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Redbridge Landlord Fined £7,500 For Overcrowded HMO

A Redbridge landlord has been fined £7,500 after he was found to be cramming 23 people into a house in east London. The property in question, situated in Beehive Lane, Gants Hill, had room for just six occupants.

Housing officers at Redbridge council raided the property following complaints from neighbours about overcrowding. The officers discovered 16 people currently in the house as well as evidence of another seven living there. The people inside did not have access to sufficient cooking, washing and toilet facilities. The residents inside were also all adults.

The property’s managing agent, Marvel Estates Limited, held a house in multiple occupation (HMO) licence, however it was only valid for six tenants.

Following the raid, which took place in June last year the firm, based in Forest Gate, appealed against a financial penalty imposed by the council. However, at a tribunal hearing last month it agreed to pay the fine.

The cabinet member for housing and homelessness at Redbridge Council said: ‘We are determined to root out rogue landlords and this financial penalty makes it clear we mean business. It’s unacceptable for tenants to be living in conditions which fail to comply with legislated requirements. We want to work with landlords to prevent this kind of situation but if they are not willing to do so, our message is clear – we will find and fine you.’

The fine for the Redbridge landlord is part of a wider crackdown on rogue landlords in Redbridge and across London. Last month in Brent a landlord was found to have crammed 26 mattresses into a dangerous three-bedroom house. Officers forced their way into the property and found over 20 men who were residing in conditions described as ‘appalling and unsafe’. The house, located in Kingsbury, was described by the council as one of the worst illegal HMOs it has ever experienced.

Source: Residential Landlord

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Agents and landlords ‘could be in trouble’ as most councils fail to understand new HMO rules

A series of Freedom of Information requests has found that only a minority of local authorities have established the number of properties that need to be licensed under new HMO rules.

Even fewer councils – only a tiny handful – know whether the properties would meet licensing conditions, for example, as to fire safety and new minimum room size requirements.

As a result, thousands of HMOs could be illegal, exposing landlords and agents to fines and other penalties, and inability to serve Section 21 notices.

Tenants meanwhile could face losing their homes.

From October 1, the old HMO rules changed, and now apply to properties of any height where there are five or more sharers in two or more households.

Previously, only properties of three storeys or more were covered.

A 2008 Government report estimated there were 56,000 HMOs licensed under the old regime.

These will automatically be passported over to the new arrangements, but the Government estimates a total of 160,000 properties could be covered by the new regulations and has given local authorities up to three years to identify them.

Research carried out by Doncaster-based property investment firm Touchstone suggests that many councils will need all of this time, while meanwhile a large number of HMOs are illegal.

The research has apparently revealed massive gaps in local authorities’ knowledge of where these properties are and who owns them.

Most, it is claimed, are relying on landlords to submit licence applications.

Of the 238 authorities that responded to a Freedom of Information request, sent at the start of September, asking how prepared they were for the changes, 93 said they had carried out research to establish how many properties in their area require an HMO licence.

However, only 14 had conducted research to establish how many of those properties were in a condition where they could expect to be granted an HMO licence.

Touchstone CEO Paul Smith said that the Government had passed legislation without any clear idea as to the sale of the issue.

He said: “We’re aware of one local authority with 1,800 properties classed as HMOs and privately it told us that only around 40% will meet the [HMO standards required in] the new regulations.

“If that’s happening across the country, we could be looking at a major problem.
“Ministers have estimated 160,000 properties could be affected but I would be interested to know how they arrived at that figure as most local authorities have not conducted any research.”

Responses to the Freedom of Information requests showed that while Manchester City Council estimated it now has 5,000 HMO properties, it hasn’t researched how many will meet licensing standards.

North Somerset Council said it had 2,940 properties affected, Peterborough and Bournemouth put their numbers at up to 2,500 while Cambridge, York and Hull city councils estimated they had more than 1,000 HMOs.

None was able to say how many were currently operating illegally.

Leeds, Bristol, and Norwich were among the majority of authorities which said they had not carried out any research to establish how many properties in their area might be affected or how many might pass or fail.

Richard Lambert, CEO of the National Landlords Association, had already said that landlords enquiring about licences were being given wrong answers by local councils which appeared to know nothing of the changes.

He now says: “This is an unacceptable failing on the part of the Ministry of Housing, Communities and Local Government.

“We‘re also concerned that local authorities appear unprepared for the changes and have, anecdotally, heard that landlords may be being given advice which could put them at risk of breaking the law.

“Our advice to all landlords is to check if your property falls under the new regulations, and if your local authority does not yet have a process in place, make sure you apply using the existing mandatory HMO licensing scheme and receive an acknowledgement of your application.”

