The definition of a House with multiple occupants (HMO) has changed this week. This has consequences for a number of landlords, particularly if their properties hadn’t needed a HMO license previously.
Last year the Government undertook a consultation looking at HMOs and residential property licensing. The consultation aimed to give councils best-practice guidance on standardising living conditions in HMO properties across the country. The government then published its response to the consultation in December. Now close to a year on, the new changes have taken effect.
What do brokers need to know?
Previously, the HMO licence applies to properties with three or more storeys that are occupied by five or more people from two or more households. Now, the scope of licensing for HMOs has been extended. This means that a licence is required for HMOs with five or more occupiers. This pushes a substantial number of properties into the definition of a HMO and requires more landlords to apply for licences. Clients will be looking to their brokers for clarity on what this might mean.
In addition to the licencing changes, the Government has also set a minimum room size for bedrooms in licenced HMOs. This has been a topic of much discussion – particularly when evidence of bad practice is highlighted in press. The new guidance recommends floor space to be no less than 6.51sqm and 10.22sqm for single and two adults sharing respectively.
The new rules are estimated to impact roughly 170,000 properties (according to the Residential Landlords Association), on top of the existing 60,000 already under licence. Brokers will need to be prepared to help their clients understand the new rules, as it’s likely that they will be looking to their brokers for advice. In addition, these new regulations provide an opportunity for brokers to approach existing clients, raising awareness and helping them navigate the new processes to ensure they are compliant.
How can you make sure your clients are compliant?
There are several steps brokers can and should be taking to educate their clients to help with the changes. Raising awareness amongst those landlords whose properties are now classified as an HMO is the first step. Once awareness has been raised, brokers should be able to give practical advice on the licence process. Should landlords find that rooms within their property are smaller than the required dimensions, they may need to find funding for renovations; being able to help the landlord find suitable funding for the work is another way brokers can help landlords.
One important thing to make sure your clients are aware of is that licences are valid for five years and do need to be renewed after this period. They must also understand that a licence will be required for each individual property either from the landlord of property management firm.
Adrian Moloney is sales director at OneSavings Bank