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14:30 PM, 10th June 2020, About 4 years ago 6
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Over the past year we have seen Mandatory HMO licensing increased in scope to include all properties with 5 or more occupants, where they belong to two or more households. Since this we have seen a dramatic increase in the use of prosecutions, civil penalty fines and Rent Repayment Orders against Landlords.
Many landlords, doing their best and running what they believe to be good HMO operations, are oblivious to the fact that a licence is even required. As we all know, ‘ignorance is no defence in the eyes of the law’.
We have a growing number of people being influenced by YouTube and property promotional events to rent properties and then re-rent them as serviced accommodation (hotel) rooms or HMOs having little or no regard to the requirements for housing act compliance, planning permission or licensing. Ignorance of the law, again.
Most landlords do not realise that local authorities have become extremely powerful. We now find case after case where Councils are using nigh-on military and espionage type tactics in order to secure prosecutions or, increasingly, apply civil penalty fines (which the council gets to keep).
The most terrifying thing for people like myself working in compliance and defending portfolio and small landlords against the authorities is the startling number of cases where the severity of the situation has not sunk in. Each of these Landlords is the alleged perpetrators of one or more crimes committed by breaching HMO licensing and/or HMO management regulations.
They need to wake up! These are severe criminal matters and the fines are enormous.
An increasing number of Councils are also enacting Additional HMO Licensing schemes that mean all ‘sharer’ houses in an area need to be licensed as HMOs or the landlord will face a criminal charge.
Many council planning departments are also enacting HMO Article 4 Directions which mean that any and every newly formed HMO (think 3+ people, not all one family, sharing) requires formal planning permission. So many rent-to-rent and rent-to-SA people are falling foul of this.
The regulations are about to get tougher too. The forthcoming new (post-Grenfell and post Bolton Cube) ‘Fire Safety Order’ is going to seriously upscale the requirements on fire doors and fire alarm systems in ALL rental properties – whether single let, HMO or serviced accommodation. And whether they need licensing or not.
We expect the existing systems HHSRS and LACORS both to be rewritten and republished in the next couple of years too. (If you don’t know what these are, you need to find out.)
Since those requirements were written in the mid-noughties, and the advancement of the HMO industry, it is clear that we are seeing more and more demand for high-end HMO rooms – on a comfortable, safer and more luxurious level.
These are becoming the first-time home for many starting work or graduating from University rather than a stop gap as they were in the past. They’re also popular with older ‘silver-singles’.
We find that most councils don’t understand this market at all (or choose not to). They still view HMOs as the bottom of the housing food chain with occupants as described by the Judge in the case of Nottingham vs Parr as likely to be ‘immigrant, low income and vulnerable.”
This could not be further from the growing reality of the type of occupants that many readers of this article provide high quality HMO accommodation for.
These are more likely to be persons of high intelligence, multinational education, educated to degree or even master’s level. Often working in managerial and even C level positions, and on very respectable incomes.
Yet we see frequent, wilful, enforcement from local authority housing officers based on all HMOs being as per Nottingham vs Parr ‘housing for the most vulnerable in society who have no choice where to live and who need protecting from evil landlords.’
The result is that we see often overzealous, and probably promotion hungry, enforcement officers leaving common sense in the bathroom when they go out to work in the morning in order to aggravate, chastise and prosecute generally good landlords who are following clearly safe guidelines.
They aim to penalise decent landlords over minuscule things or findings; because they now have the POWER to fine landlords under the civil penalty legislation. They send these out like parking tickets (except these are for up to £30,000) even though frequently the council itself has not followed due process and procedure on its part.
Have no doubt: You the landlord are guilty until proven innocent under this regime.
I found it quite astounding but in the last year, I’ve worked on many cases where legal sub-landlords had been presented with £25,000 civil penalties where the council has entered premises and has not followed its legal duty nor done the required complete assessment of the property to establish the grounds for its intended prosecution, let alone the issuance of the civil penalty!
There are many cases that come across my desk and one as recently as last week was a landlord who had being taken to court by the local authority for licensing and management offences relating to operating an unlicensed HMO. Despite the fact it was declared by the landlord that he had rented the property to two sisters and their husbands (Two sisters and two brothers-in-law, that sounds like one family to me).
Yet the over-zealous council decided that these were four persons forming two households and issued a declaration that the house is an HMO and then proceeded to prosecute them under their Additional HMO licensing scheme.
If that nonsense (and I use that legal term advisedly) was to hold water then there are thousands of properties being rented by large families that this council would claim are illegal HMOs.
We are up against Council Nonsense every day!
Another very interesting recent case was where a wealthy landlord had let a property to a company; for them to sublet by the room (rent-to-rent). In that local Borough, the property would require an Additional HMO licence. The agreement was that the superior landlord would apply for the required licence. He did not even after significant pressure from the sub-landlord.
The sub-landlord company then received a massive Rent Repayment Order from one of the occupants. We expect all the occupants to do likewise, which will end up in a cost of more than £50,000 to the sub-landlord who will then have to litigate against the superior landlord for breach of contract.