Source: Property Industry Eye

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Houses of Multiple Occupation – the ultimate guide for landlords

Houses of Multiple Occupation are an area of growth for investors, with 43% of these landlords in acquisition mode. So what do landlords need to know about HMOs, and about the rules and regulations that govern them? We answer some the key questions here.

What is an HMO?

HMO stands for House in Multiple Occupation. An HMO is generally defined as any property (house of flat) occupied by three or more people comprising two or more households who share facilities (kitchen, bathroom and/or toilet).

Who needs an HMO licence?

Not all HMOs need a licence from the local authority.

There are however two types of HMO license that operate in England – Mandatory and Additional.

  1. Mandatory HMO licensing

    Mandatory HMO licensing is restricted to larger properties under Part II of the Housing Act 2004. This would be any multi let property with 5 or more occupiers creating two or more households regardless of the size of the building.

    Major changes to the rules and regulations around these properties came into force on 1 October 2018 and changed both the definition and some key conditions.

    Before this date, there were an estimated 60,000 properties across England which needed a mandatory HMO licence. Following the changes, upwards of 220,000 properties may now need a licence.

  2. Additional licensing

    Additional licencing, often called Part 2 Licensing, is a discretionary scheme that many local authorities have adopted to help regulate HMOs that are not covered by mandatory licensing.

    This varies from authority to authority, but typically includes smaller privately rented shared houses and flats, designed to capture multi let properties with less than 5 occupiers

    Simple Tip: If you are not sure if your property requires a licence, get in touch with your local authority as soon as possible to discuss it.

What kind of properties need an HMO licence?

Prior to 1 October 2018 landlords needed a mandatory HMO licence if the property was:

  • Three or more storeys high
  • Contained five or more pople creating two or more households
  • Contained shared facilities such as a kitchen, bathroom or toilet

The new rules bring many more properties into the mandatory HMO classification and the main changes are:

  • The removal of the three-storey rule
  • The inclusion of certain flats that are situated above or below commercial premises
  • New minimum room sizes.

What are the minimum statutory conditions for an HMO licence?

Since 1 October 2018 the minimum conditions a property has to meet include:

  1. Minimum bedroom size:

    The new statutory minimum requirement is 6.52 square meters or 10 square meters for HMO’s in which all tenants have their own bathroom but share other facilities such as a kitchen.

    Simple Tip: This is the MINIMUM requirement and local authorities may well insist on larger room sizes.

  2. Fit & Proper Person Test

    Landlords must undergo a Fit & Proper Person Test. They must not have convictions which might affect their suitability for the licence or have breached the landlord laws or code of conduct.

  3. New waste management obligations

    Landlords must also provide enough storage facilities to deal with the holding and disposal of all household waste. Landlords must comply with the scheme issued by the local authority (if one exists) for the storage and disposal of domestic refuse pending collection. A failure to comply with the scheme is a breach of the licence and a criminal offence.

  4. Alarms

    Landlords must install smoke and carbon monoxide alarms;

  5. Gas Safety

    Landlords must send the council an updated gas safety certificate every year

  6. Electrical appliances

    Landlords must provide safety certificates for all electrical appliances when requested.

Who might be caught out by the changes?

  1. Landlords who are operating HMOs that are only 2 storey or less, with 5 or more occupiers. Traditionally these Landlords would have been exempt from requiring a licence.
  2. Those running properties with smaller rooms may also have to reconfigure based on the new minimum room sizes.

I already have an HMO licence – do the new rules apply to me?

The new conditions will not apply to existing HMO licences – those issued before 1 October 2018 – until the current licence expires. In other words, if you already have a licence the changes will only apply when this is due for renewal. At renewal the new statutory conditions will apply.

Landlords who already have an additional or selective license but whose properties will now come under the extended scope of mandatory HMO licensing will need to contact their local authority to determine if they need to be migrated to a HMO licence or not.

I have an additional HMO licence – will the new conditions apply to me?

The new minimum room size conditions apply to all Part 2 or additional licences. That includes HMOs that are required to be licensed under additional licensing provisions as well as the mandatory licensing regime.

The new rules will only apply, however, once that licence expires and is renewed or if it taken out for the first time.

How long do landlords have to comply with the new conditions?

Landlords falling into the mandatory HMO licence criteria generally have a grace period of six months, from 1 October, to make changes to their properties so that they comply with the new conditions. That might mean reconfiguring properties, for instance to comply with minimum bedroom sizes. It’s recommended that landlords check with their local authorities to ensure the national approach has been adopted.

Simple tip: After this, those that do not comply will be subject to a fine of up to £30, 000 as well as possible criminal prosecution.

For those with licences issued before 1 October, an authority has no grounds to act against an existing license holder that is not compliant with the new standards. Landlords that do not comply with the new minimum room standards at the time of renewal will be given a notice period of up to, but most likely less than, 18 months to comply.

What are the penalties for failing to apply for, or meet, HMO licence conditions?

