HMO Legislation, Mandatory Certificates and Proposed Changes

by Andy Graham

A month ago

HMO Legislation, Mandatory Certificates and Proposed Changes

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HMO Legislation, Mandatory Certificates and Proposed Changes

Landlords of student and professional house share accommodation all over the UK have a number of legal obligations to fulfill, and depending on the type of property you let or exactly where it is, there may be some additional considerations to take into account. This article is intended to serve as a brief reminder to HMO landlords and covers some of the legal responsibilities, although the list isn’t exhaustive. I felt obliged to collate some of the important considerations because it surprises me how many of our landlords are still unaware of their obligations. We invest and manage student property in a number of cities but you should always check with your local council as there are regional variations and additional requirement to some of these.

GAS SAFETY CERTIFICATE

Badly fitted and poorly serviced gas appliances can cause gas leaks, fires, explosions and carbon monoxide poisoning, so this stuff shouldn’t be taken lightly by student landlords or any student letting agent. Carbon monoxide is a poisonous gas which can kill quickly with no warning and some of the symptoms are headaches, dizziness and nausea – you can see why students might mistake this feeling for a hangover… so don’t risk it!

As a landlord, you have full responsibilities for the gas safety, and you’ll certainly need it for your license. By law, you must keep all of the gas appliances you supply in good condition and you must arrange a Gas Safe Inspection every year! The Gas Safe Register is now the official list of gas and heating engineers who are qualified to work safely and legally on your appliances and it replaced the CORGI registration. So, when you need any work done on your boiler or other gas appliances or it’s time to renew your annual Gas Safety Certificate, make sure you only get a Gas Safe registered engineer who will be insured and able to sign it off! It should cost around £50-£60 and is quick and easy! Find out more about the gas safety register here.

ELECTRICAL SAFETY CERTIFICATE

Landlords have a legal duty to ensure that their rental property, and any electrical equipment and appliances provided, are safe before a tenancy begins, and remain safe throughout the duration of a tenancy. This means you need a NICEIC electrical safety certificate, and the HMO license team will require this too. Unless you want to risk a potential fire, a hefty fine and even going to prison if the worst case happened, you need to ensure that the electrical system in your property is checked by a NICEIC registered electrician every at least every 5 years or when modifications are made to the system. It should cost around £140 and is quick and easy! To find out more about the NICEIC scheme and to find a contractor near to you, then please click here.

FIRE SAFETY CERTIFICATES

Fire safety has never been more important. Exactly what you require will depend on the type of property you have, the number of bedrooms and whether it is subject to HMO licensing policy. You might also need emergency lighting and whether or not you do, will depend on the same things. A good starting point would be the LACORS  guidance – the purpose of this guidance is to provide a common set of guidelines for each type of property, buy your local council team will be able to confirm this for you when you apply for a new license or need to renew.

LEGIONELLA CERTIFICATE

Legionella is a potentially fatal disease caused by a bacterium that has a tendency to grow in warm, stagnant water. As a landlord, you have a responsibility to ensure that you take steps towards minimising the risk of allowing legionella bacteria to grow in your property, primarily by ensuring a Legionella Risk Assessment (LRA) is completed for each property. A landlord can carry out the LRA themselves but unless they are competent as defined by the HSE (who are the people that will be suing them if they get it wrong), then they are wasting their time. So long as the recommendations detailed in the L8 ACOP are followed, landlords should be able to demonstrate that they have fulfilled their obligation to ensure their property is safe. For further reading, visit the HSE website here. Most landlords I come across outsource this certificate requirement for obvious reasons.

ENERGY PERFORMANCE CERTIFICATE (EPC)

The Energy Performance Certificate (EPC) gives tenants and landlords information on the energy efficiency of their property. It gives the building a standard energy and carbon emission efficiency grade from ‘A’ to ‘G’, where ‘A’ is the most efficient. From the 1st April 2018, there will be a requirement for any property rented out to have a minimum energy performance rating of E. If your property is currently less than E, part of your EPC report will list the potential rating that the building could achieve with a few recommendations on how to do it. You can read more about the EPC regulations here.

