Before you are renting out your property it is important to find out if your property is an HMO and if you need a licence.
Failure to license is a criminal offence and can end up with Civil Penalty Notice (CPN) up to £ 30000 and rent repayment order up to a year’s rent. It is also illegal to use Section 21 notice of eviction (Notice to quit) to remove tenants from an HMO until the HMO is licensed. Banning Orders may also apply against the most serious offenders.
What is an HMO?
The Housing Act 2004 set out the meaning of ‘house in multiple occupations’ (HMO). Section 254 of the Act define the property as an HMO if the property is shared by three or more people, living separately as more than one household and sharing one or more basic amenities (such as toilets, kitchen etc).
Section 258 of the Act classify a single household is they are part of the same family: married, same sex relationship and relatives of any of the one these mention (parents, grandparents, children, grandchildren, brothers, sisters, uncles, aunts, nephews, nieces or cousins). Half-blood relationship is treated the same as full blood and a stepchild is treated the same as a child.
However, it should be mention that there are a few exceptions to the definition like: jobs regarded as being of a domestic nature, like nanny, nurse, servant, personal assistant etc. Also, to the rule that it must be the occupier’s only or principal home, like migrants, seasonal workers, asylum seekers or any other dependants.
There are a few exceptions of properties that are not classified as HMOs. These are:
- properties managed / controlled by the public sector bodies
- let by educational establishment by students
- occupied by religious communities ol,
- occupied by owners or member of their households
- occupied by two people
Basic Standards for HMOs
If your property is classified as an HMO, (independent if you will need a licence or not), it must meet the health and safety standard (Housing Act 2004). This means that it should meet all the physiological, psychological requirements and protection against infection/ harm standards (Section 6 Housing and Health and Safety rating system). If your property is an HMO, the next step is to determine if you will need a licence.
Different type of licence
It is important to know there are three types of licensing that operate in England:
- Mandatory HMO licensing
- Additional licensing
- Selective licensing
Mandatory HMO Licensing
Mandatory HMO licensing does not apply to all HMOs. It is restricted to certain larger properties under Part II of the Housing Act 2004.You will need a mandatory HMO licence if your property meets the standard test, self-contained flat test or converted building test HMO definition in section 254 of the Housing Act 2004 and is occupied by five or more people.
National mandatory licencing scheme for larger HMOs since 2006.
Since 2006 all landlords have been required to licence HMOs that are: 3 or more storeys high, five or more people that form two or more households sharing some facilities.
Extension to mandatory licensing 2018
- Any storey with 5 or more persons in
- 2 or more households,
- HMOs above or below commercial premises
- Minimum room sizes for licensable HMOs
- Minimum room sizes for children living in HMOs
- Condition on storage and disposal of waste in an HMO
Thus, prior to 1 October 2018, the mandatory HMO licensing scheme only applied to properties that were three or more storeys in height, but that restriction has now been lifted.
Over 50% of London Boroughs operating now with additional licensing and with more schemes on the way. Additional licensing applies to certain Houses in Multiple Occupation (HMOs) that fall outside the mandatory licensing scheme.
Each council has the power to introduce additional licensing but should only be introduced if a significant proportion of the HMOs are being poorly managed and are giving rise, or likely to give rise, to problems affecting the occupiers or members of the public.
Some local authorities also set up selective licensing of residential property that is an HMO not fitting the mandatory licensing criteria or is property other than an HMO.
The local authority is likely to do this in areas with low housing demand and areas with significant and ongoing problems due to anti- social behaviour. This type of licence will last for maximum 5 years and will be reviewed regularly.
What does it mean for you as a Landlord?
- Trusted by tenants
- Online application
- Licensed fees based on units of accommodation
- Mandatory License is 5 years (renewable)
- Planning permission for change of use for HMOs of more than 6 unrelated adults (From sept. 2018)
When considering a licence application, the local authority will consider the following factors:
- maximum tenant the property is suitable for
- If the prospective licence holder is a ‘fit and proper’ person to hold the licence and if this person is the manager of the property.
- If there exist satisfactory management arrangements
An application often requires the following documents:
- Criminal records disclosure document(s)
- A floor plan of the property, with the room sizes and the location of fire precautions added
- Electrical installation condition report/ certificate
- Energy Performance Certificate (EPC)
- Tenancy agreement
- Inventory of furniture and fittings
- Terms of contract with Estate Agent
- Gas Safety certificate (if the property has gas)
- Portable Appliance Test (PAT) report
To find out more, we will advise you to check out the following website: www.londonpropertylicensing.co.uk
Contact Abito Homes today. We can also help you with an application if needed.