First Blanket HMO Licensing Scheme Starts in Oxford

by Property118.com News Team

16:20 PM, 27th January 2012
About 7 years ago

First Blanket HMO Licensing Scheme Starts in Oxford

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First Blanket HMO Licensing Scheme Starts in Oxford

The countdown has begun to the start of the UK’s first HMO blanket licensing scheme that starts in Oxford.

From January 30, every landlord letting a house in multiple occupation (HMO) in the Oxford City Council area must apply to licence the property.

The order covers small HMOs for three to five unrelated tenants as well as larger HMOs that already need compulsory licensing.

Oxford is the first city in the UK to bring in a compulsory licensing scheme for all shared houses.

Councillors reckon the city has 5,000 HMOs – around 1,000 are large HMOs and the rest smaller, shared family homes.

In the past 12 months, 933 large HMOs have registered for a licence.

Councillor Joe McManners, the city council’s board member for housing, said: “The team have worked hard to licence HMOs in the city and we are well on the way to issuing a thousand HMO licences.

“HMOs have long been recognised as being a particular problem in the city, with many examples of poor quality homes and in some cases being poorly managed. These damage the reputation of good landlords and we are determined to put this right, and stop those doing the right thing being undercut by cowboys.

“The private rented sector is hugely important to the residents of Oxford, not just in terms of providing much needed accommodation, but also with the impact that it can have on local communities and licensing every HMO will help drive up standards for everyone.”

Failing to licence an HMO can lead to fines of up to £20,000.

“Enforcement action is being taken against those landlords and agents who are not complying with the scheme and some of them have been taken to court and fined. Now every HMO in the city needs a licence, there is nowhere left to hide,” said McManners.

Every HMO is inspected before a licence is issued. If problems arise from poor management or unsafe living conditions, the council can take legal action to withdraw licences and bar landlords from running HMOs.



Comments

0:30 AM, 1st February 2012
About 7 years ago

Yes I can see that is really sweating your asset; but am still dubious as to the efficacy of using a property like that particularly in light of the fun and games you are experiencing with Norwich council recently and with all this other HMO confusion and cost.
I have enough hassles with 'normal' tenancies.
I can't imagine what it must be like multiplying tenant issues by 5.
So I think I will stick to my conventional less rewarding ways of doing things and leave it to the likes of Robin Pilley to max the profit out of his way of doing things.
I also think turning the say dining room is a bit cheeky.
That really is sweating the asset.
But 1 room; bathroom and a kitchen for 5 sharers.........sounds a bit pikey to me.
Not a very pleasant place to relax in.
I don't think I have the true grit to utilise a property that way.
Perhaps I am in the wrong business!?
I would prefer to have a large downstairs for all the occupants to rewlax in.
It is not good just to remain in your bedroom
It would almost be a prison cell with wallpaper with very small 'association' areas.
I can't think that would make these sharers think anything great about the property they live in.
I respect anyone who is prepared to take on all the hassles of HMO's and good luck to them if they make more money than me.

Mark Alexander

7:39 AM, 1st February 2012
About 7 years ago

I think it's horses for courses Paul. I'm no handy man and I opt for a relatively easy life. I love property, law, people, financial stuff etc. but at heart I'm a marketing man. My real skill is helping businesses to grow and I love it. Besides, it's very lucrative 🙂  My brother, on the other hand, is the complete opposite to me. I'm the thinker, he's the doer. He manages my whole family's property portfolio's and also has a maintainance company too called TheModernizer.com. It works well for me and him too.

Just because I'm not into student lets or HMO's does not mean that I'm not interested in them. I'm intrigued by varying business models used by landlords to generate wealth. Check out "Spotlight on Jonathan Clark" on Property Tribes for example. Mary is a student landlord and then Robin Pilley does something completely different again. They are all successful at what they do so I keep an open mind. If I were in the market to buy more property I would probably be talking to Robin Pilley as he sources and manages HMO's. He is an ARLA member, he's won lots of awards for what he does and he's not that far from me. The 15% yieldshe achieves are very attractive. For the record he's not a client of ours so please don't think I'm saying this just to promote a client.

13:50 PM, 1st February 2012
About 7 years ago

I don’t think costs are that match to meet the full HMO regs if you have to do a complete renovation anyway.  However converting an OK family home to HMO
standards may be close to the cost of a full renovation.

