Legislative changes mean that larger HMOs must be licensed and a failure to do so is a criminal offence. James Driscoll outlines the new provisions
Following new provisions introduced by Part 2 of the Housing Act 2004, larger houses in multiple occupation (HMOs) are now subject to mandatory licensing. This change was introduced in England on 6 April. It replaces the previous system under the Housing Act 1985, which gave authorities a discretion to have a registration scheme for HMOs in their area.
The 2004 Act:
● introduces a new and more comprehensive definition of HMOs;
● creates the new requirement that certain HMOs must have a licence; and
● gives local authorities the power (with government consent) to introduce additional licensing for those HMOs that do not require a licence under the mandatory system.
Landlords of larger HMOs will now have to obtain a licence in order to operate lawfully. Failure to do so is an offence that is punishable with a fine of up to £20,000. Defaulting landlords could face rent/housing benefit repayment claims and will be barred from recovering possession on the two-month notice ground where they let on assured shorthold tenancies. Local authorities can make management orders under Part 4 of the Act if they decide to revoke a licence (and in other cases). From 6 July, authorities will also have the power to prosecute where an HMO operates without a licence.
How is an HMO defined?
A building is an HMO under the 2004 Act if it meets one of the following new tests:
● The “standard test”: A building with one or more units that are not self-contained flats occupied by persons who are not part of a single household and who share basic amenities, or where there are no such amenities.
● The “self-contained flat test”: A flat occupied by persons sharing basic amenities (or lacking them) who do not form a single household.
● The “converted building test”: A converted building containing one or more units that are not self-contained flats and are occupied by persons who do not form a single household – there is no requirement for the sharing of basic amenities under this test.
● The “converted blocks of flats test”: A building where the conversion works do not comply with building standards and where fewer than two-thirds of the flats are owner-occupied.
● An HMO declaration has been made by the local authority.
Occupiers form part of a “single household” if they are members of the same family, namely they are married or living together as husband and wife – or in an equivalent relationship if they are of the same sex – or are relatives. A property that would otherwise be an HMO under the standard, self-contained or converted building tests is not an HMO if it is occupied by one family or by a family and certain relatives. Moreover, some persons employed by a family, such as carers, are treated (by the Licensing and Management of Houses in Multiple Occupation and Other Houses (Miscellaneous Provisions)(England) Regulations 2006 (SI No 373)) as though they form part of the family. Furthermore, a local authority can also declare a building to be an HMO where the occupation amounts to a “significant use” of the accommodation: see section 255 of the 2004 Act.
Some arrangements are excluded. These include buildings that are:
● managed or controlled by a local authority, registered social landlord and certain other public bodies (so, a building leased to such a public landlord might not be treated as an HMO);
● regulated by other legislation;
● occupied by students and controlled or managed by a university or certain other educational establishments;
(See Schedule 14 to the 2004 Act for the full list of buildings that are not HMOs for the purposes of the Act.)
Which HMOs have to be licensed?
The Licensing of Houses in Multiple Occupation (Prescribed Descriptions)(England) Order 2006 (SI No 371) states that an HMO that is three storeys or more, occupied by five or more persons, living in two or more single households, must be licensed.
Smaller HMOs may need to be licensed if the relevant local authority has adopted additional licensing. Some HMOs that are subject to mandatory licensing and were registered under the 1985 Act are “passported” onto the new system. Those HMOs that are subject to a registration scheme with controls under the 1985 Act are treated as being designated as areas to which additional licensing applies (under the 2004 Act commencement order no 5 (SI no 1060)). These buildings will therefore be licensed, assuming, of course, that they remain as HMOs under the new provisions.
Local housing authorities must be satisfied that: (a) the applicant is a fit and proper person to hold an HMO licence; and (b) the house is reasonably suitable for occupation by the stated number of occupiers (or will be if conditions in the licence are fulfilled). Licences will be granted subject to conditions, some of which will be mandatory (specified in Schedule 4 to the 2004 Act) and others at the discretion of the authority. The licence holder’s failure to observe a licence condition is an offence. Appeals against licensing decisions are heard by the Residential Property Tribunal, so an appeal lies against a refusal of a licence, or against conditions contained in it, or a subsequent decision to revoke a licence to the tribunal.
Where a property requires a licence under Part 2 of the Act, the landlord may seek a temporary exemption notice if it wishes to take steps that will result in the property no longer being licensable. For instance, it might recover possession and renovate the premises in order to sell.
Landlords will have to consider applying for a licence if a non-HMO property needs one under a local authority selective licensing scheme made under Part 3 of the Act.
James Driscoll is a consultant solicitor at Trowers & Hamlins
