The Government has announced plans to reform the Mandatory Licensing of Houses in Multiple Occupation (HMO’s) in the private rented sector in England, subject to parliamentary clearance, by extending the scope of HMO Licensing. These changes are expected to come into force in April 2018 and will crack down on bad practices, stamp out overcrowding and improve standards for those renting.
Licensing has been in force since 2006 and it presently only applies to properties of three or more storeys, lived in by five or more people in two or more separate households.
The new plans mean that Mandatory Licensing will be expanded to include HMO’s occupied by 5 or more people, in two or more separate households, irrespective of the number of storeys. This could now include flats including those above or below commercial premises and one/two storey properties.
This move, affecting around 160,000 properties, will give Councils’ powers to take enforcement action, including bringing in fines of up to £30,000 and it will be introduced in two phases. During the first phase of six months it is expected landlords will apply for licenses. At the end of this six month grace period, landlords who have still not applied for a license may be prosecuted and can be subject to rent repayment orders being made against them.
Included in this change there will be new rules setting minimum size requirements for bedrooms in HMO’s. The aim will be to prevent overcrowding, and local councils will be able to make sure only rooms meeting the standard are used for sleeping.
Landlords will also be responsible for the satisfactory disposal and storage of refuse and there will be new rules which are designed to stamp out so called rogue or criminal landlords who knowingly rent out unsafe and substandard accommodation. A database of rogue landlords convicted of certain offences introduced through the Housing and Planning Act 2016 and Banning Orders for the most serious and prolific offenders are to be implemented in April 2018.
Of course, Licenses come at a cost and Plymouth City Council’s current charges taken from their website are shown below:-
Initial licensing fees
This applies when:
the property hasn’t been previously licensed as a HMO
the property was previously licensed, but the licence holder has changed since the previous licence was approved
Standard fee – £800
Fee if full application is received within six weeks of becoming licensable and no further discounts apply – £540
Fee if full application is received within six weeks of becoming licensable, no further discounts apply and the licence holder has passed the landlord proficiency test – £510
Fee if the licence holder is accredited through an accreditation scheme – £480
The cost of the new Licenses have not yet been published but the charges are likely to be the same as shown above.
This will generate a huge income for Councils across England and whether landlords will decide to increase rents to tenants to offset the charge as a result remain to be seen.
At SAMS, we strongly support laws that increase the health and safety standards for tenants so we broadly welcome the new plans. However as usual the vast amount of good landlords are being penalised for the few bad ones.
In our opinion, there is no place in this industry for bad landlords or Agents so anything that helps to root them out and ban them must be seen as a positive move, even though it brings with it even more red tape and procedure changes.