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Licensing of HMOs


The Housing Act 2004 introduced licensing of some categories of HMOs. It is compulsory to licence larger, higher-risk dwellings. Local authorities will also be able to additionally licence other types of HMOs if they can establish that other avenues for tackling problems in these properties have been exhausted.

>> Purpose of licensing of HMOs

Licensing is intended to make sure that:

  • A landlord of an HMO is a fit and proper person (or employs a manager who is)
  • Each HMO is suitable for occupation by the number of people allowed under the licence
  • The standard of management of the HMO is adequate.
  • This is to ensure vulnerable tenants are protected and that the dwelling is not overcrowded

High-risk HMOs can be identified through licensing and targeted for improvement by a local authority under the HHSRS.

>> HMOs subject to mandatory licensing

Mandatory licensing applies to HMOs for which:

  • The HMO or any part of it comprises three storeys or more, and
  • It is occupied by five or more persons, and
  • It is occupied by persons living in two or more households

If you are the landlord of a licensable HMO you must apply to the Local Authority for a licence. More information about mandatory HMO licensing can be found on the DCLG website.

For clarification of whether or not your property is licensable contact your local Environmental Health team. [see Useful Contacts for Landlords]

If you refuse to apply for a licence or cannot meet the criteria yourself yet do not use an agent to manage the property, the local authority must intervene and manage the property.

Other HMOs may also require a licence through an additional local authority licensing scheme. [See below]

>> Additional licensing of HMOs

Local Authorities have a discretionary power to establish a scheme to require particular types of HMO within their area to be licensed. This can apply to any type of HMO provided it isn’t already mandatorily licensable, nor exempted by the Act (for example student halls of residence, housing association owned properties).

Before they can set up such a scheme, the authority must follow the legal process which includes:

  • Identifying the problems arising from that type of HMO
  • Considering whether any other course of action to deal with the problems is available
  • Ensuring the scheme is consistent with their local housing strategy
  • Consulting with those likely to be affected including tenants, landlords, landlord organisations etc

A scheme does not come into effect until three months after it is made and may last for up to five years.

>> Selective licensing

Local authorities have the power to selectively licence any privately rented properties in designated areas suffering from low housing demand and/or significant and persistent anti-social behaviour. A selective licensing scheme is not limited to HMOs.

A similar process to that for Additional Licensing must be followed before a scheme can be made. A scheme does not come into effect until 3 months after it is made and may last for up to 5 years.

>> Transitional licensing

Prior to the introduction of HMO licensing, some local authorities operated HMO registration schemes locally with control provisions, to ensure that HMOs met certain standards. In those areas, all registered HMOs requiring a mandatory licence were automatically given one for the duration of the remaining registration period. At the end of that time you or the manager will have to apply for a new licence if the property continues to meet the criteria for mandatory HMO licensing.

Smaller registered HMOs that do not require a mandatory licence are also automatically given a licence as if an additional licensing scheme was in operation. This licence lasts for the remainder of the period they would have been registered. 

This special arrangement for additional licensing schemes to replace registration for smaller HMOs will last until July 2009. After that if the local authority wishes to continue additional licensing they have to undertake the normal consultation and approval procedures. However, even if they drop the scheme any licences which are still running will remain in force until the end date on the licence. When the licence comes to an end, if there is no new additional licensing scheme in place, you will not need to apply for a new licence.

>> Applying for a mandatory licence

Anyone who owns or manages a licensable HMO has to apply to the local authority for a licence. West of England HMO licence application forms can be downloaded here.

The local authority must give a licence if it is satisfied that the:

  • HMO is reasonably suitable for occupation by the number of people allowed under the licence
  • The proposed licence holder is a fit and proper person or that the proposed manager, if there is one, is fit and proper
  • The proposed licence holder is the most appropriate person to hold the licence
  • The proposed management arrangements are satisfactory, the person involved in the management of the HMO is competent and the financial structures for the management are suitable

As of 01 January 2008 the West of England authorities will be taking a hard line towards landlords of licensable HMOs who have failed to come forward and apply for their licence.

The landlord of any licensable HMO who has not applied for a licence by 01 January 2008 may be subject to an additional £100 administration fee on top of the licence fee for the property. Landlords could also be prosecuted for failing to licence their properties [see Offences below].