The superior landlord and the sub-landlord can both expect to be prosecuted for the Section 72 offence of operating without an HMO licence plus a Section 234 offence for breach of management regulations. These are very serious criminal charges.
This once again illustrated to me just how many landlords are blatantly and wilfully ignoring their legal duty to operate Housing Act compliant licensed properties and to comply with planning legislation.
Landlords and rent-to-rent operators all too often have their heads in the sand. They believe they are innocent; or being unfairly or harshly treated. Despite all logic and reason, they do not accept nor believe that they (or the property company they are running) have committed a criminal offence for which there are expensive and criminal consequences and redress by the local authority and the tenants.
Let me be very clear; when the Housing and Planning Act 2016 came into force it gave councils the power to prosecute you without any reference to the courts, judges nor the Crown Prosecution Service. In effect it gave them the power to be police, judge and jury. That is a frightening amount of power.
The Council is not your friend: Stop talking to them!
Let me explain: Most days in our office the number of calls coming in that are in response to problems the landlords have with licensing or planning enforcement . It makes us think we’ve put out an advert offering free gold bars!
The stark reality is that they are landlords and agents calling in desperation as they begin to find out that they are in breach of legislation and slowly realise they are guilty.
What makes it all the more difficult is that it is their decision making thus far that has got them into this trouble. Yet they continue to make decisions which get them into deeper and deeper trouble.
The common response when we explained to them that they are guilty, is they believe they can just call the local council and negotiate their way out.
They fail to understand that the council is their prosecutor.
If the police accused you of a serious crime, you wouldn’t pop in to tell them everything you know in the hope of negotiating your way out. You would get expert representation. Yet this is exactly what landlords do when the council invites them to ‘pop in for a chat’.
What the council has actually invited them to is a PACE (police and criminal evidence) interview which is conducted under caution. Landlords attend these interviews and spill their hearts out to expertly trained interviewers. Convicting themselves.
Please don’t get me wrong we at Landlord Licensing & Defence are very much in favour of rogue landlords, bad landlords and illegal landlords being removed or rehabilitated through enforcement of legislation, but not the increasing onslaught of councils against decent landlords.
We are seeing eye-watering amounts in civil penalty fines being issued by councils. It reminds me very much of American lawsuits where they’ll go for as high a figure as they dare; with the aim of negotiating a settlement through plea bargaining.
Unfortunately, time after time we see unrepresented landlords (with minimal knowledge of housing law) then attempt to plea bargain against skilled inquisitors. Inevitably it makes their situation worse rather than better.
If you find you are in trouble with a council remember they are prosecuting you on criminal matters. Stop talking to them immediately and get professional representation from an expert in Housing Act law and regulations.
Landlords Defence is a company set up to assist Landlords to avoid prosecution and fines by being fully compliant with the Law and the Regulations.
Landlords Defence regularly assists owners and Landlords who have just discovered the hard way (when a massive Civil Penalty Fine notice lands on their desk) that they have not been complying with the law and regulations. Landlords defence takes charge of the situation, negotiates with the appropriate Council on the basis that the owner/landlord has now taken professional advice and help and then manages an immediate operation to make the property fully compliant with legislation and installs systems to ensure it can stay that way.
Contact Des Taylor and Landlord Licensing and Defence here: www.landlordsdefence.co.uk/contact or phone 0208 088 0788.
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Paul Shears
2:24 AM, 11th June 2020, About 4 years ago
Nine months ago my tenants had an unannounced visit from the council. The excuse given, was that the council had been informed that the integral double garage had been converted into accommodation.
My lead tenant at the time, was working on his car in the garage, and the conversation took place within the open garage.
The council official then expanded the conversation to enquire about the nature of the contract and how many people were living in the house. When my tenant pointed out that they were only four people on a jointly and severally liable contract, took up no parking spaces in the road and placed no burden on the neighbours, the official apparently agreed went away.
Several months later, just at the start of Covid19 I received a letter from the council pointing out that they have now set up a department to inspect properties known to not require a HMO license.
The facts speak for themselves.
My tenants are all voluntarily moving out at the end of the month. I will sell my own home and move into the rental property before selling that and leaving this messed up country.
I have an ex member of my staff in another field who is a staunch conservative county councillor and a landlord himself.
Even he can make absolutely no sense of the desire of both left and right wing politicians and councils to destroy the small scale landlord industry. So he is about to sell his last rental property.
Des Taylor Landlords Defence Ltd
10:45 AM, 11th June 2020, About 4 years ago
Hello Paul,
Yes, the council have intelligence officers gathering information for present and future use and cross referencing everything to be able to enforce where they can.
The Property Passport will make it easier for the councils to identify things and breaches of compliance.
Many landlords are finding this business is more complex than before.
It is becoming essential that management systems are in place that cater for management and legislation and that they adapt as things change and the people running the management systems are competent.
The managing agents will become dominant and those that do it well will be valuable and worth employing for full management.
The time has come to accept that no matter which government is in place, the rules are getting more stringent and will likely do so more and more.
