‘HMOs are regulated to make sure that tenants are safe. Up to now the rules have applied only to buildings with three or more storeys but from 1 October single storey buildings could be HMOs if they meet the other requirements.’
HMO landlords must comply with rules on good management and many HMOs will require a licence from the local authority, so it is crucial that landlords understand how the rules affect their properties.
What is an HMO?
At its most simple, an HMO is a house or flat which is shared. To qualify, a building (or part of a building) must be occupied by more than one household who share a bathroom, toilet or cooking facilities. The households must occupy the building as their only or main residence and pay rent.
The rules can apply to parts of a building and to self-contained flats within a building, as long as the requirements for households sharing are met. Purpose-built blocks of flats will not be HMOs, although an individual shared flat in the block might be. There are special rules for converted blocks of flats and self-contained flats within buildings, so it is crucial to discuss your specific situation with a solicitor.
The regulations define what counts as a single household. This includes a single person and various sorts of family relationships, plus some other arrangements, such as people with live-in carers and some domestic employment relationships. For example, three unrelated individuals sharing will count as three households; a family and an unrelated individual will count as two.
Some buildings that would otherwise be HMOs are exempt. The exemptions most likely to apply to private landlords are:
- buildings occupied by no more than two individuals who form two households; and
- buildings where the landlord is a resident and shares with no more than two others.
The resident landlord exemption highlights a potential trap for parents considering buying a house to accommodate a child at university. If there are more than two other students sharing and contributing rent, the house is likely to be an HMO.
Management of HMOs
Not all HMOs need to be licensed but all are subject to rules about management. These include maintaining satisfactory fire safety arrangements and keeping both common areas and the occupiers’ living accommodation in good repair.
Licensing of HMOs
HMOs occupied by five or more people, who form at least two households, are subject to mandatory licensing by the relevant local authority, with the exception of some converted blocks of flats which are subject to separate rules. If in doubt, check with your solicitor.
The regulations also provide for additional licensing by local authorities, who may be entitled to require all HMOs in specific areas to be licensed. This power may be exercised where a number of HMOs in an area are being poorly managed and causing problems to other residents.
To obtain a licence the owner must show satisfactory management arrangements. When a licence is granted, it will state a maximum number of occupants and may be subject to a requirement to carry out specific improvements. A licence will be granted for a maximum of five years.
A landlord who has let parts of an HMO on an assured shorthold tenancy will not be able to use the ‘no default’ possession process under section 21 of the Housing Act 2004 if the HMO is not licensed when it should be. Private landlords rely heavily on section 21, so this is a significant practical deterrent.
Failing to comply with the regulations on HMOs is a criminal offence and can result in a fine or prosecution. The complexity of the rules means that landlords of buildings that could be HMOs need expert legal advice. More buildings will be affected from October 2018 and timely advice could avoid serious legal consequences.
For further information, please call 020 7426 0400.