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HMO Licensing Information

To start with we shall give you the Licensing terms:

Each licensable HMO will need its own licence.

Once a licence is granted it cannot be transferred to another property or to another person.

If the HMO is sold the new owner and/or manager will need to apply for a new licence.

A licence will normally last for 5 years.

HMO Mandatory Licensing

Part 2 of the 2004 Housing Act is intended initially to apply this only to the larger higher risk HMOs of 3 or more storeys occupied by 5 or more people. However, in future this may change to include all HMOs.

What is a storey?

1. A section or horizontal division of a building, extending from the floor to the ceiling or roof lying directly above it

2. all the rooms on the same level of a building

3. any horizontal section or division

So, you can have a property with:

A basement, ground floor first floor – 3 storeys

A ground floor, first floor and second floor – 3 storeys

Ground floor, first floor and attic conversion – 3 storeys

A self contained flat to the ground floor, a separate two storey maisonette above – 3 storeys

A shop to the ground floor and a self contained flat above on 2 floors – 3 storey

A Mezzanine floor would constitute a storey

You will need to check with your local authority for further information on a specific property.

So if we now take this and add it to Section 258 the definition of a single household you will see that a three storey property being occupied by 5 or more persons, who are unrelated forming two or more households would need to be Licensed under the Housing Act 2004

Part 2 – Mandatory Licensing

The License holder must be a FIT and PROPER PERSON – That does this mean?

The Local Authority must have regard to the statutory criteria set out in Section (66 (2) and have regard to any other facts or matters which it considers to be relevant

Matters to which the Local Authority must have regard.

Associates

The Local Authority may take into account evidence of any of the above conduct by a person “associated or formerly associated with”, the proposed licence holder or manager “whether on a personal, work or other basis”, if relevant.

Any “Spent” convictions cannot be taken into account. However. A lack of conviction may non mean that the incident was not relevant.

Managers

Assumption: the person having control of the property is the most appropriate person to hold the Licence. i.e. the person who receives the rents.

The proposed manager, if not the Licence Holder, and all other persons involved in the management must also be fit and proper

The Decision

If the Local Authority is not satisfied – IT MUST REFUSE and make an Intermediate Management Order instead. Any proposed reasons to be given in advance. There are 14 day to make representations and the Right to appeal to the Residential Property Tribunal (RPT).

Some Local Authorities are also operating a “Zone”, so if the Landlord resides outside this zone and cannot reasonable demonstrate that the property is being managed properly. The Local Authority may appoint a local management agent to be the License Holder.

For the Manager this may have a serious impact on how they act for their client, as they will now have the full weight of the obligations on their shoulders rather than that of the owner.

The Local Authority must grant a License IF it is satisfied that:

The HMO is reasonably suitable (etc)

The Licence holder would be a fit and proper person.

So to summarise:

A property which is three storeys, occupied by 5 or more persons who are unrelated forming two or more households, the owner must apply to the local authority for a mandatory licence. To be the License holder this person must be a Fit and Proper Person.

Remember that a habitable basement or attic conversion counts as a storey

Penalties for failing to License under Part 2

If the legal owner fails to Licence a property which requires a Mandatory Licence under Part 2 of the Housing Act 2004, he/she will be committing an offence which a local authority can prosecute. The penalty is up to £20,000

Bajinder Bahi - known locally as Gilly - was fined more than £3,000 at Stratford Magistrates Court in June 2007 for failing to licence two flats in Warwick Street which were both occupied by students from Warwick University.

Rent Repayment Order

If a landlord has been convicted of operating an HMO without a valid license the local housing authority may apply for a Rent Repayment Order to reclaim money paid to the landlord by means of housing benefit. Tenants including former tenants can also apply for a Rent Reyapment Order following the council being awarded an order for the same property. This would be to claim back money they have paid during this period

An example: a landlord in Leamington was ordered to repay his tenants more than £18,000 in what is believed to be the first case of its kind in Britain. The tenants claiming back rent while the property remained unlicensed between September 2006 and June 2007.