Landlords of HMOs that fall under the new definition – and do not yet have a licence – have committed a criminal offence by failing to apply for a licence or a temporary exemption before 1 October 2018.

Landlords can be subject to a civil penalty notice (fine) up to £30,000 or risk being prosecuted by the council and if found guilty given a criminal record, be fined an unlimited amount and/or ordered to pay court costs and a victim surcharge.

Simple tip: It’s worth noting that whilst the property is unlicensed, landlords cannot issue a Notice of Seeking Possession under Section 21 Housing Act 1988 to evict tenants.

How do you apply for an HMO Licence?

Landlords or their agents need to submit a licence application to the local council using the council’s application form. Councils usually ask for a floorplan of the property in addition to other supporting documentation.

You will also need to pay an application fee which is normally non-refundable. These vary but the average licence fee is around £1,000 for a first-time application. Renewals are normally less than the first-time fee.

A licence will normally be granted for a five-year period.

What if a landlord has a problem getting an HMO licence?

A local authority will normally only refuse to grant a licence if it has serious concerns regarding the HMO, its management, or the landlords inability to pass a fit and proper person check.

Councils will try to resolve any problems with the applicant before refusing a licence. Resolution of such problems may include proposing a different licence holder or imposing certain conditions.

Landlords can disagree with the conditions set out in a licence, for example, those which state a maximum number of occupiers or a requirement for work to be carried out. The council must consult with the applicant, giving its reasons and allowing them a period of 14 days to make their case.

A right of appeal to a residential property tribunal is available to HMO licence applicants if they disagree with a council’s final decision.

Is an HMO right for me?

Carl Agar, landlord, letting agent, developer and Chief Exec of the Home Safe licensing scheme, talks about some of the pros and cons of running an HMO in this video.

Source: Simple Landlords Insurance

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New HMO and Section 21 rules start today

Landlords and agents should be aware of important changes to the rules covering HMOs (house of multiple occupation) and issuing Section 21 notices, which come into force from today.

New HMO rules

From today, all landlords, or managing agents, of properties which have five or more occupiers who form two or more households will need to have, or have applied for, a mandatory HMO license.

If you have a property with five or more occupiers who do not form just one household, and this includes children, regardless of the number of storeys the property has, you need an HMO license issued by your local authority.

There is no grace period and the penalties for not complying can be severe: up to a £30,000 fine, a First Tier Property Tribunal Rent Repayment Order and a Banning Order, and a criminal record.

Some landlords may need to make structural alterations or improvements to safety standards to comply with the new minimum room sizes in HMOs.

New section 21 rules

From today, all landlords in England with Assured Shorthold Tenancies (ASTs), regardless of their start date, will need to comply with the requirements of the Deregulation Act 2015 as to when and how a landlord can serve a Section 21 Notice, which enables them to terminate a tenancy agreement.

When issuing a Section 21 Notice of Possession, landlords will now be required to use Form 6A.

The form, prescribed by government, combines the two previous types of Notices into a single Notice for both periodic and fixed-term tenancies. Therefore, landlords should stop using their old Notices from today.

In addition, under the Deregulation Act 2015, landlords wishing to issue their tenants with a Section 21 Notice should ensure they have shared the ‘How to rent: the checklist for renting in England’ guide with tenants; make sure the property has an up to date Gas Safety Certificate and the tenants have seen it.

Landlords must also publish the property’s Energy Performance Certificate (except when the property isn’t required to have one); inform tenants which scheme their deposit is protected in; where the property is licensed, provide a copy of the licence to all of the tenants.

Source: Simple Landlords Insurance

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New regulations for landlords in 2018: HMO licences, eviction changes, mortgage relief cuts and more

October sees the introduction of yet more new rules for landlords to keep on top of.

Recent years have seen a host of changes for landlords to deal with, a succession of policy tweaks that risk making their portfolio more complicated to administer and even less profitable.

Generally these changes are limited to the start of a new tax year, but next month will see the introduction of new rules covering houses in multiple occupation (HMO) and evictions.

Here’s what you need to know.

Licensing for HMOs

From 1st October, there will be a significant change to the licensing of houses in multiple occupation (HMOs) for landlords.

Currently, you only have to get a licence if the property has at least three storeys and is being occupied by five or more individuals, who are not all related to each other.

In addition, some local authorities can require licences for HMO properties in specific areas, even if they don’t tick either of those boxes.

Licencing is about to become far more widespread though, as the minimum property size is being removed. As a result, any HMO properties with five or more occupants will require a licence.

You’ll need to get a move on too as you need to have applied for your licence before 1st October, otherwise you’ll be classed as renting the property out illegally.

Minimum room sizes for HMOs

The changes to licences aren’t the only development for HMO landlords to be aware of. There will also be minimum room sizes for any room being used as a bedroom.

