Increased HMO landlord licensing - how could this affect you?
The Ministry of Housing, Communities & Local Government (MHCLG) recently announced its intention to increase the licensing of houses in multiple occupation (HMO) in the private rental sector (PRS).
With an estimated 500,000 HMOs across the country, this proposed legislation could have implications for a high proportion of private landlords.
What is being proposed?
At the moment, compulsory HMO licensing only applies to properties with three or more storeys. However, under these proposals, mandatory HMO licensing would be extended to all rental properties that are occupied by five or more people from two or more households.
The Government says it's proposing this licensing extension in order to discourage rogue operators, reduce overcrowding and instances of sub-standard accommodation while creating a level playing field for landlords.
Key information - what do you need to know?
- The proposed new system will cover any HMO which is a building or a converted flat where tenants share basic amenities;
- It would also apply to purpose-built flats where there are up to two flats in the block and one or both are HMOs;
- Of 395 official consultation responses, 81 were landlords/landlord organisations and just 11 were letting agents;
- If introduced, the new system is estimated to require licensing is sought for an additional 160,000 rental homes;
- The legislation is only being proposed for England;
- If you have an HMO licence you will no longer need a selective or additional licence;
- Mandatory HMO licensing in its current form has been in operation since 2006.
What could this mean for you?
Landlords with properties that fall under the proposed new HMO licensing criteria will need to update any existing licenses or apply for a new license (if they haven't been licensed before). HMO licenses can be purchased from your local council and need to be renewed every five years.
These proposals have been launched alongside other measures to increase minimum bedroom sizes, require criminal record checks to be provided for licensing applications and introduce a mandatory condition for disposal and storage in HMOs. These measures form part of a wider Government movement to crack down on rogue landlords and so it's expected that enforcement could be extensive with fines and prosecutions potentially being more frequent and strict.
In the decade since mandatory licensing was first brought into force, the HMO market has expanded significantly. This has given some rogue landlords increased opportunity to exploit tenants. One upside of this new system is hopefully an improved reputation of the HMO market and fewer instances of overcrowded or sub-standard rental properties.
What happens next?
The Government has said that it hopes to introduce the new system this year, following approval from both the House of Commons and the House of Lords.
The proposals will be introduced in two phases which, according to the National Landlords Association, means they will be introduced in April 2018 with a six-month grace period allowing landlords to comply before any action is taken against them.