Changes to HMO Rules now Effective

Fresh rules governing Houses in Multiple Occupation (HMO) are in force and thought to affect some 160,000 properties. More than 77,000 landlords are expected to apply for a new licence, with around 177,000 rental homes set to be classified as HMOs. 

The average bill for licence fees is set to be an average of nearly £500 per property, while applications are likely to take around three hours per licence. 

Previously, landlords letting to five or more tenants from different households only had to apply for an HMO licence for properties with three or more storeys. 

However, as of October 1, all properties with at least five tenants from at least two separate households where there are some shared facilities must be covered by an HMO licence. And, ultimately, it is down to you as a landlord to make sure your portfolio complies with the new legislation. 

Bedroom size also matters – under the new rules, children aged 10 or younger must have at least 4.64 square metres of space, while single rooms must be of at least 6.51 square metres. For two adults sleeping in the same room, the minimum size is 10.22 square metres. 

Clearly, the clampdown has health and safety in mind, and is designed to stop landlords, most of whom won’t be affected by these regulations, from overcrowding accommodation. 

However, those letting out properties do need to be aware of the changes, bearing in mind that if you are letting out a property without an HMO licence and it needs one, you could face a hefty fine. 

What’s a separate household? 

Interestingly, tenants can be considered to be part of separate households, even with a joint tenancy agreement. For example, a property shared by five students with a joint tenancy agreement would still probably need to be classed as an HMO. But as these situations are not always straightforward, you should consider seeking professional advice where necessary. 

Speak to your mortgage broker 

Equally, it may be worth speaking to your mortgage broker to be sure you can still secure the necessary finance if one (or more) of the properties you let out has become an HMO under the new rules. That’s because lending on your entire portfolio could be affected. You may need to take out mortgages with a commercial lender instead. 

If in doubt, you may be better off getting an HMO licence, even if you’re not entirely sure whether you need one, and even using the services of a lawyer if necessary. 

The good news is that if your properties are already legally licensed and unaffected by the changes, they will be transferred to the new arrangements free of charge. 

The National Landlords Association (NLA) is concerned local councils may be unprepared for the new system for HMOs, or may not have the capacity to process applications. But CEO Richard Lambert says: “All landlords should do everything they can to ensure compliance.”

Talk to us if you have any concerns over the new rules. More information is available at gov.co.uk