Landlords feel heat on changes to multiple occupation licensing

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Landlords who have not responded to legislation introduced last year to protect tenants in multiple occupancy properties are facing significant fines.

A recent case involved a property in Lincoln, where a landlord was fined £40,000 for not having a licence for a house in multiple occupation. She had also failed to ensure the property was safe for the tenants. Among the issues raised was the lack of a working fire alarm on the ground floor and padlocks fitted on bedroom doors which could delay emergency escape.

Rules introduced in October 2018 saw revised criteria for mandatory licensing of houses in multiple occupation, known as HMOs. Where a property is an HMO, it must satisfy special requirements regarding fire and general safety, utility supplies and management of communal areas. Under the extended regulations for mandatory licensing, buildings of less than three storeys may now be classified as an HMO, if they house five people or more in two or more separate households with shared kitchen, bathroom or toilet facilities.

If properties are not in a safe and habitable condition, with relevant emergency protection in place, then HMO licences will be refused. Local authorities are demonstrating they will take enforcement action against landlords who do not comply with their obligations.

In a Supreme Court ruling last year, it was confirmed that local authorities can limit the class of persons that could occupy a specific HMO, thus allowing them to impose conditions beyond those which are mandatory. In the relevant case, the licensing for the property limited occupation to students, meaning any non-student tenants would put the landlord in breach of their licence.

As well as being a criminal offence to let a property without obtaining a licence, or failing to comply with conditions of the licence, landlords with an unlicensed HMO may face a rent repayment order obliging them to return any rent received from the occupiers. They would also be unable to issue Section 21 eviction notices to recover possession from tenants, as these can’t be served while an HMO remains unlicensed. The knock-on effect is that a landlord is likely to be in breach with any borrowing on the property, as a lender may be unable to recover vacant possession in these circumstances.

Any lending is likely to have specific conditions regarding compliance with the HMO rules. Landlords should be aware that most lenders have specific HMO products and do not allow standard buy-to-let loans to be used if the landlord intends to let the property as an HMO.

Last year’s legislation also introduced the following requirements on bedroom sizes in HMOs, related to the age and number of people using the room.

  • One child under 10 years must have a minimum of 4.64m2
  • Anyone over 10 years must have a minimum of 6.51 m2
  • Two people over 10 years sharing a room must have a minimum of 10.22 m2

Additionally, any room that is smaller than 4.64 m2 must be reported to the local housing authority, irrespective of its purpose.

Many properties that previously were not in the HMO category are now included, so it’s important for landlords to check their individual situation to help ensure that they are compliant.