The minimum sizes are:

  • 4.64㎡ for any room in which one child under the age of 10 sleeps
  • 6.51㎡ for any room in which one person over the age of 10 sleeps
  • 10.22㎡ for any room in which two people over the age of 10 sleep

Any rooms that are smaller than 4.64㎡ cannot be used as a bedroom. In fact, if there is any room within the HMO that is smaller than that, irrespective of how it’s being used, the landlord will have to inform the local housing authority.

New eviction rules

One of the ways that a landlord can take back possession of a rental property is by issuing them with a Section 21 notice. The landlord doesn’t have to give a reason for claiming back possession but must provide the tenant with at least two months’ notice.

The Deregulation Act 2015 changed the way that a Section 21 notice can be used to bring some tenancies to an end, though this was limited to tenancies agreed on or after 1 October 2015.

However, from 1st October 2018, this is being extended to all tenancies.

So what’s changing? For starters, a Section 21 notice cannot be issued during the first four months of a tenancy (though this doesn’t apply if a tenancy has been renewed).

In addition, the notice is only valid for six months from the date on which it was issued. If you don’t follow up with possession proceedings within that six month period, you’ll have to issue another Section 21 notice.

The big change though is over ‘revenge evictions’.

Essentially, if a tenant makes a legitimate complaint about something to do with a property, such as repairs that are needed, and they aren’t dealt with then the tenant can take the issue to the local housing authority.

If the council then issues an improvement notice or emergency work notice ordering the improvements to be carried out, then you will need to act on that before issuing a Section 21 notice. Otherwise, your notice will be invalid.

So those are the key changes you need to be aware of for October. Now let’s look a little further back at the other changes that have already happened in 2018.

Ongoing changes to mortgage interest relief

Before April 2017 it was possible for landlords to deduct the interest they paid on their mortgages from their taxable income – which meant they paid tax on their profits rather than their turnover.

However, the Government decided to change the rules on that, amid concerns that buy-to-let landlords gained tax benefits that homeowners couldn’t, giving them an unfair advantage. That all began changing in the last year.

From April last year, landlords were only able to claim relief on 75% of their mortgage interest. From April this year, that fell to 50% and it’s going to keep galling until it reaches 0% in 2020.

At that point, it will be replaced by a tax credit equivalent to 20% of mortgage interest.

Changes to energy efficiency measures

New rules mean that from April this year new tenancies and renewals need to be at least rated E on their Energy Performance Certificates.

This rule will be rolled out across all tenancies over the next two years and landlords who don’t meet the requirements could face fines of up to £5,000.

Most rental homes will easily comply with this new rule as the vast majority of recently built homes will easily meet that efficiency rating.

However, an estimated 330,000 rented homes were below this standard when the rule was implemented in April, according to Which?.

While listed properties may be exempt, landlords of non-listed but older and structurally less efficient homes may need to worry.

The Rogue Landlord Database goes live

It’s finally happened; after many pledges from Government, it has finally set up a national database of ‘rogue’ landlords to share with Local Authorities.

The Ministry of Housing, Communities and Local Government has created the database, which will include landlords who have a conviction for offences such as letting overcrowded properties, unlawful eviction and gas safety offences.

Its plan is that councils will be able to share data with each other more easily so they can monitor problem landlords more closely.

However, the list will not be made public and, because of that, the scheme has received some serious criticism.

David Cox, chief executive of the Association of Residential Letting Agents (ARLA) says that it was a good idea but has been poorly executed.

“When this legislation was first announced, we were wildly supportive – anything which will help eradicate bad letting agents and landlords has our full support,” he explained.

“However, the outcome is disappointing. The database won’t be public, which means no one will be able to see it and therefore letting agents and landlords who are on the list can continue operating with impunity.

“This appears to be a pointless exercise; if the list were made public – like the equivalent for estate agents – rogue agents and landlords would leave the market for good.”

Letting fees ban

It’s not part of the 2018 tax year changes, but it’s possible it will come into force at some point in the next seven months, along with limits on deposits.

If the new legislation was put through, tenants could not be charged high fees just to apply to rent a new home. Some tenants are even charged high fees just to renew their tenancies each year.

The ban may not directly affect most landlords but many letting agents and industry commentators have suggested that it will mean a hike in prices for them as their agents recoup their lost profits.

What else could be coming?

Landlords might be getting tired of the political spotlight but with more and more people renting, especially younger people, mainstream politicians are increasingly recognising there’s a public appetite for housing reform.

So there’s likely to be more changes even before the next tax year. There has been talk of a new Ombudsman that could deliver binding resolutions to owner/tenant disputes.

There’s likely to be a new code of practice introduced to increase greater fairness for renters and the Draft Tenant Fees Bill could well mean that rental deposits are capped at six weeks’-worth of rent.

Source: Love Money