Category Archives: HMO Basics

Hammersmith and Fulham Additional Licensing Scheme

Additional HMO Licence Scheme

In an aim to increase standards and control the quality of privately available rented accommodation in the district, Hammersmith and Fulham are introducing an additional licensing scheme for HMOs in the area.

The scheme will come into affect on the 5th of June – the date when we are expecting applications to be available on the council website. The additional licensing scheme will require landlords across the borough to get a licence if they let a property occupied by at least three people who do not make up a single household and who share a kitchen, bathroom or toilet. 

The introduction of an Additional Licensing Scheme is just one of the new measures brought in by the council to control property standards. Other measures include increased safety protocols for tenants including waste management – these changes were made in January of this year and include all licensed properties.

An increased Selective Licensing Scheme will require all landlords letting a property on named streets, where anti-social behaviour has been a problem, to get a licence.

A new landlords’ rental charter to encourage landlords to commit to best practice in management, housing standards, living rent, charges, protecting tenants’ deposits and security of tenancies. We expect this will attract tenants to choose H&F charter landlords over other landlords.

A new social lettings agency to put potential renters in touch with the best local landlords who meet all the higher standards expected.

It is not surprising that the county is currently leading the way in increased property regulation considering one third of the rental accommodation in Hammersmith and Fulham is supplied by the private rented sector.

More specific information regarding Additional Licensing will be available as we have it!

Civil Penalties Introduced

Civil Penalties show degree to which government is keen to increase control in the private rented sector.

The introduction of Civil Penalties on Thursday the 6th of April 2017 is a good indication of the strengthening of local authority powers to tackle ‘rogue landlords’ currently taking place. As set out in the Housing and Planning Act 2016, the Government want to make serious movements toward regulating the growing private rented sector.

What is a Civil Penalty?

A civil penalty allows local authority to directly fine the landlord or letting agent in breach of housing law. This means that local authorities will be much more likely to apply fines as it will not be necessary to through the courts, rather, the fines will be applied directly to landlords and agents.

There is a clearly a direct link between HMO regulation and the introduction of civil penalties. This was set out in Housing and Planning Act 2016 and later considered during the government consultation. Of the fineable offences, three out of five are directly linked to non-compliance to HMO regulation.

Civil penalties will be possible for the following offences:

  • Offences in relation to the licensing of a House in Multiple Occupation (HMO)
  • Offences in relation to selective licensing under part 3 of the Housing Act 2004
  • Failure to comply with management regulations for HMOs
  • Contravention of an overcrowding notice
  • Failure to comply to improvement orders issued by Local Authorities.

Importantly, a landlord or letting agent can incur up to three penalties totaling £30,000 each, with a maximum fine £90,000.

Why the need for civil penalties?

Concurrent with the Government consultation carried out in October 2016, the increased charges have been brought in to act as a greater deterrent against non-compliance of HMO regulation. It was deemed that earlier fines were being costed in as simple running costs for some larger portfolio landlords – and therefore HMO licensing obligations were being neglected.

The growth of the private rented sector has meant that local authorities are lacking control over the rental market. New measures brought in regarding improving standards in the market are hoping to show tenants that government is taking action to improve conditions for private renters.

What does a local authority need to do to impose a civil penalty?

The local authority will need to serve notice to the landlord or agent. This will need to detail the amount of the proposed penalty, the reasons for which it is being issued, and information on how the landlord or agent can contend the fine.

Importantly, the notice must be served within 6 months of the evidence being presented to prove the offence was committed or whilst the offence is on-going. The landlord or agent will then have 28 days to make their defense directly to the local authority. The defense is considered before a final civil penalty is given.

We are still waiting to hear about the landlord database and whether it will introduce a banning order on landlords who have failed to comply. More as we get it…

Why do we need HMO licensing?

HMO licensing is causing quite a stir, but why is it so important?

HMO licensing has affected so many landlords up and down the country. Updates to the legislation mean that a further 170,000 are to be affected by licensing laws by the end of the year. I assume many of you may be asking, or have asked at one point, why do we need HMO regulation?

To put it simply, the need for HMO licensing is directly linked to the increase in the private rented sector. In 2014, the Smith Institute revealed that the private rental market now extends to include 20% of the entire housing market. So with more people involved in private property rentals, the market becomes harder to regulate and standards difficult to uphold.

The growth of the private housing can be reduced to three main causes. Most significantly, and certainly well talked about currently, is the decline of home ownership. There is a reason millennials have been graced with the title ‘generation rent’. Nowhere is that truer than in our fantastic capital. In London, home ownership is down to just 50%. Overall, for those aged 25-30 home ownership has dropped by nearly a quarter. Secondly, the continued growth of the buy to let market, which has seen greater numbers of ‘retirement fund landlords’ introduced to the market. Finally, the provision of social housing has been slowing down to an almost complete halt since the 1980s.

For enterprising individuals, the growth of the private rented sector is no bad thing, as greater demand equals greater supply – along with fantastic business opportunities. The problem arises when the growth of the market stretches to include landlords who do not follow good standards and practices – giving the rest a bad name! The table, at the top of this article, is taken from a paper published by the Department for Towns and Local Governments. It shows, quite clearly, that the number of non-decent homes is significantly greater in the private rented sector. Though it must be noted – the recent housing white paper claims that this percentage has actually fallen to 28%.

These bad landlords have received a lot of press over recent years, the BBC series Housing Enforcers and CH4’s Landlords from Hell series are just the tip of the ice-burg. A lot of this bad press has been deserved, I worked with tenants who were living in conditions you wouldn’t keep a small pig in. A report by Shelter, published in 2016, determined that London has the worst private landlords of the nation. With one out of five renters in London claiming to have been victimised by landlords failing to meet industry standards.

However, I have also had wonderful landlords, the kind that come round every Monday to test the fire alarms and have a quick chat or tell you you’re getting a new boiler before you’ve even noticed a problem with the old one.

The bad landlords need to be deterred from the market full stop and that is what recent movements have been focused on doing. Government legislation has sought to tighten up rules in the market, from the use of third party agencies for deposits to the recent changes to HMO licensing. The message is clear, the private rented sector is going to be more scrutinized than ever before and hence more regulated than ever before.

 

HMOs Debates, Discussion and Developments. Part One: HMOs created

Part one: HMOs created

HMO legislation has been a hot topic in parliamentary discussion over the past year or two with more changes arriving during these last then during its entire existence. This series intends to trace the movements and developments of HMO licensing in parliaments and popular discussion.

When were HMOs initially introduced?

The first HMO legislation came out of the 1985 Housing Act. Its defining criteria was based solely on the idea that when people were living together from more than one household (family) then the home would be described as House in Multiple Occupation.

HMOs came about after the recognition of the growing private rented sector and a need to ensure that those properties were safe and not overcrowded.

 

Types of Licensing

Mandatory Licence, Additional Licence or Selective Licence: what’s the difference?

There are currently three distinct types of property licences being issued by local authorities in the UK. They differ depending on the size and intended use of the rental property. In brief, mandatory licensing is for houses that operate under the normal HMO defining criteria (3 storeys, five or more tenants from two or more households). Additional and Selective licensing are brought out at the locals council discretion and can affect smaller shared houses than mandatory schemes.

Mandatory Licensing (HMO rental property)

An HMO required to obtain a license if it is three or more storeys and is occupied by five or more unrelated tenants. It is the responsibility of the landlord or property manager to contact their local council to apply for a licence. Along with making certain changes within the house – adding 30 minute fire resistance for example. You will also be responsible for ensuring certain ‘HMO management’ procedures are taken care of, for example, ensuring contact information of the landlord is clearly displayed within the house.

Additional Licensing (HMO rental property)

Before a council can authorise an Additional Licensing Scheme in their area they must submit a detailed report to its members. This report is then scrutinised and deliberated throughout a consultation period. If the additional licensing scheme can be justified then it will be applied throughout the borough. Additional licensing schemes tend to open the scope of HMO defining criteria to include houses with just two storeys or perhaps houses with with three or more sharers.

Selective Licensing (Any rental Property)

Selective property licensing can be applied to all rented accommodation – regardless of meeting HMO criteria. Selective Licensing is dictated by Local Authority and can be narrowed down to specific streets or include entire wards. Your council’s website should have some information as to whether your property falls into an area affected by this scheme.  Selective licensing schemes choose particular streets in areas with known anti-social disturbance orders.