Houses in Multiple Occupation and Licensing Reform

From 1 October 2018, the Houses of Multiple Occupancy mandatory licensing requirements will be expanded to include a number of new buildings, previously exempt from the legislation. Landlords will also be obliged to ensure their tenant's bedrooms meet minimum size criteria and that their tenants comply with the local waste disposal scheme.

Houses in multiple occupation (HMOs) are playing a significantly central role in meeting the countries housing needs. Students, young professionals, migrant workers and the most vulnerable members of society all rely upon shared accommodation and the government is recognising the need to ensure that residents are not exploited by unscrupulous landlords looking to maximise their profit and house tenants in unsuitable accommodation. 

Two storey houses or flats, originally designed for families, have been used more and more and overcrowding has become a particular issue that the government is looking to address. The government also recognises the impact of HMOs on the wider local community particularly where inadequate rubbish storage has led to an increase in the presence of vermin and associated health and safety problems. 

The specific secondary legislation coming into force is:

• The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 ("The Prescribed Description Order"); 
• The Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018 ("The Mandatory Conditions Regulations"). 

It is therefore important that all landlords who rent private property fully understand the landscape of licensing reforms and what their duties will be after 1 October 2018. 

Who and what is affected 

Simply put, Part 2 of the Housing Act 2004 required local housing authorities to license HMOs in their respective areas if the properties in question met the definition of an HMO under the 2004 Act. The licensing regime originally only applied to properties of three storeys or more with five or more people making up two or more separate 'households' (or family units) living within them. 

The incoming Prescribed Description Order sets out the types of buildings which will now be subject to HMO licensing requirements. The new definition of an HMO will include buildings which are one or two storeys high and which accommodate five or more people from two or more separate households or families who share amenities (such as a toilet, personal washing facilities or cooking facilities). These properties will now be considered to be HMOs and require an HMO licence as from the 1 October 2018.

Flats which meet the self-contained flat test will also need to be licensed. Such properties will meet this test if they are occupied by 5 or more people forming more than one household and the flat lacks a basic amenity or more than one household shares a basic amenity. Licensing will be required for these flats unless they are purpose-built. 

A property will also need to be registered as an HMO if it meets the converted building test, namely whether it has been converted (in the every-day use of the word) and is not a self-contained flat. If the building itself contains self-contained flats, then this is irrelevant. 

A converted building is a property where living accommodation has been created since the original building was constructed. A house converted into a bed-sit may meet the test but so too may a family house where only part of it has been converted to provide separate accommodation. 

Exemptions  

Although the new rules will increase the number of properties which come under the umbrella of HMO licensing requirements, the exemptions contained at Schedule 14 to the Housing Act 2004 continue to remain in force and can still be relied upon by landlords. 

For example, the Schedule provides that buildings which are managed or controlled by a body which is registered as a social landlord under Part 1 of the Housing Act 1996 (or is social housing within the meaning of Part 2 of the Housing and Regeneration Act 2008) are not HMOs and are therefore exempt from the obligation to obtain an HMO license. 

New Mandatory License Conditions

Amendments to the Housing Act 2004 provides that a local housing authority may impose certain conditions relating to the management, use and occupation of a licensed HMO.

The mandatory conditions are specified in Schedule 4 of the Housing Act and relate to the provision of smoke and carbon monoxide alarms, gas safety and the safety of electrical appliances and furniture. 

The Mandatory Condition Regulations introduce the following: 

• Waste disposal provision requirements; and
• Mandatory national minimum sleeping room sizes. 

Local authorities will, after 1 October 2018, need to include a condition as part of the HMO license to oblige the landlord to comply with the council's storage and waste disposal scheme. These will be mandatory conditions. 

If a license holder fails to comply with the waste disposal scheme will be a breach of the terms of the license and they will be committing a criminal offence. 

The minimum sleeping room sizes to be imposed as conditions of Part 2 licences are: 

• 6.51 m² for one person over 10 years of age;
• 10.22 m² for two persons over 10 years of age; and
• 4.64 m² for one child under the age of 10 years.

 It will also be a mandatory condition that any room of less than 4.64 m² may not be used as sleeping accommodation and the landlord will need to notify the local housing authority of any room in the HMO with a floor area of less than 4.64 m². 

If a license holder breaches the prescribed minimum room sizes then they may, on conviction, be subject to an unlimited fine. The local housing authority may alternatively impose a financial penalty of up to £30,000 without prosecution. 

Local housing authorities are not bound by these room sizes however. They will have discretion to set their own higher standards within license conditions. Perhaps unsurprisingly, they cannot set lower standards. 

Transitional provisions 

Landlords of HMOs that fall under the new definition will be committing a criminal offence if they fail to apply for a licence or a temporary exemption by 1 October 2018. 

Fortunately, both the Prescribed Description Order and the Mandatory Conditions make transitional provision to allow local authorities and landlords the opportunity to comply with the new rules and enable the smooth transition to the new regime: 

For properties currently licenced: 

• The existing licence is valid and its conditions will apply until the date the licence expires; and
• The extended mandatory licensing conditions (minimum sleeping room sizes and waste disposal requirements) will apply from the renewal of the existing licence. 

If at the time the licence is renewed and the licence holder is not compliant with a condition related to sleeping room size the local housing authority must provide notification specifying the condition or conditions and a period of up to 18 months within which the licence holder must become compliant.

The new licensing regime is designed to drive up health and safety standards and clamp down on private landlords providing inadequate accommodation for increased profit. All landlords will need to be aware of the new licensing requirements and their obligations to ensure they are acting in compliance. 

If you have any queries or concerns about your organisation's obligations in respect of the new licensing rules, please contact Kate O'Brien or Matthew Watts who will be happy to discuss the matter with you.