>> Fit and Proper Person test

In determining whether the licence applicant is a ‘Fit and Proper Person’ the local authority will take into account a number of factors. They have to consider:

  • Any unspent convictions relating to violence, sexual offences, drugs and fraud
  • Whether the person has breached any housing or landlord and tenant law
  • Whether they have been found guilty of unlawful discrimination

>> Licence conditions

A mandatory licence, which will normally last for the maximum five year period, will carry a fee to be charged by the local authority to cover their administration costs. This fee will vary with the size of the property and the number of occupants. There may also be discounts available for joining certain schemes, such as accreditation or deposit bond or loan schemes. The licence will specify the maximum number of people who may live in the HMO. The following conditions must apply to every licence:

  • A valid current gas safety record, which is renewed annually, must be provided (for properties that have gas)
  • Proof that all electrical appliances and furniture are kept in a safe condition
  • Proof that all smoke alarms and emergency lights are correctly positioned and installed
  • Each occupier must have a written statement of the terms on which they occupy the property. This may be, but does not have to be, a tenancy agreement

The local authority may also apply other conditions of their own which may include any of the following:

  • Restrictions or prohibitions on the use of parts of the HMO by occupants
  • Action necessary to deal with the behaviour of occupants or visitors
  • Ensuring the condition of the property, its contents, such as furniture and all facilities and amenities (e.g. bathroom and toilets) are in good working order and to carry out specified works or repairs within certain time limits
  • A requirement that the responsible person attends an approved training course in relation to any approved code of practice

A full list of HMO licensing conditions can be obtained from the licence application form, available at:

www.landlordinfo.co.uk

>> Properties which cannot be granted a licence

If the property is not suitable for the number of occupants is not properly managed or the landlord or manager is not a fit and proper person, a licence will not be granted. If an HMO is supposed to be licensed but cannot be granted one, the council must make an Interim Management Order (IMO), which allows it to manage the property.

The IMO can last for a year until suitable permanent management arrangements can be made. If the IMO expires and there has been no improvement, then the council can issue a Final Management Order (FMO). This can last up to five years and can be renewed.

>> Temporary exemption from licensing

If the landlord or person in control of the property intends to stop operating as an HMO or legally reduces the numbers of occupants and can give clear evidence of this, then they can apply for a Temporary Exemption Notice.

This lasts for a maximum of three months and ensures that a property in the process of being converted from an HMO does not need to be licensed. If the situation is not resolved, then the landlord can apply for a second Temporary Exemption Notice for a further three months. When this runs out the property must be licensed, become subject to an Interim Management Order, or cease to be a HMO.

Temporary Exemption Notices also apply where the licence holder dies. The property will be treated as if it is subject to an exemption notice for three months, during which time the estate can either apply for a new licence or cease to run the property as an HMO. If it takes longer than the initial three months the estate can apply for one further exemption notice.

>> Right of appeal against a local authority decision

A landlord can appeal to the Residential Property Tribunal, normally within 28 days if the local authority refuses a licence, grants a licence with conditions, revokes or varies a licence.

More information about the work of the Residential Property Tribunal Service and the jurisdiction of Residential Property Tribunals under the Housing Act 2004 can be obtained from their website.

[See Residential Property Tribunal Service for more information on the RPTS]

>> Offences

It is a criminal offence if you or the person in control of the property fails to apply for a licence for a licensable property or allows a property to be occupied by more people than are permitted under the licence. A fine of up to £20,000 may be imposed. In addition, breaking any of the licence conditions can result in fines of up to £5,000.

Note also, that no section 21 notice [see Section 21 Notices] may be given in relation to a shorthold tenancy of a part of an unlicensed HMO so long as it remains such an HMO. This means that unlicensed HMO landlords will be unable to evict their tenants by the notice-only section 21 procedure.

>> Rent Payment Orders

The Local Authority may apply to the Residential Property Tribunal Service for a ‘rent repayment order’ allowing it to reclaim any Housing Benefit that has been paid during the time the property was without a licence up to a maximum of 12 months.

A tenant living in a property may also make an application to claim back any rent they have paid during the unlicensed period, up to a maximum of 12 months, if the landlord has been convicted of operating a licensable HMO without a licence, or has been required by a rent repayment order to make a payment to the local authority in respect of Housing Benefit on the property. 

For more information about licensing go to:

www.communities.gov.uk

or

www.landlordinfo.co.uk

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