PLANNING PERMISSION AND ARTICLE 4 DIRECTION

In 2010 the Government introduced a new Use Class of ‘C4’ for any ‘House in Multiple Occupation’ (HMO) and generally speaking, it is permissible for any property owner to change their property from a C3 (Dwelling House) to a C4 (HMO) without the need for planning permission. However, the government also gave local councils the power to remove this permitted development right at their discretion by means of an ‘Article 4 Direction’. Councils have used this to designate limitations on the number of HMO’s in certain areas, so it’s important to establish whether your property sits within one. If it does, you’ll need planning permission and whether or not you will get it depends on a number of factors determined by the local planning policy. If you owned and used a property as a HMO before your local Article 4 direction was introduced, you may just have to present the historic evidence of if you are ever asked (or want to sell with the planning permission) – the local planning department will be able to issue you with a certificate of lawful use. You can read more about Article 4 Directions here and local council websites will usually have a map of any article 4 direction in place. Local authorities enforce this rigorously and mortgage lenders will often ask to see it too on application of lending.

HMO LICENSE

The Housing Act 2004 applies special rules to be adhered to HMO’s. The HMO licensing is intended to improve standards in properties where it was felt tenants were at ‘highest risk’. Generally speaking, a house with three or more stories, occupied by 5 or more people who form 2 or more households (a household being defined as persons belonging to the same family) is classified as an HMO in England and Wales, and is and subject to licensing.

Licensing Conditions:

The purpose of a HMO licence is to ensure that the property is safe and suitable for the number of tenants and to ensure that the person who is managing the property is ‘fit and proper’ You need a HMO licence if your property fits the governments description of a HMO (see below):

  • It’s rented to 5 or more people who form more than 1 household
  • It’s at least 3 storeys high
  • Tenants share toilet, bathroom or kitchen facilities

A variety of criteria, standards and requirements are enforced by inspection before you can get your HMO license granted. It ranges from minimum room sizes to amenities and evidence of safety certificates. Your local council may also add other conditions to your licence such as improving the standard of some facilities and amenities in your property, but they will let you know this during the process. Even if your property is smaller and rented to fewer people, you may still require a HMO license depending on your local council requirements. I am aware some local councils impose mid-term license inspections and requirements do regularly change.

Proposed changes to licensing conditions

The government is currently undertaking consultation on reforms to the HMO licensing criteria which will likely mean that a further 870,000 rented properties will require a HMO licence. There are a number of suggested reforms such as removing the 3 storey requirement and adjusting the minimum room dimensions. I will report on the subject as the consultation progresses, but assuming this will further pressurise the private landlord, it would be wise to plan ahead if you are considering making some adjustments to your property. You can see some examples of effective HMO designs here.

Applying for a HMO license

To renew or apply for a new licence, you need to contact your local council to request an application form, you can usually do it online. You can apply for the licence yourself as a landlord, or you can use a property management company who might have a better understanding of the process. You’ll be charged a fee which is set by the council, but running the risk of operating a HMO without the necessary application could result in a much bigger fee down the line! In fact, you could get an ‘unlimited fine’ for renting out an unlicensed HMO.  For more information you can read the governments full guide on HMO licensing here.

RIGHT TO RENT

This is the check that the landlord or letting agent must make to ensure that prospective tenants or occupants have a ‘right to rent’. It’s a piece of government legislation, and if the check is not made, and the occupier has no right to rent, there may be a civil penalty to pay. You can download and issue a guide here.

Andy is the managing director of Smart Property. Smart Property provide comprehensive property investment and management service, block management, and also offer a long-term rent guarantee service that Property 118 founder Mark Alexander found ‘so impressive’ he decided to invest in the company himself. Please fill in the form below to contact him.

Contact Andy Graham

Andy is the Managing Director of Smart Property

Comments

paul landlord

A month ago

Re correction of electrical safety certificates information.

