Temporary Exemption Notices Under the Housing Act 2004 Part 2 Section 62 – A Guide For Landlords
Landlords who operate houses in multiple occupation or HMOs may find they need to make use of Temporary Exemption Notices or TENs from time to time. Here’s what Temporary Exemption Notices are and how they work.
What exactly is a Temporary Exemption Notice?
The Housing Act 2004 Part 2 requires that all properties which meet the definition of a licensable HMO in England and Wales are licensed by the relevant local authority. Landlords who operate a licensable HMO without a licence can be subject to penalties.
However, Section 62 of this legislation allows for landlords to apply for and for local authorities to grant exemptions from HMO licensing for short periods for a specific property. Such exemptions are granted via the issue of a Temporary Exemption Notice (known as a TEN for short).
It is also possible to apply for a Temporary Exemption Notice for a rented property which is within a selective licensing area. However, this is done under different legislation – Part 3, Section 86, of the Housing Act 2004.
Why might HMO landlords need a Temporary Exemption Notice?
The overriding principle of Temporary Exemption Notices is that they are by definition temporary arrangements. They allow HMOs to be exempt from requiring a valid HMO licence for short periods (up to three months, or six months at a maximum) to allow the property to cease to require an HMO licence during that time. They are generally only issued where there is good reason to believe that, although the property requires a licence now, within three months it will not require a licence. (Or, in some cases, that it will be licensed.)
There are a number of particular reasons where an HMO landlord might consider that applying for a TEN for a property is appropriate. These might include (but are not limited to):
When selling the property. This might apply if the landlord has sold the property but is waiting for the sale to legally complete.
When redeveloping the property. For example, returning it to a single family house/flat or houses/flats, or converting it for commercial use. This might apply if the landlord is awaiting a decision on a planning permission application.
If reducing the size of the HMO so that it is no longer licensable. For example, so that it has less than five occupants. This would mean that it is no longer subject to mandatory HMO licensing. (Note the situation would be different if it is in an additional HMO licensing area.)
When planning to tenant the house differently. For example letting it to a family of related people.
If the owner plans to move into the house themselves, perhaps with family, and perhaps with lodgers instead of tenants.
If transferring the HMO to an organisation that does not require a licence for it, eg. a residential social landlord.
Possibly, if the property has only just become subject to a requirement to be licensed a TEN can allow time to put things right. An example of this can be where a tenant has moved a partner into the property increasing the occupancy of the HMO and so making it licensable.
In case of the death of an HMO licence holder. A three month exemption automatically applies in these cases.
There can be another possible use for a TEN: Since a property subject to a TEN is considered to be legally licensed it can allow landlords to legally evict tenants under Section 21 procedures without becoming liable for prosecution, a rent repayment order or other penalties. This can occur where a landlord attempts to evict tenants from an HMO which should be licensed but isn’t.
Applying for a Temporary Exemption Notice
HMO landlords who are considering making use of a Temporary Exemption Notice should carefully consider their strategy before applying: What is their reason for needing a TEN? How will the situation be resolved before the TEN expires?
If the process will ultimately involve evicting tenants from the HMO landlords must take particular care that this is done legally.
There are penalties for giving false or misleading information when applying for a TEN. This can also result in a TEN being revoked, if it has already been issued, and the property will therefore become an unlicensed HMO.
It is always advisable to take expert advice on the application for and use of a TEN.
TENs are applied for in relation to a specific property and not for all properties owned by a landlord. They are applied for to the local authority who is responsible for HMO licensing in that area. Different local authorities handle TEN applications in slightly different ways.
Depending on the local authority the application can be made by the landlord, the manager or a person who is authorised to act on their behalf. Applications can be made online or using a paper form (or both). Local authorities should not charge a fee for a TEN.
As well as full details of both the applicant and the property involved applications for a TEN must include:
An explanation as to the reasons for requesting the Temporary Exemption Notice.
An explanation as to the course of action which will be followed to remove the property from the criteria for being a licensable HMO.
Evidence of the above may be required and will help to support the case for the grant of a TEN.
Once an application for a TEN is made the property is treated in the same way as a property for which an application for an HMO licence has been made.
How applications for Temporary Exemption Notices are processed
The legislation allows local authorities to determine applications for Temporary Exemption Notices ‘as they think fit’. There may be differences from area to area.
Local authorities may request further information and may wish to inspect the property before making a decision. They will usually aim to issue a decision within 28 days.
If an application is successful a TEN is valid for three months.
An HMO which is subject to a TEN is considered to be a licensed HMO. Affected properties will generally need to continue to meet HMO licence standards until the property is no longer a licensable HMO.
Extending a Temporary Exemption Notice
Temporary Exemption Notices can be renewed for a further three months, ie. to last a maximum period of six months, if valid grounds for having one remain.
However, the legislation says that local authorities are only allowed to do this in what are described as ‘exceptional circumstances’. The legislation does not specify what exceptional circumstances are so this will depend on the approach of each particular local authority.
Under the legislation TENs may not be extended beyond six months.
Refusal of a Temporary Exemption Notice – and appeals against refusal
If the local authority decides not to grant a Temporary Exemption Notice in response to a notification they must promptly serve a notice on the applicant informing them of their decision and their reasons for refusal.
An applicant who is refused a TEN may appeal the decision to the First-tier Tribunal within 28 days.
The appeal will be dealt with at a hearing which can consider the matters raised in the original application as well as any new circumstances which arise.
The Tribunal is able to confirm or reverse the decision of the local authority. If it reverses a refusal it must also direct the authority to serve a TEN on a date on which it decides.
Summary
Most HMO landlords will not encounter Temporary Exemption Notices very often if at all. However they do have their uses and benefits, both in foreseen and unforeseen circumstances, in helping to stay on the right side of the law in circumstances when a property should normally be licensed as an HMO.
Key takeaways are that TENs are only intended to be used on a short term basis. They are not intended to be used to avoid (or evade) the need for HMO licensing.
While there can be benefits to the use of a Temporary Exemption Notice they can also involve risks. Those who are considering using one are strongly advised to take expert advice before making an application.
How Surrey Property Licensing can help
HMO licensing and enforcement is a complex area but we have a professional and dedicated team that offers services that as property landlords you can tap into. We are here to help, assist, and advise you. We offer a free 20-minute initial consultation to assess your situation and decide how we can best meet your needs. To discuss your specific requirements or enquire, please call 01483 608975 or use our contact form and a member of the team will come back to you.
This article is intended as a general guide to TENs and is not intended as legal advice.
