Expansion of mandatory HMO licensing

[Kevin Crocker]

As some of you will be aware mandatory HMO licensing came in with the Housing Act 2004 and was eventually enacted at the end of 2006. Amongst other radically changes to housing legislation, was the introduction of a mandatory licensing scheme designed to improve fire safety in large houses in multiple occupation.

By definition any property that comprises of three or more storeys which is occupied by five or more unrelated people, who share one or more basic amenity and must have a licence issued by the local Council. Sounds simple enough. In actual fact just this week I found myself explaining to an experience portfolio landlord the difference between an HMO (as prescribed under section 254 of the Housing Act 2004) and a licensable HMO (as defined above). So 10 years on there is still confusion over what requires a licence and what doesn't.

This could all change. Just before Christmas a national consultation was issued by the Government looking to expand the mandatory HMO licensing scheme. The link below takes you to the consultation document which outlines all of the proposals, including a national minimum room size standard. Whilst the consultation has now closed the document is still live and well worth a look.

https://www.gov.uk/government/consultations/extending-mandatory-licensing-of-houses-in-multiple-occupation-and-related-reforms

 

[Nicholas Wallwork]

Useful link thanks Kevin...

I imagine with the popularity of HMO's it's only to be expected that the scope of licensing will increase eventually...

 

[KGeeson]

Very useful information thanks! I only had a conversation the other week about what constitutes an HMO when you are living in a shared property. Definitely a bit of a confusing area (especially for newbie investors).

 

[Luke Masters]

@Kevin Crocker Great clarity on what is a confusing subject at times, I have been recently asked the question on room sizes in HMO's and whether there will be a minimum room size.

In addition I have been asked multiple times about individual council tax on rooms, is this something else you see coming into effect in the future?

 

[Ricky Bhurji]

@KGeeson I definitely can agree with your comment, first time HMO investors are terrified by the increased regulations and standards required with investing in these types of properties. Joe public is terrified enough by straight forward buy to let and being liable for gas safety certificate every twelve months! It seems that HMO investors tend to flock together and learn from each other which is why you see a lot of property investment "clubs".

 

[nmb]

I often wonder where landlords stand regarding HMO investments and the insurance side of things. Are there specific policies available for HMO investors? How would any premiums be split between the landlord and tenants?

 

[Nicholas Wallwork]

I often wonder where landlords stand regarding HMO investments and the insurance side of things. Are there specific policies available for HMO investors? How would any premiums be split between the landlord and tenants?

There are specific insurers who cover HMO's, I use a good insurance broker and they've currently placed us with Aviva (as of 2016) who also cover all our other business insurance needs (contract works for development, public liability etc...).

I leave tenants to sort their own contents insurance as that's not for the landlord to cover.