Adams Estates has been managing HMOs in Reading Berkshire for over 15 years, the purpose of licensing, especially for HMOs, is to ensure that residential accommodation within the Private Rented Sector (PRS) is safe, well managed and of good quality with a particular focus on safety.

Licensing Types

There are three types of HMO licensing

Mandatory licensing of large HMOs (new rules apply in October 2018)
New HMO rules around licensing have been on the minds of investors & landlords for months now, with a lot of speculation around what changes will be made to the current HMO licensing requirements.

After months of deliberation the wait is over, with government agreeing on February 23rd to what exactly the new HMO regulations will look like, and when they’ll come into effect.

It’s worth keeping in mind that as well as being aware of these new HMO rules for mandatory HMO licensing, HMO investors also need to be aware of the additional and selective licensing requirements that are applied to specific areas across the UK.

So what are the new HMO rules in 2018?

The new HMO rules are covered by “The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018”, which can be read in full here. This was agreed by parliament on February 23rd and will come into effect across England on the 1st of October, 2018.

The main thing this Order changes is the definition of an HMO under the Housing Act 2004. When it comes into effect later in the year, the new definition of an HMO for licensing purposes will be any property occupied by five or more people, forming two or more separate households.

This is in contrast to the existing HMO definition which is a property occupied by 5 or more people, forming two or more separate households and comprises three or more storeys.

ULTIMATELY, THIS IS THE ONLY SIGNIFICANT CHANGE WE NEED TO BE AWARE OF. THE ORDER REMOVES THE NUMBER OF STOREYS FROM THE HMO DEFINITION CRITERIA.

Additional licensing
When a council imposes a policy requiring other sizes of HMOs to also be licensed. For example, a council can bring in additional licensing requiring all HMOs to be licensed.

Selective licensing
This is at the discretion of the borough and can affect all rental properties regardless of size, number of storeys, or number of occupants. For example, a council can instigate compulsory licensing of all residential rental properties within a street, ward or the whole borough.

Before granting a licence, the local authority must be satisfied that the owner and any managing agent of the property is fit and proper to hold a licence and that the property meets required physical standards.

A licence will normally be granted where...

• Appropriate fire safety measures are in place such as smoke detectors, fire doors with automatic door closures & possibly Fire extinguishers etc.
• Annual gas safety checks are up-to-date
• The electrical wiring and appliances have been checked and certified as safe every five years
• The property is not overcrowded
• There are adequate cooking and washing facilities
• Communal and shared areas are kept clean and in good repair
• There are appropriate refuse storage and disposal facilities

Once granted the licence must be clearly displayed within the communal areas along with the name, address and telephone number of the licencee or property manager of the premises. A copy of the current gas safety certificate must also be on display.

How can I check if a property needs to be licenced?

If you are not sure whether it needs to be licenced then contact the local borough council in question - often their website contains the relevant information.

Can a landlord evict a tenant to avoid licensing?

No. Landlords are not allowed to evict existing tenants in order to avoid licensing. Any attempt to get a tenant out of a property that should be licenced but isn't may be considered a crime under the Protection from Eviction Act 1977, and the landlord or anyone else involved may be prosecuted. The Deregulation Act 2015 has also changed the law so a valid notice cannot be served to end a tenancy if the property should be licenced but isn't currently.

Licensing Requirements

What will the council take into account when deciding whether or not to grant a licence?

• The suitability of the HMO for the number of occupiers
• The suitability of the facilities within the HMO, such as toilets, bathrooms and cooking facilities
• The suitability of the landlord and/or the managing agent to manage the HMO (this is called the "fit and proper" test)
• The general suitability of existing management arrangements of the property

The council also has to carry out a Housing Health and Safety Rating System (HHSRS) risk assessment on a HMO within five years of receiving a licence application. If the inspector finds any unacceptable risks during the assessment then the landlord will be instructed to carry out works to eliminate them. The landlord must also notify the council if they plan to make changes to a HMO (structural or decorative), if the tenants make changes to the property, or if the tenants' circumstances change (e.g. they have a child).

The council must ensure that a licenced HMO is not overcrowded and has suitable shared amenities and facilities for the number of persons occupying it. If there are too many people living in the HMO at the time the licence is granted, the landlord must take reasonable steps to reduce the number of occupiers to the permitted number. Existing tenants will not normally be evicted. Instead, when they move out, it will be an offence for the landlord to allow new tenants to move in if that would bring the total number of occupiers above the maximum number allowed.

Enforcement

What happens if a landlord doesn't apply for a licence?

It is a criminal offence to operate a HMO that should be licenced but isn't and if convicted, the fines for non-compliance are unlimited.

Local authorities also have a range of other enforcement options including the power to vary the terms of a granted HMO licence or to revoke an HMO licence.

Under a rent repayment order, landlords may have to pay back to a tenant any rent they have received, or to the council any housing benefit they have received, up to a maximum 12 months. The tenancy itself will not be affected if the landlord has failed to apply for or obtain an HMO licence, although the council may take over the management of the property as another method of enforcement.

Can a tenant withhold rent if the landlord has not applied for a licence?

If a landlord or managing agent allows a HMO to be occupied by more people/households than it is licenced for then unless there is a reasonable excuse they are committing a criminal offence and the fines are unlimited. If the breach is serious or persistent the licence may be entirely revoked. If the council revokes a licence it must take over the HMO management.

What happens if the council refuses to grant a licence?

If the council is unable to grant a licence for a HMO then it will need to take over the management responsibility for the property until circumstances change and it can then be licenced. There are special rules that apply when a council takes over the management of a HMO.

What happens if the conditions in a HMO are poor?

Whether or not the HMO is licenced it should be reasonably free from hazards that might affect a tenant's health and safety. The council is responsible for enforcing those standards and can require a landlord to take appropriate action to remedy any defects. In some emergency cases the council may do the works itself.

For further information, please see the Government booklet on HMOs (PDF).