The detailed fire regs are a pain, if only they would give the option of fitting sprinkler systems instead of a lot of the fire proofing.

HMO are not for me at present due to the management demands of them, however if starting from a complete ruck, I don’t think it is that hard to fulfil all the standard, and I agree with Mary that you should be meating most of those standards anyway when aiming for that end of the market even if outside of the licencing requirements.

So just choose the correct property for what you wish to do…

Mark Alexander

14:06 PM, 1st February 2012
About 7 years ago

I think the real problems will kick in when every Council jumps on the bandwagon of selective licencing and follows Oxford lead to make all properties with 3 or more sharers licencable HMO's. They are bound to do it as it generates revenue for them and there's nothing stopping them now due to localisation. It's all very well to say buy the correct property but we can't make retrospective purchasing decisions can we?

Mary Latham

19:17 PM, 1st February 2012
About 7 years ago

I have let to every client group over the last 40 years and I can honestly say that students have been my best tenants.  They are easy going, pay their rent, make you a cup of tea, allow you to show prospective tenants at a time to suit the prospects, tolerate noisy neighbours, carry heavy items into your car.  Ok they might pinch your number plate (constantly), leave the kitchen and bathrom grubby, build artwork with empty beer cans and pizza boxes and use the dreaded blue tac on the walls but none of this is a huge problem.  You know when they will move in and out, when you will be showing for next year and when you need to get your gang together to do the big clean up fix up.

The return on a 3 bed Vic terraced at £20K pa makes it very worthwhile buying some extra marigolds. The same property let to a family would yield £6K if you could find a family crazy enough to live in a student area.

It is not the amount of the Licence fee that I mind it is the injustice of charging landlords who provide nice homes and treat tenants with respect to cover the cost of chasing the rogues.

18:07 PM, 2nd February 2012
About 7 years ago

Just caught wind of this from our Oxford property management agent. Why have we not heard before, I wonder? Immediate reaction is to sell up!

Anyone want a 4-sharer house in Headington in good nick?

matchmade

9:28 AM, 3rd February 2012
About 7 years ago

I'm very pleased for Mary that she's making good profits on her HMOs and believes she makes much more than she would letting to a family. In my experience of the Oxford and Reading markets, the extra rent is no more than 10%, not the 333% suggested by Mary (where can you rent a whole house in Oxford for £6K a year?). In my current Reading houses with 5 occupants, I gross about £1900pcm, which is more than you'd get from a family but the gains are outweighed by the extra costs and churn of tenants. But maybe I've just been undercharging and am in the wrong locations.

I too have had good experiences with students, though I prefer postgraduates to undergraduates because they stick around all year and have more settled lifestyles. Postgraduates also mix well with young working graduates, whereas undergraduates don't, unless you choose your tenants well/get lucky.

So why do I bother with HMOs myself? Because although there is greater turnover, you tend only to lose one tenant at a time out of 4 or 5, so the cost of voids over a few years can be less than with single ASTs to families, where you're earning nothing at all as you try to find a willing replacement. Also, I tend to own large Victorian houses that are principally medium-term land acquisitions as development sites. Such houses struggle to find decent long-stay non-HMO tenants because most well-off families don't want to rent: they much prefer to own, whereas young graduates, lacking the choice of ownership, often prefer large old houses over town-centre locations because of the extra space and as a reminder of their own childhood home. Proximity to the motorway network also helps as young employees often have pretty mobile jobs.

My principal objection to licensing all HMOs isn't actually about the costs, though they hurt, but the effect this will have on the rental market - separating the family market, which requires almost no changes to a newly-purchased house, and housing for single people, who will be forced to live in specialised near-bedsits, with the consequent likely increase in rents and a loss of the community feel you often get in houseshares. In my experience most houseshares are *not* erratic or unsafe, and there is far less damage than a rampant child can inflict. I suppose I want to defend the "This Life" model of housesharing and landlording, which is now under such threat by compulsory HMO licensing. Why can't groups of young people in their 20s and 30s be regarded as capable of living together just like the holy "family unit" which gets off scot free (or depending on your point-of-view, is left unprotected) from all this fuss about HMOs?

