Squeezing 5 or more people into your rented properties? Then you need to read this.

The licencing of house of multiple occupation (HMO) has been reformed

Some friends of mine bought a pleasant 1930s semi-detached villa about four years ago. They’ve put a lot of work into it and have transformed it into a genuinely charming home.

Then, about 18 months ago, their adjoining neighbour sold their house. It was bought by someone who converted it into a house for multiple tenants.

Without going into too much detail, it was a disaster for my friends. The loud and transient tenants made their life a misery with parties, antisocial behaviour in the early hours and worse. But because the house didn’t have three or more stories, it didn’t qualify as an official house of multiple occupation (HMO) and therefore didn’t need to be licensed. This made it impossible for my friends to argue that the landlord was breaching the terms of his license.

This three-storey rule has been a contentious loophole for a long time. Some landlords have seen it as a green light to cram as many people as possible into two-storey houses.

The motivation? The more bodies they can squeeze into the house, the more money the property makes for them.

However, as of 1st October the HMO licensing regime has been significantly tightened. Under the new rules, the three storey rule was dropped. This means that the landlord of the house next to my friends now needs to be licensed – it has five tenants.

In order to comply, the house owner needed to do the following things by 1st October.

  • Apply for a licence in order to lawfully continue renting the property
  • Ensure that each room complies with new minimum size regulations (which can be found here).

 

If the landlord is in breach of the room size regulations, the local authority can give them up to 18 months to rectify the matter. Note, however, this is a maximum period and an authority can demand action much sooner.

Also new in the licence regulations is a clause that covers household waste.

Where the HMO is in England, a licence under Part 2 must include conditions requiring the licence holder to comply with any scheme which is provided by the local housing authority to the licence holder and which relates to the storage and disposal of household waste at the HMO pending collection.

This, of course, comes at a cost.

The overall effect of the legislation is that many more houses with multiple occupants now need to be licensed. Many of these, plus many formerly-licensed HMOs, will now fall foul of minimum room size regulations. Some landlords, for example, will have to make the switch from renting out a house to seven occupants without a licence to renting it out to a maximum of five or six, while also having to obtain and comply with a licence.

In other words, it has just got a lot harder to make money from HMOs.

If you own any properties with five or more unrelated tenants, it’s vital you comply with the new licensing regulations.

The day after the regulations came into effect, my friend looked out of his window to see the neighbouring landlord’s HMO manager in a heated discussion with a council official. “I’ve never seen him look so mad,” my friend remarked.

My friend doesn’t know what’s going to happen to the HMO next door. But the manager has taken down the sign advertising for mature flatmates – suggesting its days of multiple occupancy may soon be over.

Join The Conversation
ICAEW
Member of the Legal Services Guild
Sign up for our Newsletter