes, so it is important for all landlords to check local regulations.

Source: Residential Landlord

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Why landlords need your help

Our recent research amongst landlords showed that only 21% said they were a full-time landlord. The rest had another job. So it is fully understandable why it is difficult for landlords to keep abreast of the constant flow of regulatory changes. Even those full-time landlords that I know struggle, so just imagine what it is like for the rest.

This is why having a financial adviser is so important for landlords, which is great news. Over the years we have read about perceived threats to the adviser community, from when the internet first begun through to robo advice and a new era of AI. But nothing can be further from the truth and landlords are now wanting a relationship that goes beyond pure advice on their mortgage.

This was reinforced in our research. Of those landlords using a financial adviser, 23% wanted help in understanding how new regulation affects them. There are changes to the licencing rules for houses in multiple occupation (HMOs) in October, for example. This has been discussed a few times within the media, but I suspect many of your landlord clients will be in the dark about this. For some, they may need to raise capital if they need to make any refurbishments and changes to comply with the new HMO licencing rules.

A further 35% of landlords, who use a financial adviser, said they need help understanding the implications of taxation, given the raft of rule changes that have been implemented. It is a complex area and I know some advisers are building reciprocal arrangements with tax advisers to determine if owning a buy-to-let property via a limited company is the right thing to do for the client. Nonetheless, the market is seeing a rise in limited company buy-to-lets. At Foundation Home Loans, over 40% of our buy-to-let applications are under this structure.

The buy-to-let market continues to change and because of this change, your landlord clients need your help more than ever – and there are lots of landlords out there who don’t have a financial adviser and are probably on the lookout for one. So take advantage before someone else does.

Source: Mortgage Introducer

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Thurrock Landlord Fined For Failure To License Investment Property

A Thurrock landlord has been fined £2,252 after failing to license her property and failing to provide acceptable living conditions for her tenants.

Rogue landlord Adeola Makinde was found guilty of failing to licence her rental property in Norfolk Place, Chafford Hundred. The property required a house in multiple occupation (HMO) licence. A trial at Basildon Magistrates Court last week lead to Makinde being prosecuted for her failure to sort this out.

The court was told that Thurrock Council had been requesting a HMO licence application from Makinde since 2014. However, no application was made.

An inspection in July 2017 revealed that the property contained 12 people living in four rooms as well as sharing a single kitchen. It also found that there were inadequate fire safety measures and a number of issues with the condition of the property which rendered it unfit for human habitation. The overcrowded nature of the property could have endangered the health of the tenants who lived inside as well as causing severe problems if a fire were to start and the residents needed to escape.

Makinde pleaded not guilty to the charge of failing to licence the HMO, three breaches of HMO management regulations, failing to return information about the house and failing to return documents. However, magistrates deemed her actions were unreasonable and therefore found her guilty of all six charges.

Councillor responsible for Thurrock housing, Barry Johnson, said: ‘We believe everyone should have a good quality place to live and will continue to take action against those landlords who fail to ensure their properties are safe, well managed and properly licensed. We are currently consulting on a proposed new additional licensing scheme which would mean more landlords who own shared houses and flats have to comply with national health and safety standards and local criteria.’

Source: Residential Landlord

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HMO licensing fees reviewed in preparation for changes in government legislation

Licensing fees paid by landlords who operate houses in multiple occupation in Cheshire East have been revised, to help ensure better living conditions and management standards.

Previously, the fee for a house in multiple occupation ( HMO ) licence in Cheshire East was set at £575 for a period of up to five years – regardless of how big the HMO was.

That charge has now been replaced by a scale of fees and charges, ranging from £430 for an initial licence for the smaller HMOsHMO , through to £760 for a renewal licence for up to five years for the largest.

The revised fees are in preparation for changes in government legislation which will come into effect in October 2018 and allow councils to bring HMOs under closer scrutiny.

At the moment, a HMO must be licensed if there are five or more occupants – living in two or more separate households – who are sharing amenities including a kitchen, bathroom or toilet and the property is set out over three or more storeys.

But from 1 October, the three-storey part of the criteria will be removed.

From the same date, councils will also be able to enforce mandatory conditions regulating the size and use of rooms as sleeping accommodation, as well as rules around waste management.

Operating without a licence is a criminal offence and the penalties include an unlimited fine. Other enforcement action for licensing offences includes banning landlords from operating and issuing civil penalties of up to £30,000.

