HMO regulations driving decline in supply

HMO regulations driving decline in supply

10:15 AM, 10th May 2022, About 3 months ago 6

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A constant barrage of regulations, restrictions, responsibilities and Selective Licencing has driven an overall decline of supply in England’s HMO sector by 3% from 511,278 properties in 2019/2020 to 497,884 in 2020/21. These figures come from market analysis performed by Octane Capital.

In 2018, the UK government introduced new regulations which insist that a Houses of Multiple Occupancy (HMO) licence is required for all properties that are occupied by five or more people who are not members of one family. Previously, a licence was only required for properties of three storeys or more in which five or more people live and are not members of one family. What’s more, in order to obtain a licence, all rooms in an HMO must exceed a minimum size and can only sleep a certain number of people over 10 years old.

As a result of this and many further regulations each of which can command a fine of up to £30,000, the number of HMOs on the market has decreased with many landlords choosing to offload their buy-to-let stock instead of negotiating yet more hurdles due to legislative changes.

This overall national decline has been driven by the London market where the level of total HMOs has declined by -13% – by far the biggest reduction of all regions.

In the capital, 11 different boroughs have reported a drop, with the biggest coming in Ealing where HMOs have declined by -59%, followed closely by a -58% decline in Lambeth. Redbridge has seen its numbers halved, and Barnet’s decline sits at -37%. The number of HMOs has also declined considerably in Greenwich (-34%), Enfield (-30%), Wandsworth (-18%), Croydon (-13%), Hillingdon (-10%), Merton (-2%), and Tower Hamlets (-1%).

Table shows estimated number of HMOs in England for years 19/20 and 20/21 alongside annual % change
Region Est number of HMOs 2019-20 Est number of HMOs 2020-21 Change 2019-20 vs 2020-21
East Midlands 24,417 29,440 21%
West Midlands 35,508 37,646 6%
North West 47,489 50,084 5%
South East 70,757 74,053 5%
North East 20,395 20,581 1%
South West 49,156 49,584 1%
East of England 37,128 37,298 0.5%
Yorkshire and The Humber
53,618 49,016 -9%
London 172,810 150,182 -13%
England 511,278 497,884 -3%
Table shows estimated number of HMOs in London for years 19/20 and 20/21 alongside annual % change
Location Est HMOs 2019-20 Est HMOs 2020-21 Change 2019-20 vs 2020-21
Barking & Dagenham 192 800 317%
Kensington & Chelsea 4,000 8,244 106%
Bexley 1,200 1,930 61%
Hammersmith & Fulham 3,000 3,700 23%
Newham 9,500 10,450 10%
Havering 267 286 7%
Bromley 2,074 2,215 7%
Richmond upon Thames 97 102 5%
Brent 16,984 16,984 0%
Camden 8,000 8,000 0%
City of London 100 100 0%
Hackney 4,717 4,717 0%
Haringey 6,000 6,000 0%
Harrow 1,200 1,200 0%
Hounslow 1,850 1,850 0%
Islington 400 400 0%
Kingston upon Thames 4,800 4,800 0%
Lewisham 6,000 6,000 0%
Southwark 5,020 5,020 0%
Sutton 1,200 1,200 0%
Waltham Forest 5,951 5,951 0%
Westminster 9,539 9,500 0%
Tower Hamlets 10,000 9,900 -1%
Merton 2,040 2,000 -2%
Hillingdon 5,000 4,500 -10%
Croydon 3,000 2,600 -13%
Wandsworth 820 670 -18%
Enfield 10,000 7,000 -30%
Greenwich 7,500 4,916 -34%
Barnet 5,930 3,760 -37%
Redbridge 4,000 2,000 -50%
Lambeth 12,000 5,027 -58%
Ealing 20,429 8,360 -59%
London 172,810 150,182 -13%

HMO estimates data sourced from Gov.UK – Local Authority Housing, and Local Authority Housing Statistics 2019-20

View full data tables online here.



Comments

Ross Tulloch View Profile

13:37 PM, 10th May 2022, About 3 months ago

Yes. Minimum room sizes meant that two of our properties had one room under 6.51m. Always let out, constantly occupied for years. So do we leave it empty (illegal to rent out, while legal to sleep on a street) or sell up? We sold, evicting 8 previously happy tenants. With minimum room size requirement, fewer low cost rooms available, so they have to either pay more nearby, or commute further. Any attack on landlords is an attack on tenants

LaLo

17:27 PM, 10th May 2022, About 3 months ago

The fines are a killer £30,000 - unlimited! It’s not worth the stress/worry - I sold!

DSR

10:32 AM, 13th May 2022, About 3 months ago

Reply to the comment left by Ross Tulloch at 10/05/2022 - 13:37
ditto!

Heather G.

12:22 PM, 1st July 2022, About 2 months ago

Reply to the comment left by Ross Tulloch at 10/05/2022 - 13:37
I have a spreadsheet of 3 bedroom houses for sale in my key postcodes. Of the 824 on my list, where the size of the bedrooms is listed, 323 have a 3rd bedroom which is smaller than 4.62m2 which is 39.2% of properties with an unlettable 3rd bedroom.
There are 239 houses with a room between 4.64 and 6.5m2 (29.2%) which can only be let to a child under 10.
There are 222 houses with a 3rd bedroom between 6.51 and 10.21m2 (27%) which can only be let to a single adult.
There are 37 houses with a 3rd bedroom over 10.22m2 (4.5%) suitable for a couple.
The average cost per m2 of these houses is £4,938 and the average size of their 3rd bedroom is 4.2m2 so that's £20,739 of value/investment sitting empty per property, or £1,594,974 of unlettable space just in the small area I monitor.

Ross Tulloch View Profile

12:27 PM, 1st July 2022, About 2 months ago

Extremely useful larger survey. Thank you. Where is this approximately? It is as if the attack on landlords and tenants is aimed at those renting the most affordable rooms

Heather G.

12:29 PM, 1st July 2022, About 2 months ago

Reply to the comment left by Ross Tulloch at 01/07/2022 - 12:27
Specific sections of CR0 and CR7 postcodes (Croydon & Thornton Heath).

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