The Basics: Private rented property licensing
If you’re a Landlord who privately owns and manages your rented properties you will be subject to property licensing regulations. These rules will determine and dictate some of the duties you are required to uphold, as well as potentially restrict what you are able to do with your property. It may all seem a little confusing at first, so let us break it down for you.
What is Property licensing?
Property licensing provides a framework that helps Councils to regulate the condition and management of private rented properties.
Does it work?
Luckily we don't need to answer that on this occasion, but most people (depending on which side of the fence you are sitting on) will have their own opinion.
What is a House of Multiple Occupation?
An HMO is when the property is occupied by three or more tenants who form two or more households, and the tenants share some or all of the toilet, bathroom or kitchen facilities.
HMO Management Regulations
Landlords of HMOs in England, whether licensed or unlicensed, must comply with the Management of Houses in Multiple Occupation (England) Regulations 2006.
The Regulations cover the following matters. The “manager” is the person managing the HMO. This may be the landlord or another person, such as an agent.
Regulation 3: Duty of manager to provide information to the occupier.
Regulation 4: Duty of manager to take safety measures including fire safety.
Regulation 5: Duty of manager to maintain water supply and drainage.
Regulation 6: Duty of manager to supply and maintain gas and electricity; this includes the manager supplying the local authority with annual gas appliance test certificates within 7 days of receiving a request from the authority.
Regulation 7: Duty of manager to maintain common parts, fixtures, fittings and appliances.
Regulation 8: Duty of manager to maintain living accommodation.
Regulation 9: Duty to provide waste disposal facilities.
Regulation 10: Duties of occupiers of HMOs.
Licensing of larger HMOs
New legislation, which came into effect from October 2018, amended the definition of mandatory licensing.
Landlords must have a licence if renting out a large HMO in England or Wales.
The property is defined as a large HMO if all of the following apply:
It is rented to 5 or more people who form more than 1 household
Some or all tenants share toilet, bathroom or kitchen facilities
At least 1 tenant pays rent (or their employer pays it for them)
A landlord of a large HMO must obtain a licence from the local housing authority to operate the HMO. More information about licensing can be found at gov.uk or on the relevant local authority website.
Additional HMO Licensing
A Council has powers to designate the whole or part of their district as subject to Additional HMO Licensing. An additional HMO is an HMO that does not require a mandatory HMO licence and includes properties occupied by 3 or 4 people living together as 2 or more separate households, which meets the standard, self-contained flat or converted building HMO test in Section 254 of the Housing Act 2004.
Selective Licensing
The Housing Act 2004 gave Local Authorities the power to designate areas of Selective Licensing to help tackle concerns over anti-social behaviour and low housing demand. In 2015, the conditions for designation were expanded to include poor property conditions, high crime, high levels of deprivation, and high migration.
Obtaining the Licence
Licensing is dealt with by the local Council. An application form will need to be completed, which is usually made online and a fee paid. Fees will vary. Each Council will have its own requirements, usually known as Amenity Standards, and these will differ between each authority.
Most of the time Licences will last five years, but some local authorities grant them for shorter periods depending on certain circumstances. For example, they may only issue a licence for one year if the landlord does not have the correct planning permission for change of use.
If a landlord has purchased an HMO property with an existing licence, the current licence will need to be revoked, and a new licence would need to be obtained. Remember, it is not transferable.
Planning and HMOs
Landlords of private rented housing, including HMOs, need to be aware of planning rules and make sure they comply with them.
A dwelling house in the occupation of a single household falls into Use Class C3 under the Town and Country Planning (Use Classes) Order 1987 (as amended).
Use Class C4 covers the use of a dwelling house by 3-6 residents as an HMO.
HMOs, where more than 6 people live, are not in any Use Class, which means that planning permission is required for such use, this is known as Sui-Generis (a term given to the uses of land or buildings, not falling into any of the use classes identified by the Use Classes Order).
Room sizes
From 1 October 2018, licences granted for HMOs in England must include conditions requiring the licence holder to ensure that rooms used as sleeping accommodation have a specified minimum floor area. The required floor area varies according to the number and age of the occupiers as follows:
sleeping accommodation for one person aged over 10 years: not less than 6.51 square metres
sleeping accommodation for two persons aged over 10 years: not less than 10.22 square metres
sleeping accommodation for one person aged under 10 years: not less than 4.64 square metres.
Failure to comply with these conditions is an offence attracting an unlimited fine.
Committing an HMO Licence Offense
A licence holder commits an offence if, without reasonable excuse, the licence holder breaches the licence by:
knowingly permitting the HMO to be occupied by more persons or households than is authorised by the licence;
failing to comply with a licence condition, such as a prohibition against the occupation as sleeping accommodation.
If convicted for such an offence, the licence holder is liable to an unlimited fine. The local housing authority may impose a financial penalty of up to £30,000 as an alternative to prosecution.
Local housing authorities should consider this within their compliance and enforcement policies and devise a proportionate process for dealing with landlords in breach.
The conditions related to room size and occupancy will not be breached by temporary arrangements, such as visitors sleeping overnight on an occasional basis, who are not to be treated as occupying the room.
However, where for example, the tenant has moved a friend in permanently, the landlord should rectify the issue, since the tenant will be in breach of the tenancy agreement. The local authority will need to consider the circumstances in determining whether a landlord is permitting the overcrowding and therefore is in breach of the occupancy levels within the licence.
Enforcement
It is a criminal offence if a landlord or managing agent is not holding a licence when required. If prosecuted for a criminal offence in the magistrates' court, an unlimited fine could be imposed if found guilty. Alternatively, local authorities could issue the licence holder with a financial penalty notice of up to £30,000 as an alternative to prosecution.
Local housing authorities or occupiers can also apply for a Rent Repayment Order (up to 12 months’ rent repaid) where a landlord or managing agent is operating an HMO without a licence.
Service of a Section 21 notice on an Assured Shorthold Tenancy (AST) will not be valid if the property is not licensed when it should be.
It is also a criminal offence not to comply with the Management Regulations. A financial penalty of up to £30,000 could be imposed for each breach as an alternative to prosecution.
A breach of a licence condition could also result in a banning order and/or the licence holder being named on the Government’s Rogue Landlord Database for repeat offenders.
Need more help or require assistance?
The process of licensing is a minefield and Surrey Property Licensing can help you navigate your way through it. We understand the process.
We also offer a free 20-minute initial consultation to assess your situation and decide how best to meet your needs. Following the consultation, we may be able to offer more long-term support, including the preparation of temporary exemption notices (TEN's), licensing representations and appeals.
To book a consultation please call 01483 608975 or use our contact form.
