HMO Licensing Fees – Oxford Council Humiliated

HMO Licensing Fees – Oxford Council Humiliated

8:00 AM, 17th November 2012, About 12 years ago 16

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HMO Licensing FeesFurther to my rant about HMO Licensing Fees on 16th October one of my readers decided to submit a Freedom of Information request to Oxford Council based on the questions I raised and has forwarded the response to me.

As you may be aware, Oxford were one of the first Councils to implement both Article 4 planning and Selective Licensing. They now require all landlords to pay a fee to licence each property they own which is let to three or more tenants.

The response to the Freedom of Information Request from Oxford Council makes very interesting reading and I’ve copied it below for you. The questions are written in this colour, the Councils answers are written in this colour and my analysis (or should I say continued rant) is written in this colour – not that I’m seeing red or anything !!!

Further to the acknowledgement below, I can now respond to your FOI request of 17th October 2012 as follows:

Q1.  How many HMOs are there?

There are an estimated 5,069 HMOs in Oxford.

I wonder how you arrived arrived at that figure? However, for the purposes of this exercise let’s assume it is correct.

Q2.  How many HMOs have been licenced?

Since 24th January 2011, the Council has received 2,541 applications and it has issued 1,397 licences.  551 HMOs were licensed already under the national scheme.  Therefore, 1,948 HMOs have been licensed.

OK, so that’s 3,121 which remain unlicensed? That’s over 60% of the estimated total isn’t it? 

Q3.  How much money has been collected from HMO Licensing?

Since 24th January 2011, a total of £1,046,392 has been received in fees.

Mmm, saved a few jobs at the Council then!

Q4.  How many HMOs have local authorities closed down due to being unsafe or unlicensed?

The purpose of licensing is not to close down HMOs, but to bring them to the legal minimum standard.  To date, over 90% of the HMOs the Council has inspected have required additional works to bring them up to the required standard.

If an HMO is in poor condition, legal action will be taken against the landlord.  If an HMO is in a very poor state of repair, the Council will serve legal notices and will require the landlord to carry out emergency works.  If the landlord fails to undertake the necessary works, the Council will carry out the work and charge the landlord.

Actually, that’s almost pretty reassuring to know – well done Oxford Council 🙂

The Council does not close down unlicensed HMOs when it discovers them.  It will require the landlord to apply for a licence and charge an additional fee of £170 to cover the costs of finding the property.  In addition, legal action may be taken for failing to licence the HMO.

Only £170, that’s not much is it?

The Council took over the management of one HMO that was in poor condition and where the landlord failed to licence the property.  The Council ran the property for a year and then it was handed over to a letting agent.

Again, quite admirable, but only one? This kinda proves there wasn’t a very big problem in the first place does it not? Apart from creating “jobs for the boys”, one might wonder what the purpose of collecting all this money was given the extent of the problem, or should we say lack of one?

Q5 & 6.  How many fines have been imposed on landlords operating unlicensed HMOs and what is the value of these fines?

Since the introduction of the Additional Licensing Scheme in January 2011, the Council has successfully concluded 26 cases of legal action, resulting in £28,703 of fines and costs.

So out of 3,121 unlicenced properties (presumably a lot more than before the 26 court cases started to be reported?) only 26 have resulted in fines? That’s less than 1%. Therefore, the remaining 3,121 unlicensed HMO landlords are risking a £170 fee IF they get caught and a less than 1% chance of prosecution leading to an average fine of just over £1,100 if my maths is correct!   

Q7.  How has the money raised as a result of the HMO licensing and fines been spent?

The HMO licensing scheme is self-funding and the fees raised cover the costs of managing and administering the scheme, including the inspections, reports and licences.

So the money raised is primarily used to raise the money then? Pure genius! One wonders why you guys chose to work in the Public Sector as opposed to the productive economy?

And there has been only one case to justify the introduction of licensing in nearly two years? !!!

The Government and not the Council collects the fines.  Therefore, the Council does not raise any money by taking cases to court.

OUCH! I feel your pain on that one. Not much incentive to spend all that money you collect to actually pursue the none payers then is there? You might as well spend it on PR to publicise the one problem you found and the 26 people you fined then! You never know, you may inspire a proportion of the 60% who are not paying you and collect another million or so to save a few more jobs. Next you will be telling us that this model is good for the economy because those people whose jobs you are saving spend their money in the economy and pay tax???  YEAH RIGHT!!!

YEP, HMO Lcensing Fees is definitely a case of “jobs for the boys” in my humble opinion!

The reply from Oxford Council came from:-

Michael Newman – Corporate Secretariat Manager, Chief Executive’s Office, Town Hall, St Aldate’s, Oxford OX1 1BX

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11:58 AM, 17th November 2012, About 12 years ago

The campaign looks ineffective (liverpool for example has a steady stream of section 72 prosecutions with some hefty fines) but the real issue is with article 4 directives. This is killing new investment in HMO properties.

Mark Alexander - Founder of Property118

12:03 PM, 17th November 2012, About 12 years ago

Indeed Simon, and this is accommodation which Councils KNOW they need the PRS to provide, particularly in view of under 35's only being entitled to benefits to rent a room..

