Councils fear cash claims if they tackle HMO problems

Councils fear cash claims if they tackle HMO problems

15:03 PM, 27th October 2010, About 14 years ago

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Councils are afraid of tackling shared housing problems because they fear landlords will sue them for loss of earnings, a senior planning councillor in a university town has revealed.

In an exclusive interview, the planner disclosed his council abandoned taking on powers to give them more control over houses in multiple occupation (HMOs) after taking legal advice.

This is the first time a council has spoken out about why local authorities are slow to tackle HMO problems.

The advice was the council could risk claims for compensation from property investors that would be ‘financially unviable’ for the council to pay.

“We undertook a risk assessment from the council’s planning and legal teams before proceeding with Article 4 powers under the Housing Act 2004,” said the source.

“We were told that any landlord who lost income as the result of the refusal of planning permission to open or extend an HMO could sue the council for compensation and that the risk covered an unknown number of possible cases and an open-ended amount of compensation.

“The council simply could not make a decision to proceed under those circumstances.”

The source, who is a Conservative councillor in contact with Housing Minister Grant Shapps, also revealed that the government is looking at revising HMO planning rules again – for the fourth time since April 6 – to avert the problem.

“I am told that any council giving 12 months notice of taking on Article 4 powers will have the worry of legal action from landlords for loss of earnings removed,” he said.

“I have yet to see confirmation of this, but understand this is the government’s intention.”

Many councils are under pressure to take on Article 4 powers. These controls allow councils to impose planning conditions on new and extended HMOs as well as selective licensing of HMOs at a neighbourhood level.

Residents see these powers as help in stamping out antisocial behaviour in areas with a high concentration of shared housing – many of which are in university towns and cities.

Several councils have announced intentions to take on the powers – notably Oxford City Council.

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