How many rooms do you have in your rental property? How many people are living there? Could you be at risk of being targeted by local government’s current crackdown on unlicensed HMOs (Houses in Multiple Occupation)? HMOs can be a serious pitfall for landlords, with the potential to cost you large sums of money in penalties and litigation.
A couple of recent news items have reminded us how important it is to keep up to date and vigilant on this matter. Birmingham City Council has won a case against a Landlord who failed to apply for HMO licenses for six of his properties. The total of his fines, plus prosecution costs, lightened his pockets by more than £20,000. The definition of what is considered an HMO had broadened to include his properties as far back as 2006 and the local authority had repeatedly written to him and visited his properties. He had ignored their instructions to apply for licenses.
Peterborough City Council has also successfully prosecuted two landlords for running unlicensed HMOs, both receiving £4000 fines. Peterborough MP Stewart Jackson referred to these as “rogue landlords” and hoped that their prosecution would send out the message that landlords who are “housing people in illegal or inappropriate circumstances would not be tolerated.”
Because the definition of what is considered an HMO keeps changing, it pays to keep up to date with government legislation to make sure that you are not breaking any laws. This is one of those situations where ignorance will not be recognized as a valid defense. To be safe, you should contact the local authority in your property’s area to find out if you are required to apply for a license. If your property qualifies, you must not ignore this essential step: apply as soon as possible. You will need to make a separate application for each HMO property. If you have bought an HMO property from a licensed manager, their license does not transfer to you: you need to apply for your own license.
Before granting an HMO license, the local authority will assess whether your property is suitable for occupancy and satisfies their requirements – which include fire, gas and electrical safety precautions – and whether you are fit to act as manager of the HMO – you will be asked, among other things, if you have a criminal record or a history of unlawful discrimination.
If you wish to turn your property into an HMO, you must find out from the local authority if you need planning permission. On the other hand, if you intend for your property to cease being an HMO, you may be eligible for a Temporary Exemption Notice (TEN).
If you have unrelated tenants living together in your rental property, the best thing you can do is to err on the side of caution and find out whether you are operating an unlicensed HMO. It might be a bit of a hassle, but remember, if you are running an HMO, neglecting to apply for a license is a criminal offence.