Gilly

10:27 AM, 4th February 2012
About 7 years ago

I agree wholehearedly with most of what you say Tony, but I think we landlords all need to make more of a stand in "working with" Councils.  There is gross misinterpretation of many of the fire regulations by council officers, as most shared houses operate without being high risk and there is considerable documentation, particularly in LACORS to back this up. 

A group of able bodied, intelligent sharers who live a co-hesive lifestyle, who watch television, maybe eat together and go to the pub etc are no more at risk than most of us (less so in my case as in my own home I have none of the fire equipment or sophisticated alarms that I provide in my HMO).  The fire statistics reduce drastically in HMOs when you remove the properties which do not have Gas safety certificates and also before no-smoking policies were introduced. 

LACORS is a sensible document which positively encourages assessment of properties and a flexible interpretation of the rules.  As it has received even more clarification since it was first issued, it is evident that some councils are not using their discretion but simply erring on the side of caution and slapping heavy-handed Improvement Notices on good landlords without discussion.  (Sorry if that sounded personal - it was!)

Ian must be working with a particular weird Council if they do not accept a sprinkler system as a viable alternative.  It is allowed and is specifically mentioned in the document ( I'll find it if required Ian).  Though a protected 30 minute escape route "is the ideal" it is not mandatory.  As far as I am concerned, fire doors and closers are the real stumbling block in a small shared house and change the fabric of the building and detract from the lifestyle more than any other regulation.  I am fighting it in my area, with advice from the National Landlord's Association and hope that it will provide a more sensible approach for the future, whilst sufficiently protecting the tenants, which is of paramount importance to us all.  Like you Tony, I don't want to lose my Victorian doors, but there is a treatment which is acceptable and for which you can receive a certificate of compliance (they just try and mess you up with closers and Yale locks once this is agreed - but there is a solution).

I have asked for examples of shared houses without fire doors, which have been inspected, on various posts, but as yet have received none.  I will let you know how I fare with my appeal as it could have quite a bearing.  Has anyone else managed to overturn an Improvement Notice or am I fighting a losing battle?

Good luck OXFORD.

0:34 AM, 5th February 2012
About 7 years ago

You can see though the net effect of what you are going through is enough to discourage LL from entering or even entertaining the idea of entering the HMO market.
Only the strong willed, confident in their stance will be prepared to do battle with intransigent councils.
You appear to be one of those.
But most of us will take the easy route and not gewt into the market accepting they may not be making as much money as they could but accepting less hassle for less money.
As Mark has said it is horses for courses.
Me I am not ever going to be on the HMO course so good luck to all those LL prepared to stick at it!!

12:01 PM, 5th February 2012
About 7 years ago

As with any regulation where there is room for discretion then individuals are at the mercy of the character of the council official dealing with their case, whether that person is pragmatic and business aware or whether they are a power happy pedant.
I fail to understand why 4 adults living in a house require greater structural safety installations than, say, a family with 2 young children. Obviously all houses should have the basics like smoke alarms but these are not compulsory in my home and maybe they should be, the issue is there would be no way to enforce that.
My big concern over this kind of blanket licensing scheme is what plans the council have in place to resource and implement checks and enforcement. Good landlords are easy targets, they are keen to operate legal and safe tenancies. So they will pay for the work and pay the license fee. Bad landlords will continue to operate unsafe premises until they are prosecuted. Unless the councils are going to use their new income stream to really make a difference in the way HMO's are regulated by prosecuting law breakers then the whole exercise becomes another cost to decent businesses making them non-competitive.
Last night I had a conversation with a young girl who is living in a  block of flats with neighbouring flats housing as many as 7 people. They have water running into the electrics. The lettings agent is doing nothing. The landlord is in prison.
In 2009 after a fire in this block of flats they were found to have no fire doors, no adequate means of escape, fake fire alarms, and gas appliances that were not installed correctly nor properly inspected. Whilst the landlord was clearly at fault where is the council in all this? Where is the Gas Safe Register who charge good plumbers but do not effectively regulate the bad ones? What is the point of regulations when they are only prosecuted when lives are seriously endangered or worse, after tragedy strikes. Where is the responsibility for ensuring these licenses are actually worth more than the paper they're written on to anyone other than the councils' fiscal department.

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