It is not a requirement for an 'NICEIC certificate'.

It is hoervet a requirement to have in place an EICR (electrical installation condition report) completed by a registered electrician (the electrician being registered is critical).

The NICEIC is just one electricians registration body of which there are a few- NAPIT, ELECSA, STROMA- being examples.

All registration bodies are government approved bodies and all equal under the law.

Sorry but being a sparks of many years as well as a landlord I just wanted the correct information out there

david Brinsden

A month ago

I own & manage a 3 storey purpose built block of 6 flats, constructed in the 70s.They were sold on long leases but 2 of them are now rented out. Is it right that if any more are rented out, it could be classed as an HMO?

Neil Patterson

A month ago

Not if they are self contained separate leasehold properties.

John Frances

A month ago

Reply to the comment left by paul landlord at 07/11/2017 - 21:05
Hi Paul, I had an interesting conversation with NAPIT last year regarding a similar situation. One of the landlords we do building work for had instructed an electrician to carry out an EICR in a HMO, which they did. It transpired that he wasnt currently registered with an approved scheme, in fact he was currently suspended by NAPIT themselves. The response I got for their technical team was that as long as he doesn't use their headed paperwork, and he had the relevant City & Guilds qualification for testing and inspecting, he was free to carry out an EICR, but wouldnt be allowed to do anything that required Part P notification. Seemed ridiculous to me anyway.

paul landlord

A month ago

Reply to the comment left by John Frances at 08/11/2017 - 13:31Hi there.
In the ridiculously overcomplicated rules and regulations in the electric business of who can do what and the requirements, (believe me we sparks are frustrated with it more than anyone), in law it is the person commissioning the work (whether it be design works, installation works or certification), who is responsible for ensuring the electrician is actually qualified, registered and insured to do the works. Failure to do so can be a problem to the owner/ landlord etc. The easiest way to check is via the government's register at
http://www.electricalcompetentperson.co.uk/
And yes I agree with your latter comment. this year I had the unfortunate experience of seeing a particular registration body deal with a very black and white case of a sparks who had badly broken lots of regulations and left an installation in a 'potentially dangerous' condition just down to laziness. The registration bodies approach to the issue was poor and they seemed to be telling the customer anything (including information which was totally incorrect) to get them to go away. 'Tell 'em owt to get 'em off the phone!' The customer was very insistent though armed all the way through with advice and information from me.
Not good but I don't suppose any system is perfect and at least if you're a landlord commissioning reports having done due diligence on the Inspector and things do go wrong at least in law you are not liable. The minimum insurance requirements for registration are £2,000,000 public liability and £250,000 professional indemnity.
As always 'buyer beware!

John Frances

A month ago

Agreed Paul, would you believe it? I got this sent through by one of our sparks today.
Looks like the whole private rented sector are going to be required to get an EICR done. Also interested that they propose to set up a new scheme for registered persons to do the EICR...........if I have read it right

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/657917/Electrical_safety_standards_in_the_private_rented_sector_working_group_report.pdf

paul landlord

A month ago

Reply to the comment left by John Frances at 09/11/2017 - 19:12
Hi John.

Told you how crazy it is in the sparks world, it really leaves your head spinning!

They have been going on about mandatory EICRs for rentals for at least the last 15 years that I can count but never done it. Looks like they may finally do it now. Happy days for me if they do- boom time in the business!- not so good for the majority of landlords pockets though.

A brief read through of that paper though shows yet again the government's 'know it all' (but actually 'know nowt') 'experts' are at it again. There are so many errors in that paper it's frightening.

But then again all landlord legislation over the last probably ten years has been done the same way- badly by people who do not know what they are talking about!!

Michael Holmes

A month ago

Yes, the whole licensing system is a mess anyway. Every Council has its own thoughts on the subject and you can get different criteria being applied across county borders as a matter of fact, no speculation involved. Of course dealing with all these matters as a private unincorporated landlord still means that you are not actually running a business, just an investement vehicle and taxed accordingly, well according to our ' learned friends' anyway.

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