You may have to obtain a licence if you are a landlord with a property that is in multiple occupations. A property rented out by at least 3 people who are not from one ‘household’ (e.g. a family) that share facilities like the bathroom and kitchen; are known as a House of Multiple Occupation (HMO), it is sometimes called a ‘house share”. Local authorities are now under pressure to crack down on illegal rental activities. The purpose of this is to crack down on delinquent landlords and improve living standards. Councils within the UK are now re-examining their inspection procedures following the rise of prosecutions on unlicensed properties to avoid any liability.
Even if your property is small and is rented to fewer than 5 individuals, you may still need a licence depending on the area. Check with your council. You need a separate licence for each HMO you run and a licence is only valid for 5 years. If you have a large HMO it is obligatory you obtain a licence. Your property is defined as a large HMO if all of the following apply:
- it’s rented to 5 or more people who form more than 1 household
- it’s at least 3 storeys high
- tenants share toilet, bathroom or kitchen facilities
There are certain conditions to obtaining a HMO licence: the house must be suitable for the number of occupants (size and facilities), the manager of the house – you or an agent – must be considered to be ‘fit and proper’, e.g. no criminal record, or breach of landlord laws or code of practice. You must also send the council an updated gas safety certificate every year, install and maintain smoke alarms and provide safety certificates for all electrical appliances when requested. However now, any properties found to be damp, cold and insecure will have their applications refused. An application maybe re-considered once the issues have been resolved. Councils want HMO’s to be safe, secure, well maintained and present no risk to health.
Many Councils are now considering on- the-spot checks to look out for possible breaches. A common breach is where tenants illegally sublet rooms without the landlord’s knowledge, increasing the number of individuals occupying the property and breaching the terms of the licence. Although this is often done without the landlord’s knowledge or consent, there is a duty on the landlord to make regular checks to avoid this happening. Aside from urgent repairs, where access can be immediate, the landlord must give the tenant at least 24 hours’ notice before an inspection takes place.
As a landlord, you must obtain a licence and ensure measures are put in place to avoid any likelihood of breaching the terms of your licence; as you can be fined up to £20,000 for renting out an unlicensed HMO.
It is estimated that there are about 463,000 HMOs in England. Not all HMOs are required to be licensed.
A government consultation closed on 18th December last year looking at whether extending the mandatory licencing to 2 storey buildings occupied by at least 5 persons should be implemented. Since 2 storey buildings currently fall outside current licencing legislation, this may bring a significant increase in the number of applications. Will local authorities be able to cope given they are resource stretched?
With demand for rented properties constantly high, this may deter landlords with 2 storey properties and the capacity to rent to five or persons and may prompt them to reduce the numbers sharing to below 5 thus avoiding mandatory licencing. Some student accommodation may also be affected by this. It is thought some landlords will prefer to not fall within the scope of the consultation proposals.
The Government is also considering a new national minimum room sizes along the lines of the statutory overcrowding standard in Section 326 of the Housing Act 1985 (6.5 sqm for a single room and 10.2 sqm for a double room). Councils would retain flexibility to set their own higher room sizes, possibly meaning an increase in minimum HMO room sizes in many areas. This will help in cases where landlords fail to manage their HMOs properly, exploiting their tenants, by renting sub-standard, overcrowded and dangerous accommodation.
The feedback on this consultation will be received later this year.