Government to Review Selective Licensing and Issues Guidance on Mandatory HMO Licensing

House in Chains by Harry Albert Lettings & Estates Leicester Letting Agent

The Government has announced a review into Selective Licensing to assess whether or not it is working as intended. The review will seek evidence from local authorities and other industry bodies who represent landlords, tenants, estate and letting agents as well as other housing professionals. The review findings will be reported next year.

A statement from the government said:

In areas where selective licensing applies, landlords must apply for a licence if they want to rent out a property. This means the council can check whether they are a ‘fit or proper person’ to be a landlord, as well as making other stipulations concerning management of the property and appropriate safety measures.

The review will see independent commissioners gather evidence from local authorities and bodies representing landlords, tenants and housing professionals.

The review’s findings will be reported in spring 2019. There will be an update on progress in autumn this year.

The review comes as the Government set out new guidance for the extension of the mandatory licensing of Houses in Multiple Occupation (HMOs) and the introduction of minimum room size requirements which we reported on earlier in the year.

Local Authorities have been told by the Government that they need to start making landlords aware of the changes in legislation. Leicester City Council are typically quite good at informing landlords and other industry professionals of legislative changes. Harry Albert Lettings & Estates, a Leicester letting agent, received a letter from Leicester City Council just days after we reported the changes to local rules regarding ‘To Let’ boards in student areas where, to erect ‘To Let’ boards in an area of Leicester densely populated by students will require planning permission.

The new HMO licensing rules will be introduced on 1st October 2018 to new license applicants whilst existing licence holders will need to be given extra time to make their properties compliant when they come to renew their licence after deadline.

The current HMO legislation obligates landlords to have a license if letting a property which is of three or more storeys and occupied by five or more people from at least two separate households. To simplify:

  • If your tenants are a family of six which makes up one household (a household is made up of close relatives) and they live in a three storey property. You’d unlikely need a license.
  • If your tenants are a group of five and make up two households within a two storey property, it is unlikely you would need a license.
  • If your tenants are a group of six made up by two households in a three storey property, you would need a license.

From October 1st, the licensing rules will be extended to HMO properties of all sizes, including two-storey houses and bungalows. So, currently, where the above bullet-pointed list is correct, from October 2018, if your tenants meet any of the above criteria, you will need a license.

The government published guidance this week saying:

Local housing authorities have a duty to effectively implement mandatory licensing in their district. This means that they must promote licensing in their area and accept and process applications before October 1st 2018.

The government expects local housing authorities to have a sufficient framework in place to process and issue licenses before the deadline in October 2018 and to encourage early applications from landlords who are due to become subject to mandatory licensing.

The government adds:

Local housing authorities must also ensure that all applications for licences are determined within a reasonable time.

The mandatory HMO licensing that comes into effect from 1st October 2018 also details rules on minimum bedroom size requirements for HMOs. These rules carry a fine of up to £30’000 for those who fail to comply. The minimum sleeping room sizes are:

  • 4.64m2 for one child under the age of ten years.
  • 6.51m2 for one person over ten years of age.
  • 10.22m2 for two persons over ten years of age.

Whilst the above is the statutory minimum bedroom size for a room to be considered a bedroom in a HMO, if the ceiling height is less than 1.5m, such as in the case of a converted loft room or annex with a sloped roof, the part of the room whose ceiling height is less than 1.5m cannot be counted towards the minimum room size. So, if you have a room in the house with a slanted room and the height of the room is 2m at the door but only 1.3m on the far side of the room, any part of the room which falls below the minimum ceiling height of 1.5m cannot be counted, this will significantly lower the area of the room. When this is the case, we believe the best option would be to put a bathroom in these types of rooms where tenants won’t legally be allowed to use the room as bedrooms therefore freeing up the old bathroom space to be made into a bedroom.

The government has given powers to local authorities to impose conditions specifying the maximum number of people who may occupied specified bedrooms in a HMO. This means, if the local housing authority thinks a room of two people is overcrowded, the landlord will have to make changes to their property.

Existing licence holders will have to comply with the new minimum room size requirements from when an existing licence expires and has to be renewed after October 2018. This means if a license doesn’t expire for a few years after October 2018, before a new license can be granted in say the year 2020, landlords should bring their properties up to standard to comply with the minimum room size regulations. However, if a landlord isn’t compliant at the time of renewal, local authorities must give them eighteen months to make the changes. If, after this eighteen month period, the landlord still fails to comply, they will be at risk of being fined up to £30’000. A £30’000 fine isn’t uncommon in the world of HMO non-compliance. Spicerhaart, one of the UK’s largest estate agents, was fined exactly that for knowingly managing an unlicensed HMO which plainly shows how little regard Spicerhaart (who own the Haart estate agency brand) have for their tenants and landlord clients. In fact, the director of Harry Albert Lettings & Estates came out with all guns blazing against them and other industry giants after more reports of failures to comply with housing law at the expense of their clients.

Commenting on the announcements, David Cox, chief executive of ARLA Propertymark (of which, PropertyMark branding is still present on the majority of the larger agents’ websites who have been convicted of housing offences, said: “Licencing doesn’t work, and it never has done. The Government’s aims are laudable; we’re all striving for the same end goal of improving the private rental sector for consumers, but these policies are impractical.” However, it does have to be noted that apparently no action has been taken against Foxtons or Spicerhaart who are routinely convicted of housing offences, so are “we all” really striving the same end goal? David Cox added:

“Licensing means councils spend all their time administering schemes, rather than enforcing against rogue, criminal landlords – a fact which has been proven time and time again over the last decade. Implementing standards for minimum bedroom sizes means small, cheap bedrooms will be taken off the market at a time when there’s an acute housing shortage.

“This will increase costs for other tenants living in the property, and means those who need or want these small, cheap bedrooms will be left without anywhere to live.

“The announcement, coupled with the gradual removal of mortgage interest relief, new energy standards for landlords, and the ever-increasing fees for these schemes, means landlords are being hit from every side.

“At a time when the Government is concerned with rising rent costs, all its policies are just increasing costs for landlords, fostering a private rented sector where financial burdens due to ever-changing legislations will keep rising.” Which is true, rising costs for landlords and agents will simply be translated into increased rents.

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