Landlords beware! Do changes to Mandatory HMO licensing rules affect you?

If you thought that requiring a licence to rent your property only applied to large student lets, think again. 

Since parts of the Housing Act 2004 came into force, local authorities up and down the country have gradually brought in new rules requiring some landlords to hold a licence to rent out their properties. Some councils have taken advantage of these new powers and have set out specialised schemes. The applicability of these specialised schemes primarily depends on the type of property, the number of people occupying the property and its location. These schemes can vary from borough to borough therefore prudent landlords should take legal advice prior to renting out a property. Importantly however, it was only specific local authorities who brought in these new rules with a large percentage of councils simply choosing not to.  

Apart from these specialised schemes, for some time (minus some exceptions) you only needed to hold a mandatory HMO licence if you rented a property with all of the following characteristics;  

  1. Five or more people occupied the property who formed more than one household 
  2. Those five people shared a toilet, bathroom or kitchen  
  3. The property had at least three storeys. 

On 01 October 2018 sweeping rule changes were brought into force by The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 replacing the 2006 Order. Essentially this now means that many more landlords will need to hold a mandatory HMO licence. 

The biggest change is the removal of the requirement for the property to have at least three storeys. Under the new rules (again foregoing any special exemptions as there are some available) you will likely need to hold a mandatory HMO licence if you rent a property with all of the following characteristics; 

  1. Five or more people occupy the property who form more than one household 
  2. Those five people share a toilet, bathroom or kitchen facilities 

The number of storeys is now irrelevant and these new rules are now in force across all of England. As alluded to in this article there are some exemptions and the definition of one household needs to be closely looked at.  

The fees for applying for a new licence vary from borough to borough with some councils offering discounts to landlords with special accreditation. The fees however are definitely not inexpensive with some councils charging over £1,000.00 a licence. If required, you will need a licence for each property and licences are not transferable.  

If you rent a property which is required to be licenced, you will be in breach of various legislation which can lead to criminal prosecution and severe penalties. You can even be banned from renting out residential property, engaging in letting agency work or property management work. In addition to these sanctions, a local authority or a tenant can apply to the First Tier Property Tribunal for rent to be repaid to them. Furthermore, you will not be able to serve a valid Section 21 Notice under Housing Act 1988 if you don’t hold a licence when one is required.  

The sanctions are no joke. If you need a licence, obtain one swiftly.   

-Nathalie White

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