If you need help then book a Free Initial Assessment Call with us: https://www.landlordsdefence.co.uk/book/
Des Taylor
Casework Director
Landlord Licensing and Defence
Rod
11:25 AM, 11th June 2020, About 4 years ago
The council are after money, 'big' money because the gov't subs have gone! Got to get it from somewhere poor things!
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mna
18:45 PM, 11th June 2020, About 4 years ago
Am I right in interpreting your article, that if a SA operator has a Rent to SA property, with 5 singles beds, across three bedrooms, they would need an HMO licence?
The key customers for most SA operators, currently, are Key workers or Contractors in the Building Industry. These individuals are not normally related, and the booking made via OTA’s such as Booking.com.
They are all one party but not related, is this not enough?
Des Taylor Landlords Defence Ltd
7:58 AM, 12th June 2020, About 4 years ago
Reply to the comment left by Rod at 11/06/2020 - 11:25
Hello Rod,
The interesting thing is that the money raised from enforcement activities is used only to fund more enforcement activity. That si all that is allowed.
This means that the more that they catch, the more they will pursue, the more they will enforce, the more they will catch.
Good landlords making errors are as likely to be enforced against as much, if not more than the landlords who blatantly disregard the regulations.
The more they can enforce and the more HMOs identified that can be licensed, and the more self-contained the rooms in HMOs become, eventually, the Valuation Office can move towards valuing for council tax by room.
This will eventually mean that the Council gets multiple payers of Council Tax Income on the same building that today they have a single source of income via Council Tax. It could be a long game that is being played.
The danger is that as you give individuals more power, the more they feel the need to dominate and be ugly. This we are seeing in some local authorities, to the point, that they will deviate excessively from the due process to achieve their aims. Many landlords don’t realise this, until of course our firm steps in and stops this in its tracks.
There are more enforcement and more fines coming, that is for sure.
Landlords need to be careful not to self-incriminate by simply being compliant to the investigative questions.
Des Taylor – Casework Director
Landlord Licensing and Defence
0203 877 0905
Des Taylor Landlords Defence Ltd
8:35 AM, 12th June 2020, About 4 years ago
Reply to the comment left by mna at 11/06/2020 - 18:45Hello mna,
You present a conundrum that many Serviced Accommodation operators are faced with.
Is it HMO or not?
There are many Serviced Accommodation Operators offering accommodation to short term guests that to anyone looking from the outside (including the local authority) look more like tenants.
The Housing Act 2004 caters for tenants and this means that is the occupation a tenancy or not. (Houses in Multiple Occupation by its name is about occupation not tenancies).
That question is a debate many can have and the council has to prove that. It may go as far and to make a HMO Declaration to confirm a property as a HMO. (This is a technical part of things).
So, the council has to evaluate the occupation and there are three main things to consider:
Firstly:
The elements that they need to prove:
1. It is Rented property
2. That Rent or other consideration is payable (this is the point that maybe when the council is interviewing the occupants many guests will call the money they pay rent).
3. The of number of occupants
4. Knowledge of sharing of amenities
And Secondly:
The landlord would need to be able to prove to a criminal standard and beyond reasonable doubt, that the occupants lived somewhere else, that they were only staying temporarily and that this was not their place of normal residence. (As you can imagine a contractor on-site in a location for many months, may be seen by others as living there).
And Thirdly
There is no requirement on the Council to prove that the landlord (host) knew that he was in control of or managing a property which was a HMO, and which therefore was required to be licensed.
In summary:
The case will only be answered by a tribunal or a judge to get a precedent and I answer based on experience and cases I have been able to represent the Landlord to a suitable solution for both Council and the Landlord.
Often councils start in the area of planning. (They have been known to us to pursue, planning, licensing, environment and building regulations all at once). The laws exist for the council to investigate and make a statutory declaration and then if it is declared a HMO, it is a HMO. (You would need to appeal to the First-Tier Tribunal to overrule that declaration).
Whilst the accommodation may appear as serviced accommodation and bookings are done through a third party, in many of these arrangements that become extended stays, the agent is often bypassed later in the relationship, to have direct access. Relying on an online travel agency booking as a defence would likely be a weak one in the eyes of a judge.
If the area is also a Selective Licensing Area or Additional HMO Licensing Area, then you would need to tread carefully.
Unilaterally, the accommodation should be assessed Fire and Health and Safety risks and whilst doing that, the findings will be like those required for a HMO, therefore, works will be required for alarms, fire protection etc.
The solution many adopt is to apply for a HMO Licence and to let as short term or long term, as this prevents the property being at risk of being unlicensed when it should do, see Thirdly above, and it permits them to create tenancies and/or licences to occupy during the term of the HMO Licence.
Of course, please read the other comments made above as there are other considerations which could become important depending how the property is configured and the facilities contained in each bedroom.
As you can see this is a complex subject, in which professional advice should be taken and evaluations made as to the risks in the varying areas of law which are covered by this arrangement.
Wherever you are at in your Serviced Accommodation business if you need help then book a Free Initial Assessment Call with us: https://www.landlordsdefence.co.uk/book/
Des Taylor
Casework Director
Landlord Licensing and Defence