Whilst the property is unlicensed, the landlord will be unable to serve any legal Notice on a tenant for arrears of rent or eviction under Section 21 of the Housing Act 2004.

Additional Licensing under Part 3

Additional Licensing is discretionary within the Local Housing Authority’s boundaries. This category is for lesser risk properties. The Act introduces a power for LHAs to introduce selective licensing to deal with particular problems in an area. Selective licensing will be primarily focused on:

Low house prices in areas of low demand have resulted in an influx of unprofessional landlords purchasing properties to rent. These people frequently show no interest in managing their properties properly, often letting to anti-social tenants who cause a range of problems. This, in turn, can create misery for the local community and cause further destabilisation of these areas. Although these problems tend to be concentrated in areas of low housing demand, other districts also suffer from the activities of poor landlords and anti-social tenants. Accordingly this power will be available to LHAs to tackle problems of anti-social behaviour in areas that do not experience low housing demand.

The Act provides a discretionary power, subject to carrying out consultation and to the approval of the appropriate national authority, for LHAs to license all private landlords in a designated area with the intention of ensuring that a minimum standard of management is met. In order for a scheme to be approved, such a selective licensing scheme must be shown to be co-ordinated with an authority's wider strategies to deal with anti-social behaviour and regeneration.

Each LHA, will, if they decide to have such a scheme, provide details of an area or zone within their boundary to which Additional Licensing will operate. These smaller risk properties will be for 2 storey properties being occupied by 5 or more persons, who do not form a single household (same as above).

For both Mandatory and Additional Licensed properties, the information of the Licence holder will be displayed in a public register containing the name of the Licence holder, the address of the property and the permitted amount of occupiers under the license. It will also display, whether or not the Licence is conditional or not.

The third which is dealt with under Part 4: Additional control provisions in relation to residential accommodation – Known as Selective Licensing Chapter 1 of Part 4 contains provisions for enforcement action in respect of properties licensable under Parts 2 and 3 and for individual properties where a residential property tribunal is satisfied that a property, which is not required to be licensed, requires the intervention of the LHA.

Non Licensed HMO’s

Taking the definition of an HMO, you will see that a property let or occupied by three unrelated persons forming two or more households in an HMO. However, this type of HMO does not require a license, unless provided by selective licensing in the area, but would still require to comply with the HHSRS standards and fire precautions. Also properties with have been converted into self contained flats, but NOT to 1991 Building Control Regulations are deemed HMO’s under Section 254 and 257 of the Housing Act 2004 and will again need to comply with the HHSRS.

To simplify : an example

A two storey house has been converted into two self contained flats – Ground floor and first floor both have independent access and do not share any utility supplies. No planning permission was applied for and the conversion was not to the 1991 building regulations – It meets the criteria in 254 and 257 (see definition page) to be an HMO Similarly A two storey house has been converted into two self contained flats - Ground floor and first floor both have independent access and do not share any utility supplies. But planning permission has been applied for and granted and building regulations complied with after 1991 It does not meet the criteria 254 and 257 so therefore it CANNOT be an HMO If the property is a purpose built block of flats, then itself is not an HMO, but an individual flat may be if the required criteria is met

Management of an HMO

Like many pieces of legislation you have one to set the criteria and another to police it. Therefore the manager, being the person collecting the rent has certain responsibilities to uphold. Please see the management page for further information

Amenity Standards

This is open to a lot of discussion,. Many councils differ as to the actual requirements necessary to fulfil the amenity standards.

Some councils will push for wash hand basins in every bedroom in a property occupied by 5 or more persons, while others will only state that at least two bathrooms are required.

A good indication as to the amenity standards are set by City & County of Swansea’ Environmental Health Dept. who have set a high standard required.

A link to their Amenity Standard’s document can be found here

Non licensable HMOs

A property can be an HMO because there are three or more unrelated occupiers froming two or more households - this situation does not need a license, but would still be subject to safety Regulations and fire precautions. Please read the relevent section.

You should check with your local authority first before attempting to run an HMO