NOTE TO ALL - please share this article with your friends/contacts/followers via Twitter, Facebook or Linked in if you feel that my comments are fair critique of the issues.

Mark Crampton Smith

10:08 AM, 20th November 2012, About 12 years ago

Mark, Below is another FOI request response from Oxford. Interestingly there is a difference of nearly 1600 in the estimate of the number of HMOs one of the respondents is not singing from the hymn sheet!

Further to
the acknowledgement of 19th September 2012, I can now respond to your FOI below
as follows:

1a) How many HMO's
with 5 or more tenants on 3 or more floors does the council believe that there
are in Oxford?

The estimate is 650

1b) How many HMO's with 5 or more tenants on 2
or more floors does the council believe that there are in Oxford?

The estimate is 1,800

1c) How many HMO's with 3 or more tenants on 2
or more floors does the council believe that there are in Oxford?

The estimate is 4,200

1d) In each of those cases, how many are
currently registered? (please indicate each category separately)

HMO's with five or
more tenants on three or more floors – 529 ( 121 not yet registered)

HMOs with five or more tenants on two or more floors – 1,255 ( 545 not
yet registered) Approximately
7,000 HMO's in total. Judy

HMO's with three or more tenants on two or more floors – 1,617 ( 2583 not
yet registered)

1e) In each of those cases, how many have had
registration enforced upon them by the council discovering them?

HMO's with five or
more tenants on three or more floors – 17

Other HMOs – over
150 from 70 landlords

2a) How many HMO's with 6 or more tenants does
the council believe that there are in Oxford?

This figure is not available because six
tenants is not a threshold used for requiring a licence

2b) In each of those cases, how many have
fulfilled all of the criteria for an HMO License?

469 houses have been licensed with
six or more occupants.

2c) In each of those cases, how many have have
had an additional kitchen sink or dishwasher enforced on them?

In total, 75 houses have required these
additional facilities.

3a) How many traditional 20th Century HMO's
with a "box room" smaller than 6.51m2 are there in the city?

The Council
does not have this information.

3b) How many of
these has the council removed from the landlord the right to let this room?

To date, the Council has issued 40 licences
with a condition relating to ceasing the use of bedrooms smaller than 6.5m2 in
traditional 20th century houses built primarily for family use that have been
turned into HMOs.

Richard Greenland Richard

11:19 AM, 20th November 2012, About 12 years ago

Good call Mark. Seems to me it's yet another case of Stealth Tax. Every year more regulation, it just makes it harder for anyone to do business. Except where we really need (the banks) where too much was cut in the '80s and this government too is scared to put it back.

Mark Alexander - Founder of Property118

16:38 PM, 20th November 2012, About 12 years ago

Given that it's a very different set of questions it stands to reason that the answers don't match up - or am I missing something?

I will leave others to apply similar logic and critique as my own to the FOI responses you have received. Thanks for sharing.

18:29 PM, 20th November 2012, About 12 years ago

I'm sorry but a landlord talking about working in "the productive economy" is beyond parody.

Mark Alexander - Founder of Property118

18:37 PM, 20th November 2012, About 12 years ago

HAHAHA - where do you think landlords get their money from to invest in property? I wasn't born with a plumb in my mouth, I've not won the lottery and I've never inherited money. I grew up in a working class family and worked hard in the productive economy to earn every penny I've ever invested into property. There's also a lot more work that you might think in being a landlord too, it's not just a case of buying a property and banking the rent you know!

Mark Alexander - Founder of Property118

19:40 PM, 20th November 2012, About 12 years ago

Having read this again, clearly I was missing something. Estimates of 7,000 HMO's in Oxford in total vs 5,069 in total in the original posting. The second version makes no mention of flats either! Who was it that responded to your FOI request?

20:41 PM, 20th November 2012, About 12 years ago

When a Council finds a property that needs a license under their new laws, are they obliged to tell the landlord & request the money first, or can they simply fine the landlord on the grounds that the landlord should know the rules have changed without any direct notification?

When a mortgaged property becomes a "small HMO" because the council has invented new rules, can the mortgage company foreclose the mortgage because it was not granted to an HMO?

8:50 AM, 21st November 2012, About 12 years ago

Although as a landlord I am not in favour of over-regulation of the market, clearly some additional safety measures need to be put into place for HMOs. Oxford has the situation where there are lots of houses where 10 or more people are crammed in and a few of these have been highlighted in the local press.
The bigger picture issue is why there is not a national licensing scheme rather than it being left to local councils to decide how to implement things. For example some boroughs in London need to have anything with more than 3 tenants in licensed whereas others only if over 3 floors.
I don't think the cost of licensing a HMO is an issue, it will end up passed onto the tenants in one way or the other, a landlord has to make ends meet and if this reduces supply then prices will inevitably go up.
It seems like 90% of HMOs in Oxford had to have work done to bring them up to standards, seems like a good success rate for the council no? (unless we're questioning whether the HMO license conditions are valid which is a whole other argument in itself)

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