New HMO legislation – implications

In case you missed it, here is an opportunity to catch up with our latest technical paper which looks at the new HMO (Houses in Multiple Occupation) legislation being introduced on 1st October 2018, subject to parliamentary approval, and the implications for valuers and lenders.

Purpose built flats

The regulations bring purpose-built flats where there are up to two flats in the block, into the scope of mandatory licensing. They also remove the three-storey rule – at present mandatory licensing applies to HMOs of at least three storeys and five occupants comprising of two or more family units. The Government has now decided to extend the scope of mandatory licensing to bring smaller HMOs within the scheme.

Mandatory licensing

Mandatory licensing will now include all HMOs with five or more occupiers living in two or more households, regardless of the number of storeys. Effectively this means the storey requirement will be removed from the current definition.

It will also include purpose-built flats where there are up to two flats in the block and one or both of the flats are occupied by five or more persons in two or more separate households. This will apply regardless of whether the block is above or below commercial premises. This will bring certain flats above shops on high streets within mandatory licensing as well as small blocks of flats which are not connected to commercial premises.

As is the case now, it is the individual HMO that is required to be licensed and not the building within which the HMO is situated. This means that where a building has two flats and each is occupied by five people living in two or more households, each flat will require a separate HMO licence.

It has been made clear that landlords with properties that fall into the category of an HMO, even if previously licensable under discretionary or additional licensing, are required to submit an application by 1^st October 2018 at the latest.

Minimum room sizes for HMOs

In addition to licensing legislation, new rules will be brought in at the same time covering minimum room sizes. This is something which is already policed by individual local authorities in Mandatory Licensed HMOs as they reserve the right to set the maximum number of tenants in an HMO thereby excluding a room if they deem it to be too small for habitation. The accuracy of measurement is therefore key and we should expect further guidance from local authorities as this plays out.

For the full technical paper, and to understand the implications for valuers and lenders, please click here.