House in Multiple Occupations (HMO's) - Spring 2007

01 April 2007

As from 6 April 2006 certain Houses in Multiple Occupation (HMOs) must be licensed by the Local Authority under the new national mandatory licensing scheme. The purpose is to raise the standard of accommodation for this type of property and to ensure higher standards of management.

Do I need a licence?

You do if you:

• rent out property which has three or more storeys (including habitable attics or basements) and
• have 5 or more tenants living in 2 or more households. A ‘household’ is a family living together including married and unmarried couples and same sex couples and includes family units comprising of parents, grandparents, children and uncles and aunts and remoter relatives. Three friends sharing are considered three households. A couple sharing with a non- relative consists of two households but an au-pair is included in their household.

If you are a landlord with more than one property, a licence is required for each property and the licence holder must be the person who manages the property and is considered by the local authority to be a ‘fit and proper’ person to hold the licence. The licence is not transferable to other properties or other persons. A licence will last up to five years and must then be renewed. There is a fee for applying for a licence but this will differ between the local authorities which have been allowed by the Government to set their own fees, however, these must reflect the actual costs to the local authority of dealing with and providing the licences. To find out the fees in your area you should contact the local authority.

The criteria considered by a local authority before granting a licence include the suitability of the property and that the amenities are sufficient for the number of people it is proposing to house. The number, type and quality of shared bathrooms, toilets and cooking facilities must meet minimum prescribed standards. If the criteria are not met a licence may still be granted but with conditions which may include setting a time by which additional amenities must be provided or by granting a licence for a smaller number of occupants in the house. If a property is deemed unfit and cannot be brought up to the required standard a licence will be refused.

When deciding if a property is up to the required standard a Housing Health and Safety Rating System (HHSRS) has been set up and the local authority can use this system when deciding if a property can be licensed or can use it to check the property at any time during the licensed period. This system will identify any hazards at the property. If hazards are identified the local authority will require a landlord to carry out remedial works.

The above relates to the national mandatory licensing scheme. Local authorities can widen the scheme to other HMOs and provide a scheme of ‘additional licensing’. Before implementing such a scheme authorities must consult local landlords and publicise the scheme and the date when it comes into force.

If you are already required to register or give notice to your authority that you own a HMO, you will have to apply for a licence if you meet the 3 stories and 5 tenant criteria.

If you are selling a property which is an HMO, the new owner must apply for a licence if the property meets the criteria.
Penalties

Failure to apply for a licence is a criminal offence and can result in a fine of up to £20,000. The local authority can also reclaim up to 12 months housing benefit paid when the Landlord was operating without a licence and tenants can do so if the Landlord has been convicted or the Local Authority has obtained a Rent Repayment Order.

A Landlord of an HMO without a licence will not be able to obtain an Order for Possession using the Section 21 Accelerated Possession Procedure. It is therefore essential for Landlords to register and put their HMOs in good order to avoid severe penalties for breach.
 

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