New HMO Licensing Scheme
If you’re working in property in the London borough of Lambeth, Yuno that you will have to be prepared for the HMO licensing scheme coming into force on Thursday 9th December.
Whether you’re an estate agent, lettings agent, property investor, property manager, mortgage lender, mortgage broker, or building manager, you will be wondering why Lambeth Council has introduced this legislation and how this will affect your business.
Why is there a new scheme?
The council introduced the HMO licensing scheme to improve accommodation standards for tenants, routing out rogue landlords and illegal HMOs. The consultation finished in March this year and the proposals gained the support of two-thirds of residents while 81% of landlords and agents were against it.
Lambeth estimates that there are 5,000 HMO properties in the borough; this includes house and flat shares, bedsits (section 254 HMOs), and some buildings converted into flats (section 257 HMOs). Smaller houses and flatshares occupied by three more people to from more than one household will now require an HMO licence.
What is a HMO?
To determine what is an HMO we need to start with what ‘HMO’ stands for ie. House in Multiple Occupancy or House of Multiple Occupation. The standard definition of a section 254 HMO is: 3 or more tenants, more than 1 household and, generally speaking, that share facilities (kitchen, bathroom etc) though legally should meet standard test, self-contained flat test or converted building test HMO definition.
For Section 257 HMOs, the standard definition of a section 257 HMO refers to buildings that: have been converted into self-contained flats; the conversion did not comply with the relevant Building Regulations in force at that time and still does not comply, and less than two-thirds of the flats are owner-occupied.
If the conversion was completed before 1 June 1992, it should comply with Building Regulations in force as of 1 June 1992. If the building was converted after 1 June 1992, it should comply with the Building Regulations in force at the time of the conversion.
The full definition of all HMO’s can be found in the Housing Act 2004 Sections 254 to 260.
What does the new Licensing scheme cost?
The new Lambeth HMO licensing scheme will see costs increase to £506 per bedroom or £2,024 for a four-bedroom HMO. Currently, Lambeth council charges an application fee of £289 per bedroom so property businesses will see a big increase in the cost of 75% per HMO licence, and lead to the highest per bedroom fee in London.
What does this mean for my business?
Unfortunately, persons managing the property or persons in control, under the Housing Act 2004, can get up to a £30,000 fine per offence. This even the case for let only as the legislation under part 263 states collection of Rack Rent (more than 2/3rds of the rent) and ‘other payments’ means agents and property professionals are on the hook just the same as the landlord.
To top it off, tenants can claim back up to 12 months rent under Rent Repayment Order making some very unhappy landlords.
The key here is to ensure you have always given the right advice, if you are looking for support for you, or your landlords, it is best to trust the experts such as Environmental Health Officers, accredited by CIEH, experienced in local councils.
What is Property Licensing?
Property licensing is the Local Authority’s process of improving living standards in rental accommodation and proving that landlords are ‘fit and proper’ persons to operate these properties. The type of property/HMO licence a property requires varies depending on a number of different factors, including the number of tenants and the council your property is located in.
Why is Property Licensing important?
It is important that you are aware of both the national and local authority regulations. The licensing rules are not consistent across every London borough, with each individual borough creating its own set of licensing rules. A professional licensing company should be instructed to guide you through the process. In short, the type of HMO licence required will depend on the property itself, how it is tenanted and the borough that it is located in.
What next steps do I have to take?
When a council introduces tricky property legislation, it can drive you crazy in trying to understand how it can affect your property portfolio. So what can you do to stop going a little crazy?
A platform like Yuno will keep you sane and take away all the worry about anything to do with compliance, HMOs and licensing – it’s yoga for property professionals.
No longer will you have to worry about risk as Yuno informs you in real-time about any changes that affect your property portfolio.
For more information on how you can generate leads, increase revenue, save time, reduce risk and win instructions, please contact Yuno on 020 3848 2205 or email email@example.com