Councillor Ainsley Arnold, Cheshire East Council cabinet member for housing, planning and regeneration, said: “Poor housing can impact on a person’s mental and physical health and mandatory licensing will be key in ensuring that landlords provide good quality, safe accommodation that is well managed.

“In Cheshire East, there are an estimated 600-650 HMOs and 51 meet the current definition for a mandatory licence. However, from October, it’s estimated that around 500 will require one.

“To make sure we can respond to the significant increase in HMOs needing a licence and safeguard those living in them, we have strengthened our resources and created additional posts.

“The licence fees and charges have also been reviewed to ensure that the full cost of processing an application, which varies according to the size of the HMO , is passed to the landlord as a valid cost of operating their business.”

As part of the changes, an initial one-year licence period has been put in place where a licence is required for a property or proposed landlord for the first time.

However, as an incentive to landlords and to support the council in managing the transition to the new regulations smoothly, those who submit a complete application by 15 August can receive an initial two-year licence.

Cllr Arnold said: “Unfortunately there are a minority of irresponsible landlords who are providing unsafe and poorly managed accommodation that falls well short of the standards we expect in Cheshire East.

“By putting in place a shorter initial licence period, it will give the council greater control and improved engagement with landlords to help ensure residents are safeguarded and that other issues such as waste management can be correctly addressed.”

Source: Cheshire East

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Goodbye HMOs, hello Flats?

There has been a trend for some time now for converting HMOs back in to single-let properties. Why?

Well, many landlords report that the HMO market in some cities and towns is completely saturated – and they are absolutely right.

For a long time now I have advised people to be very careful when acquiring or developing a HMO. It must be in the right area, there must be a constant demand, and the rental price of a room must be significantly higher than the rental price of a one bed flat.

If not, be warned that you may find yourself with a very difficult under-performing property investment. Add to this the increased regulation in the HMO market and hopefully you can see why investing in HMO’s could have had its day… Certainly outside of its traditional demand areas.

The HMO market has developed rapidly in the past decade and has served a market demand, but rest assured it is now under attack.

For evidence let’s just look at the student market. The institutional investor has entered the student market on a large scale, creating high spec purpose built blocks of rooms, supported by universities and preferred by parents – especially the parents of oversees students.

Consequently, the private landlord letting to students has found their market disrupted massively. In Hull and York this has led to an oversupply of nearly 300 student properties in each area, in turn to many landlords turning their properties back to standard residential lets.

Others have had no choice but to compete in the much more competitive ‘professional’ HMO market, targeting regular workers. This is creating on over-supply in this market too, driving down room rates. And when the room rates hit the same level as a one-bed flat rate… then suddenly tenants start to reconsider their position and letting preferences.

My view on this is relatively simple. HMO’s have their place in big cities, student areas and areas where there is an abundant supply of low income workers (look out for large distribution sheds and companies such as Amazon). When investing you need to choose your location wisely – and check for signs of saturation in the market. Look for Article 4s, get information from the council on multi-lets, and scour spare room and rent a room portals for the number of ads from an area, take-up and turnover of rooms.

For the savvy investor, though, this does represent an opportunity.

If you can identify areas with saturated HMO markets, then you can be certain that the demand for one-bed flats or studios will be there – and will be growing.

It’s worth looking at those areas and consider converting any existing HMOs into studio flats, or acquiring properties to develop into flats to serve the new market.

Source: Simple Landlords Insurance

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Portsmouth HMO Investors To Be Fined For Rubbish Failures

House in multiple occupation (HMO) landlords could face fines of up to £5,000 if they fail to put out their rubbish correctly in Portsmouth.

Portsmouth City Council has decided that landlords will be fined for failing to put out rubbish correctly. The move was approved in a meeting this week and will affect any landlord who manages a HMO. The fines will be increased by more than 8,000 per cent from the previous cost of £80.

If residents are found to be leaving waste in their front gardens, streets or neighbour’s front gardens landlords and tenants will be penalised.

The council’s housing boss, Councillor Darren Sanders, said: ‘We do not have the cleanest streets in the country. They are good but they are not the cleanest. We have to use every power we can to make it cleaner. This is one way in which we can do this. It’s clear from the residents’ complaints that something needs to be done. £60 is not a deterrent. We have to send the message that we are serious.’

