HMO Licensing & Advice

The Housing Act 2004 introduced the compulsory requirement for larger, higher risk houses in Multiple Occupations to be licensed from the 6th April 2006. Now councils also have the ability to license other types of HMO to tackle problems in smaller properties. However, at present the Council is only concentrating on Mandatory Licensing.

Below is a quick break down on the essential basics of HMO's for landlords

What is HMO?

‘HMO’ is short for house in multiple occupations which means a building or part of a building such as a flat that is occupied by people who from more than one household:

As their only or main residence
Where the accommodation is used as living accommodation
Where rents are payable or alternative arrangements in lieu of rent are made by at least one of the occupants
And where there is sharing of one or more basic amenities (kitchen, toilet, personal washing facilities) or a lack of such an amenity within the living accommodation

A Local Housing Authority (The Council) may also declare a property to be an HMO if it believes that a significant use of that property falls within the above definition. An example of this would be a bed & Breakfast/Hotel accommodation which provides accommodation for people who have no other permanent residence. In Newcastle, it has been decided that where the residences exceed 30 days this criteria will be deemed to have been met.

A household is defined as a family (this includes single persons, couples and same sex couples) their relatives, foster children and domestic staff.

Do all HMOs have to be licensed?

Only those HMOs comprising of three storeys or more, with five or more occupants, will be subject to the mandatory licensing requirements. In calculating whether or not there are three storeys, any attic or basement accommodation within the residential accommodation may be included as will any part of a storey used in connection with the HMO for example an entrance lobby/reception area. In addition any part of a building not used for residential purposes, such as commercial premises within the building will count towards the number of storeys.

All HMOs will have to comply with The Management of Houses in Multiple Occupation (England) Regulations 2006.

There is also a discretionary power which enables local authorities to license other types of HMO where there are problems with their management.

Please contact us on 0845 034 6677 or email mail@thehomagame.co.uk for more information on which HMO’s have to be licensed.

Why does the Government want HMOs to be licensed?

Larger HMOs such as shared houses and bedsits often have poorer conditions and management standards than other privately rented properties. Since living in an HMO is often the tenants’ only housing option the Government have recognised that they need to be properly regulated.

Licensing is intended to ensure that:

Either the landlord of an HMO is a fit and proper person, or the landlord employs a manager who is a fit and proper person
Each HMO is suitable for occupation by the number of people allowed under the license
The standard of management is satisfactory
Higher risk HMOs can be identified and targeted for improvement.

Where it is found that landlords do not meet these criteria and a license cannot be issued the Council can intervene and manage the property so that steps can be taken to protect tenants and any other persons affected by the operation of the HMO.

How will it work?

Anyone who owns and/or manages and HMO that must be licensed must apply to the Council for a license. The Council must issue a license if it is satisfied that:

The HMO is reasonably suitable or can be made suitable for occupation by the number of people allowed under the license having regard to prescribed standards
The proposed license holder is a fit and proper person
The proposed license holder is the most appropriate person to hold the license
The proposed manager, if there is to be one, is a fit and proper person
The proposed management arrangements are satisfactory
The person responsible for the management is competent
The financial arrangements for the management are suitable

What does fit and proper mean?

In deciding whether the license holder meets these criteria the Council must take into account circumstances which may compromise the welfare of the tenants and the good management of the property. It must take into account

Whether the applicant has any previous convictions relating to violence, sexual offences, drugs or fraud
Whether they have broken laws relating to housing or landlord and tenant issues
Whether they have been found guilty of unlawful discrimination
Whether the person has previously managed HMOs that have broken any approved code of practice or been refused a license in the past.

What is in a license?

If a license is issued, it will specify the maximum number of people who may live in a HMO.

It will require the landlord to have:

A valid current gas safety certificate, which is renewed annually (where gas is supplied to the house)
Proof that all electrical appliances and furniture are kept in a safe condition
Proof that smoke alarms are correctly positioned and installed and are maintained in good order
Given to every occupier a written statement of the terms under which the occupy the property, for example, a tenancy agreement

The Council may also apply the following conditions:

Restrictions or prohibitions on the use of parts of the HMO by its occupants
Requirements regarding the internal and external condition of the property its contents and their maintenance
Requirements regarding the provision of amenities including kitchens, toilets and personal washing facilities
Provision of fire precautions
A requirement for works to be carried out within specified time periods
A requirement that the responsible person attends an approved training course.

How long will a license last?

A license will normally last for a maximum of five years, although it can be for a shorter period.

How much will the license fee cost?

