License to thrill – new changes to HMO licensing are worth getting excited about
24 Oct 2016
The government is extending mandatory licensing for houses in multiple occupation so 870,000 additional private tenants have extra protection from rogue landlords, including through minimum space standards. It is also consulting on further changes to improve the level of protection they get. While these are positive steps in their own right, the indication that the government continues to recognise the need for reform in the PRS is also hugely encouraging.
Tweaking HMO licensing regulation doesn’t exactly sound like the sort of policy change that is going to make your pulse race. But the announcement last week that the government is consulting on a swathe of changes to mandatory licensing is worth getting excited about.
Not only do the proposals stand to give almost a million more tenants the protection of living in a licensed property, they are also likely to enhance the quality of that protection with new space standards and a raft of other proposals.
Before we crack into the detail, it’s worth giving a quick refresh of what an HMO, or ‘house in multiple occupation’ is.
HMOs are basically properties that are shared by a group of friends or strangers: the sort of arrangement that’s common among students or that gets advertised on Spareroom or Gumtree. The sharers are likely to have their own bedrooms, but they will also share amenities like a bathroom or kitchen.
Many HMOs are fine and adequately meet the needs of the tenants who live there. But some rogue landlords use HMOs to make vast amounts of money by exploiting unaffordable rents and desperate tenants. They offer what seem like relatively low rents, but make up for it by stacking too many tenants into too little space, and don’t invest in the quality of the property. As such, some of the worst conditions and overcrowding in rented housing have historically been in HMOs. (Take a look at this recent example, if you want an idea of what I’m talking about.)
Which brings us onto the final thing you need to know about HMOs. Because they’re more at risk of being poor quality, HMOs are already subject to a complex licensing regime, which can vary between and even within different council areas. Licensing helps to ensure that conditions are good in HMOs by
- setting standards for the quality of the home
- making sure landlords and their agents are ‘fit and proper persons’
- and requiring landlords to pay a fee, which goes back into enforcement
And if a landlord is running an unlicensed HMO which is subject to licensing, they face an unlimited fine.
The government is consulting to make changes to mandatory licensing which means that the changes will affect relevant properties in every council area.
So, what changes are being proposed?
The most tangible is the confirmation that in order to be licensable, rooms must meet minimum space standards. This closes a loophole that allowed some landlords to let out tiny rooms, following a decision up an upper-tier tribunal.
For rooms for one person, that minimum standard is 6.52m2 and for rooms for two it is 10.23m2. This clarification is really welcome as 6.52m2 is not big, as you can see in the scale plan below.
The government is also consulting on further changes, including
- Requiring a criminal record disclosure to determine whether landlords are fit and proper and
- A requirement to ensure that there are sufficient refuse disposal facilities
But the most significant change that the government is proposing is probably the sheer increase in the number of properties that will require a license. This is because they are planning to remove the ‘the storey rule’ from mandatory licensing. The storey rule has meant until now that only HMOs of at least three storeys are covered by mandatory licensing. In future, mandatory licensing will apply to all HMOs with five occupants or more from two different households (with the exception of purpose built flats).
DCLG estimates that this means 174,000 additional properties will be covered by mandatory licensing. By definition, each of those properties is home to at least five people living in them, meaning that an additional 870,000 tenants may now receive the extra protection of living in a licensed property.
All of this is positive in its own right.
But it is also a promising indication that the new government recognises the need to continue reforming private renting for the growing number of people who live in it. In recent years we have seen real progress, particularly on improving the regulation of private renting conditions.
These changes have improved and will continue to improve renting for millions of families and people. However, some areas in dire need of reform, like security of tenure, remain largely untouched. There is now a real opportunity to carry on the momentum that the government has built up on conditions and push on by reforming security too, so that every renter can live in a home that is not only good quality, but can also be long term.