Properties qualifying as Houses in Multiple Occupation (HMOs) have long presented a potential headache for landlords.
Originally, the requirement for an HMO licence only applied to properties that comprised at least three storeys. However, from 1 October 2018, size is no longer relevant. It is expected that it will bring an additional 160,000 properties within the HMO remit.
When do you need an HMO Licence?
You need to apply for an HMO Licence from your local housing authority if:
- you rent out a property to five or more people, who form two or more households; and
- the property meets one of the following tests:
- Standard Test
- Self-Contained Flat Test
- Converted Building Test
The “standard test”
(a) consists of one or more units of living accommodation (excluding self-contained flats);
(b) is occupied by two or more households, is the tenants’ only or main residence (this includes students only occupying during term time) and this is the only use of the property;
(c) one or more tenants pay rent; and
(d) two or more tenants share a toilet, bathroom or kitchen, or the accommodation is lacking in one of these.
The “self-contained flat test”
The property is a self-contained flat with a bathroom, toilet and kitchen available for the tenants’ exclusive use, and (b)-(d) above apply (but it must not be a purpose-built flat in a block of three or more self-contained flats).
The “converted building test”
The property is a converted building and (a)-(c) above apply.
Penalty for not having a Licence
A landlord will commit an offence if they do not have a licence and may face an unlimited fine and a rent repayment order or a penalty of up to £30,000 as an alternative to prosecution.
It should also be noted that local housing authorities have powers to extend the mandatory licensing regime to other properties beyond those caught by the tests set out above.
If the HMO Licence is not in place, then unwary Landlords may find other rights are also restricted. For example, if an appropriate HMO Licence is not in place then valid notice under s21 Housing Act 1988 cannot be served.
HMO Licence Conditions
HMO Licences will include various conditions, ranging from landlords submitting annual gas safety certificates to the local housing authority, to installing smoke and carbon monoxides alarms.
The new rules also introduced extra mandatory conditions. These include minimum bedroom sizes, restrictions on the number of people of certain ages in each bedroom and waste storage and disposal requirements.
Penalty for Failing to Comply with Conditions
A landlord who fails to comply with their licence conditions could be fined up to £5,000. However, if a landlord knowingly permits occupation in excess of the number of tenants or households authorised by the licence, the fine is then unlimited. In either case, it may be agreed that a penalty of up to £30,000 could be imposed as an alternative to prosecution.
If you are letting properties with more than one tenant and multiple households, it is worth checking the guidance given by your local authority carefully as failing to obtain and adhere to an HMO Licence is not more risky than ever.
For more advice on HMO Licences and other Landlord and Tenant issues please contact Claire-Elaine Arthurs, Property Litigator at gunnercooke
DD: +44 (0) 7791 143 284