However, local landlords do not agree with the new strategy.

Speaking at the meeting Southsea-based landlord and letting agent, Alwin Oliver, said: ‘I think we both agree on what we want. For many students waste management is pretty low on their list of priorities. I think the city council is not nearly clear enough to tenants about what is appropriate and what is required. What is needed is a really clear message on the website. Removal of the waste isn’t the issue, it’s who pays to get rid of it. It’s not always the landlord’s fault. If we put rules about waste removal on the tenancy agreement I think we’ve done enough. And just to say the issue we get most often is end-of-tenancy waste.’

Source: Residential Landlord

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Landlord fined over £20,000 for not licensing HMO with fire hazards in Bath

A Bath landlord has been fined £24,000 after failing to licence and manage a House in Multiple Occupation, which council investigators found to be in poor condition and had fire hazards.

Allan Green, of Credenhill Road, London, was charged with failing to licence a House in Multiple Occupation (HMO), failing to comply with regulations related to the management of the HMO and failing to respond to a formal request for information.

Green was found guilty of all six offences by Bath Magistrates when the case was heard on 30th May.

He was fined £24,000, £4000 for each of the six offences, ordered to pay the prosecution costs of £1,860 and the victim surcharge of £170.

The court heard that Bath & North East Somerset Council started investigations following a complaint from a resident about the property.

Officers found the property should have been licensed as an HMO because it is within the council’s Additional Licensing area and was occupied by three unrelated tenants who were sharing one or more amenity.

The court heard that officers found the house to be in a poor condition with a number of fire hazards, particularly related to the means of escape from the building.

Green was asked to supply to the council the latest gas and electrical test certificates but failed to do so and contact details for the HMO manager were not displayed in a prominent position within the property.

The court heard the defendant also failed to co-operate with the council or respond to a formal request for information.

Council officers served schedules of works on Green but he failed to complete any of the remedial work and did not apply for an HMO licence.

Councillor Paul Myers, (Conservative Midsomer Norton Redfield) Cabinet Member for Economic and Community Regeneration, said: “Our Housing Service always works in partnership with landlords to improve housing standards wherever possible.

“Additional licensing helps to ensure that occupants of HMOs are able to live in safe and well-managed properties.

“Where landlords fail to licence their properties such as the case here, they are undermining the objectives of the Additional Licensing Scheme and are putting the safety of their tenants at risk.

“This case shows our message is clear – landlords and letting agents operating outside the law will not be tolerated by Bath & North East Somerset Council.”

For more information on the legal requirements for Houses in Multiple Occupation, visit: www.bathnes.gov.uk/hmos or contact the Housing Standard and Improvement team on 01225 39644.

People can also report an unlicensed HMO here by visiting: www.bathnes.gov.uk/reportunlicensedhmo

Source: Bath Echo

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Refinancing buy to let mortgages likely as HMO changes near

A buy to let mortgage firm says it’s likely that there will be a spike in refinancing enquiries as landlords meet a new deadline for HMOs.

A raft of changes come into effect in October, including:

– Introduction of minimum room sizes: rooms used for sleeping by one adult must be a minimum of 6.51 square metres; bedrooms shared by two adults must be at least 10.22 square metres;

– Bedrooms occupied by children of 10 years or younger must be at least 4.64 square metres;

– Local authorities have the discretion to increase minimum room sizes if they wish.

In addition:

– HMOs occupied by five or more people, must have an appropriate mandatory licence, regardless of how many storeys the property covers;

– Purpose-built flats with up to two flats in the block, require mandatory HMO licensing;

– Landlords must obtain a mandatory license if the property is occupied by persons living in two or more separate households.

Penalties for running an unlicensed HMO or for failing to meet the required licensing standards, set by the relevant local authority, could see landlords face unlimited fines.

But the implications of failing to meet local authority licensing standards on an HMO property could impact future funding claims Andrew Turner, chief executive at Commercial Trust Limited.

“More landlords will be required to bring their HMO properties up to local authority licensing standards. In scenarios where perhaps one bedroom in the property fails to meet minimum licensing standards, there could be future implications, if the landlord wants to remortgage the property.

“Investors looking to remortgage may find that a lender will only base rental stress calculations on rental income from the bedrooms that do meet local licensing rules. That could make obtaining the required level of financing a lot tougher.”

Source: Letting Agent Today