Licensing Arrives

The 6th April has a lot of relevance for lettings legislative changes that will come into force on the that day. With the new HHSRS scheme going live and the introduction of Mandatory Licensing of some HMOs, it will remain an important day.

The stated intent of the Housing Act 2004 from the perspective of the private rented sector is to improve the standards of property and to improve the quality of management. Both of these start on the 6th April 2006 when the Housing Health and Safety Rating Scheme goes live and the Mandatory Licensing of some HMOs comes into force.

Most of the Statutory Instruments (the details of the regulations) have now been written and these clarify many of the details that until now had not been clarified. For example, we now have confirmation that mandatory licensing will apply to Houses in Multiple Occupation (HMO) where a property that is three or more storeys has 5 or more persons in two or more households. The official figures for this estimate that there will be at least 100,000 HMOs that will need to be licensed. Some local authorities will have few, some will have thousands.

As from 6th April, if you have a property that requires licensing it will be necessary to apply to the council for a licence and to continue to operate without making an application could attract a fine of up to £20,000 once the enforcement regime goes live in July.

There is no doubt that managing HMOs will become a more specialised area under the new rules with new “Management of Houses in Multiple Occupation Regulations” to conform to and a new Code of Practise too. Failure to follow the management regulations will attract a fine. Failure to follow the code of practise will not carry a fine but could be counted against the license holder in respect of considering if they are a fit and proper person to hold a licence.

Whilst landlords can hold licenses, it could also be held by the agent if this is more appropriate.

There will also be a lot of HMOs that do not require licensing. The English House Condition Survey estimates that 640,000 properties will become HMOs under the new rules. These too will have to be run in accordance with the Management of HMO regulations and the code of practise. However, they will not need to be a licensed.

This area is causing some confusion as under the old scheme, generally if a property was an HMO and the local authority had an HMO registration scheme, the HMO had to be registered. Now there will be literally thousands of properties that will count as HMOs but will not need to apply for licenses.

Defining an HMO is a little complex, but really simply, any property occupied by three unrelated sharers can now be an HMO.

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