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Preparing for HMO licensing changes - Stage 1

Information on preparing for HMO licensing changes - Stage 1

IN THIS ARTICLE

  • Background
  • Consequences of making the wrong decision

Background

With a significant change in property licensing laws being introduced across England on 1 October 2018, Colchester Borough Council is working to improve its systems for licensing houses in multiple occupation (HMOs) to make those systems more efficient and to enable landlords or their property managers to make a licence application, pay the licence fee and upload supporting documentation online. The new application process is scheduled to open in early September, giving landlords or their property managers several weeks to apply.

In the meantime, what should you do to prepare?

Check

1. Firstly, check whether any of your properties will require a licence from 1 October 2018. You can do this by using our Licence Checker tool.

Licence Checker tool

Decide

2. If you have a licensable property then you must decide now whether you intend to apply for a licence or whether you wish to legitimately remove it from the requirement to licence. For example, when HMO licensing was first introduced in 2006 some landlords either:

  • reverted their HMOs to single family dwellings; or

  • reduced the number of occupiers to 4 or less; or

  • reduced the number of storeys in use as part of the HMO to 2 or less

The first two options may be available to you to legitimately avoid the new requirement to licence from 1 October but only if you act now and in accordance with the law. Once a property becomes licensable on 1 October 2018 any notice requiring possession of the entire house (or a letting room within it) that is served under section 21 Housing Act 1988 will be invalid and cannot be enforced through the courts whilst the property remains unlicensed.

Consequences of making the wrong decision

After 1 October 2018 if the property continues to be let as a licensable HMO without a licence application being made then the landlord (and any property manager) will commit an offence and be liable to prosecution or a civil penalty of up to £30,000.

Failure to apply for a licence and continuing to let a licensable HMO has a further consequence. Any rent received after 1 October 2018 can be reclaimed by occupiers upon making an application to HM Courts and Tribunals Service.

It is also worth noting that properties let to 3 or 4 occupiers who are not all members of the same household (i.e. not a family) still fall within the HMO definition and are therefore subject to additional legal requirements including HMO Management Regulations. As a result landlords who chose to legitimately avoid licensing by taking rooms or storeys out of commission in 2006 will have lost upward of £30,000 per room in order to avoid licensing fees of less than £2,000 per HMO over the 12 years to date.

We therefore recommend that you take urgent legal advice and independent financial advice to inform any decision to avoid licensing.

Mortgage

3. As part of your decision making we also recommend that you check your mortgage terms and conditions and, if in any doubt, speak to your mortgage provider. You are required to notify them of any licence application that you make and the Council has a legal duty to consult them as part of the licensing process. Mortgage providers have contacted us in the past to advise that their customer has breached their terms and conditions by operating an HMO without their consent.

Would you like more help to prepare for licensing?

Further briefings will be provided over the next 2-3 months to help you to prepare for 1 October. These will cover subjects including space and amenity standards, complying with HMO management regulations and producing fire safety risk assessments.