As it's been months since the extension of mandatory HMO licensing in England, we wanted to reflect on the impact of the changes and look to what the future may hold.
What is an HMO?
An HMO (House of Multiple Occupancy) is a residence occupied by three or more people sharing facilities such as a bathroom, toilet or kitchen, who form two or more households.
There are three different types of HMO licensing:
Mandatory licensing of large HMOs
Mandatory licensing applies to HMOs nationwide and sets out the basic criteria for a property to be deemed to be an HMO.
Additional licencing applies where a council imposes extra policies for other sized properties to be licensed.
Selective licensing will be at the discretion of each borough and can affect all rental properties regardless of the other criteria, for example, a borough can require that all properties in a particular street or borough be licensed.
As of October 2018, the mandatory licensing regulations were updated by the government while the other two categories remain at the discretion of local authorities. For more information regarding your local authority’s HMO requirements, please visit Gov UK.
Under the pre-October 2018 regulations, a property was required to have an HMO licence if the building:
- Comprised three or more storeys;
- Was occupied by 5 or more people living in two or more households; and
- Contains shared facilities such as a kitchen, bathroom or toilet.
What were the HMO changes made?
The October 2018 extension legislation updated the criteria to remove the three-storey requirement and to include properties that are:
- Occupied by five or more persons; or
- Occupied by persons living in two or more separate households; and
- The standard test under section 254(2) of the Act;
- The self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats; or
- The converted building test under section 254(4) of the Act.
Why were the changes made to HMOs?The changes come as part of a wider push to crack down on the minority of landlords who rent out sub-standard and overcrowded homes and the government’s commitment to improving standards in the private rented sector in general. Housing Minister Heather Wheeler MP stated “everyone deserves a decent and safe place to live” and these simple sentiments underpin the reason behind the changes in legislation. Whilst increased regulation is often feared by those it impacts, the extensions to mandatory HMO licensing should not pose a threat to or deter those who have taken steps to ensure their property is compliant.
It was estimated in 2018 that the changes in legislation would bring an additional 160,000 properties within the scope of the mandatory licensing criteria.
What does the future hold for HMOs?
With the rocky landscape of post-Brexit Britain in our sights, it seems that predictions of the future have halted pending clarity about the country’s political and economic standpoint from the government. That being said, landlord and tenant-related legislation continue to be passed at a landmark pace with the Homes (Fitness for Human Habitation) Act receiving Royal Assent in December 2018 and the Tenant Fee Act passing on 1 June 2019. Local authorities have also begun to introduce further additional licensing with areas such as Newport, Bath and North East Somerset Council all publishing their intentions to introduce new additional licensing requirements.
It would, therefore, appear that whilst the October 2018 changes to mandatory HMO licensing have not set the lettings world alight per se, they certainly haven’t faded into obscurity (cue GDPR) as some may have predicted. Our advice would be to ensure that your property is compliant with mandatory licensing requirements if applicable and to keep an eye on your local authority’s website for any changes to additional or selective licensing in your area. It is likely that as further landlord and tenant-related legislation comes into effect throughout the year, the crackdown on HMO licensing will only become more apparent.
Download this FREE guide to HMO Licensing and learn more about the legal requirements for properties in England and Wales: