In this week’s #ExpertView, Complylex answers the essential questions about HMOs to help landlords and letting agents comply with the latest legal requirements and avoid fines.

Managing an HMO can be a compliance nightmare, with eyewatering fines and the potential of Rent Repayment Orders if you get it wrong. At Complylex, we try to explain legal requirements in straightforward terms to keep you on the straight and narrow. Our experts have therefore answered five of the most important basic questions about HMOs to help you avoid financial penalties.

What is an HMO?

To be defined as an HMO, a property must have three or more occupiers forming two or more households sharing amenities within a house, converted building or self-contained flat. The property must be used as a main home and at least one of the occupiers must be paying rent. ‘Main home’ usually includes students because most local authorities regard the rented property as the students’ main home during term-time.

What is a mandatory HMO licence?

A mandatory HMO licence must be obtained from the Local Authority if a property has five or more occupiers forming two or more households sharing basic amenities. The property could be a converted building or a self-contained flat. However purpose-built blocks with three or more self-contained apartments and Section 257 HMOs (converted blocks where the conversion works did not comply with the Building Regulations 1991 and more than one third are privately rented) are exempt. A converted block falling under Section 257 may contain   a flat which will require a licence if it falls within the categories defined by the local authority. Some of the conditions of an HMO licence are as follows:

  • Bedrooms within an HMO must meet these minimum size requirements:
    • 1 person over 10 years old: not less than 6.51 square metres;
    • 2 people over 10 years old: not less than 10.22 square metres;
    • 1 person under 10 years old: not less than 4.64 square metres.
  • A licence holder must be a ‘fit and proper person’, which means they must not have been found guilty of criminal activity involving drugs, violence, sexual offences or of breaking any laws relating to housing and/or residential lettings.

What’s the difference between Additional and Selective licensing?

Additional licensing is when a Local Authority applies HMO licensing to other types of HMOs which fall outside the definition of mandatory licensing. Approval for Additional Licensing has to be obtained from the Secretary of State and can apply to certain areas of a borough or an entire borough.

Selective licensing can apply to all types of rental stock, not just HMOs. A single property or whole areas could be affected. However, Government approval for selective licensing must be obtained if it affects more than 20% of private rented accommodation or more than 20% of the Local Authority area.

What is an Article 4 Directive?

Section 4 of the Town and Country Planning Act 1990 is known as an Article 4 Directive. An Article 4 Directive removes permitted development rights within an specific geographical area. Therefore, it can prevent the change of use of a family house (C3) to an HMO (C4).

Some local authorities insist, as part of the licence provisions, that the category of planning for a property is changed from C3 to C4. This can have a detrimental effect on a landlord if he wants to sell his property at any time in the future. There is no guarantee that planners will allow the designation to be changed back to C3 being a private house, which could affect the resale value.

What are HMO standards?

In addition to meeting all the requirements of the Housing Health and Safety Rating System (HHSRS) and The Management of Houses in Multiple Occupation (England) Regulations 2006 as amended, HMOs must meet the requirements laid out by the Local Authority. Such measures may include additional safety measures, water and draining requirements, common parts requirements, fixtures and appliance requirements, waste disposal and occupier requirements.

You can find more useful information on the Government website: Houses in Multiple Occupation

Help with legal compliance for property professionals

TDS works in partnership with Complylex, the online compliance-based platform for estate and letting agents. Together, both organisations are committed to helping property professionals navigate complex industry legislation and raise standards in the Private Rented Sector (PRS).

Property law can be confusing, even for property professionals. To help, the Complylex platform has been designed to provide concise, accessible information on property law presented in a way that is easy to understand. The tool was created by a team of property professionals who came together with a mission to demystify legislation and give their fellow professionals a simple and affordable way to comply with the legal requirements governing their sectors in England and Wales.

Endorsed by Painsmith Solicitors, the platform can be utilised, as and when needed, much like a resource or guide. Notifications can also be set-up to alert subscribers of legal updates by email, to keep users up to date on the latest regulations which can be crucial to remaining compliant on all legislation changes.

Read more about TDS and Complylex

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About the Author

Caroline Kenny

Caroline Kenny has over twenty years’ experience in the UK residential lettings industry, having worked for a number of corporate, independent and franchise agencies, as well as The UK Association of Letting Agents (UKALA), The National Landlords Association (NLA) (now the National Residential Landlords Association NRLA) and ARLA Propertymark. She is an Associate Tutor for MOL Learn and an advisor/consultant to clients within the UK Private Rented and Build to Rent sectors. Currently also studying for her law degree (LLB Hons), Caroline is also a Fellow of ARLA Propertymark (ret’d) and holder of the prestigious Diploma in Residential Lettings and Property Management.

About TDS

Tenancy Deposit Scheme (TDS) is a Government-approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and provides fair adjudication for disputes that arise over the tenancy deposits that we protect.

TDS Academy: We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits. Click here to see upcoming TDS Academy dates.

TDS can only comment on the process for our scheme; other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.

These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.

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