The cost of the license fee will be £1100.00 for a five unit HMO. There will be an additional fee of £25.00 for every additional unit of accommodation. A unit is a living/sleeping room. The Government have stipulated that the cost of operating the licensing scheme may be paid for by charging a fee. The fees are therefore a reflection of the Councils costs in administering their statutory obligations under the Housing Act 2004 with regard to licensing. Please contact us on 01748 823 863 or email mail@thehomagame.co.uk for more information on fees and charges.

Can the Council refuse to issue a license?

The Council can refuse to issue a license if the property does not meet the conditions and/or the landlord or manager is not a fit and proper person.

What will happen then?

Where a license cannot be issued the Council can issue an Interim Management Order (IMO). This will allow us to step in and manage the property. The owner will still keep their rights as the owner. This order can last up to 12 months until suitable permanent management arrangements can be made. If there is no likelihood of improvement then the Council will issue a Final Management Order. This can last for five years and can be renewed.

Is there a right to appeal?

A person refused a license can appeal against the Councils decision. Initially they will be advised that the Council is considering refusal of the license and they will be given an opportunity to make representations. If the Council are still unable to issue the license and the application is refused then the applicant can appeal to the Residential Property Tribunal against the decision.

They may also appeal to the Tribunal if the Council decides to:

Grant the license with conditions
Revoke a license
Vary a license
Refuse to vary a license

Temporary Exemption from Licensing

If a Landlord or person in control of a property intends to stop operating it as an HMO or reduces the number of occupants to less than five and can give clear evidence of this then they can apply for a Temporary Exemption Notice. This will last for a maximum of three months and ensures that a property in process of being taken out of the licensing regime does not need to be licensed. If the situation has not been resolved within this period a further notice can be issued. When this runs out the property must cease to be an HMO or become licensed, or become subject to an interim management Order.

Are there any penalties?

It is an offence if the landlord or person in control of the property:

Fails to apply for a license for a licensable property or
Allows the property to be occupied by more than the number permitted in the license.

A fine of up to £20,000 may be imposed. In addition, breaking any of the conditions attached to the license can result in fines up to £5,000 for each offence.

Rent repayment orders

Where a landlord is convicted for failing to licence an HMO the Council can apply to the Residential Property Tribunal for a rent repayment order. This would enable the Council to claim back any housing benefit that has been paid during the time the property was operating without a license, up to a maximum of 12 months. A tenant can also apply to the RPT for repayment of any rents that have paid during the same period.

Is your property an HMO?

If you are a landlord, tenant or interested resident, by looking at the following guidance you can determine if a property is an HMO and if it is, whether it is also subject to the licensing requirements. Remember the Management of Houses in Multiple Occupation Regulations 2006 will apply to most HMOs.

It will be an HMO if it is one of the following

A shared house lived in by people who belong to more than one family* and who share one or more facilities**
A house in bedsits lived in by people who belong to more than one family* and who share one or more facilities**
An individual flat lived in by people who belong to more than one family* and who share one or more facilities**
A property declared to be an HMO under section 255(1) of the Housing Act 2004 e.g. B&Bs with permanent residents.
A building converted into self-contained flats where the conversion work did not comply with the appropriate building standards at the time of conversion and still does not comply with them.

Exemptions from an HMO

The property will not be an HMO if:

If it is occupied by only two persons
If it is occupied by the owner ( and their family if any) and one or two lodgers
If it is occupied by a religious community
If the occupiers have their main residence elsewhere***
If no one in the property is required to pay rent
If the owner or manager is a public body e.g. Police, NHS
If it is a building of self contained flats if two thirds or more of the flats are owner-occupied or held on a lease of more than 21 years
If it is a building which is subject to other regulatory control e.g. residential care homes, approved bail hostels, remand centres etc.

The property will not be an HMO if:

An HMO must have a license if all three of the following apply:

It is an HMO (see definition above)
It comprises three storey's or more (including basements, attics and commercial premises)
It is occupied by five people or more

Exemptions

If the entire property is in self contained flats

* Family - husband, wife, co-habitee, child. Including step and foster children, grandchild, parent, including step and foster parents, grandparent, brother, half-brother, sister, aunt, uncle, niece, nephew, cousin

** Facilities - basic amenities: WC; wash hand basin, shower, bath; cooking facilities

*** Accommodation used by full-time students whilst they are studying is taken to be their main residence

If you are a landlord and think your property needs a license you can obtain a license application form from by contacting us on 01748 823 863 or email mail@thehomegame.co.uk.