A useful article for the new starters who want to dip their toes into HMO investments. You need to know this by heart!
From 1st October 2018, the Houses of Multiple Occupation mandatory licensing requirements will be expanded to include a number of new buildings, previously exempt from the legislation. Landlords will also be obliged to ensure their tenants' bedrooms meet minimum size criteria and that their tenants comply with the local waste disposal scheme.
Houses in multiple occupation (HMO's) are playing a significantly central role in meeting the country's housing needs. Students, young professionals, migrant workers and the most vulnerable members of society all rely upon shared accommodation and the government is recognizing the need to ensure that residents are not exploited by unscrupulous landlords looking to maximize their profit and house tenants in unsuitable accommodation.
Two story houses or flats, originally designed for families, have been used more and more and overcrowding has become a particular issue that the government is looking to address. The government also recognizes the impact of HMO's on the wider local community particularly where inadequate rubbish storage has led to an increase in the presence of vermin and associated health and safety problems.
The specific secondary legislation coming into force is:
• The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 ("The Prescribed Description Order") - this Order sets out the types of buildings which will now be subject to HMO licensing requirements. The new definition of an HMO will include buildings which are one or two storeys high and which accommodate five or more people from two or more separate households or families who share amenities (such as a toilet, personal washing facilities or cooking facilities). These properties will now be considered to be HMOs and require an HMO licence as from 1st October 2018.
• The Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018 ("The Mandatory Conditions Regulations") - The Mandatory Condition Regulations introduce the waste disposal provision requirements and but of most importance, the mandatory national minimum sleeping room sizes, which is to be imposed as conditions of Part 2 licences:
1. 6.51 m² for one person over 10 years of age;
2. 10.22 m² for two persons over 10 years of age; and
3. 4.64 m² for one child under the age of 10 years.
It will also be a mandatory condition that any room of less than 4.64 m² may not be used as sleeping accommodation and the landlord will need to notify the local housing authority of any room in the HMO with a floor area of less than 4.64 m².
It is important that all landlords who rent private property fully understand the landscape of licensing reforms and what their duties will be after 1 October 2018.
Good luck to all fellow investors who continue to adopt HMO as their dominant strategy.