Changes to houses in multiple occupation – HMO

Houses in multiple occupation are a great way for landlords to maximise property yields and improve cashflow. But are you aware that the law for HMO’s is changing?

There are approximately 60,000 properties that currently fall under the ‘Mandatory Licensing’ requirements of HMO properties. This is set to rise to an estimated 175,000 properties when the new legislation comes into force in October.

Under the current legislation, if you are a landlord with a property housing 5 or more unrelated occupants over 3 or more stories you have had to apply for a licence from your local authority to operate a multi-occupied letting. The license sets down strict safety standards to which landlords have to comply.

From October, in England, mandatory licensing is changing and The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 will replace the 2006 order of the same name. The legislation removes the 3 storeys element and means that any HMO occupied by 5 or more unrelated individuals will require an HMO licence. It also includes a requirement that rooms used for sleeping by one adult will be no smaller than 6.51 square metres, while those slept in by two adults need to be at least 10.22 square metres.

Key changes:

• HMOs occupied by five or more tenants will need a licence, regardless of the number of storeys
• Room sizes are subject to minimum sizes which are dependent upon the number of people sleeping in it; to prevent overcrowding.
• Applicants must show that they are a ‘fit and proper’ person.
• Most student accommodation and purpose-built (PBSA) will be caught by the new regime.

The licence will have to be applied for before the 1st October 2018 in order to lawfully continue renting out the property and is expected to particularly hit landlords that let to students.

If you currently rent an HMO which didn’t previously require licensing but will do after the new order comes into effect later in the year, then you will need to apply for a license through your local council.

You will also need to ensure you comply with your local council’s HMO licensing standards, which may involve making changes to your property to comply with minimum safety standards, room sizes, amenity standards (kitchen facilities, number of bathrooms etc).