Covid-19 Bounce Back loans for property businesses16:06 PM, 5th May 2020
About 3 weeks ago 46
We were recently approached by a landlord of a four bedroom HMO property whose Local Authority had contacted her to remind of the approaching restrictions on minimum room sizes. One of this landlords bedrooms was slightly below the 6.51 sq metre limitation, which becomes effective from 1st October under ‘ The Licensing of Homes in Multiple Occupation ( Mandatory Conditions of Licensing ) Regulations, 2018.
The landlord’s options are quite limited. She will have to serve a Section 21 Notice on the tenant of the smaller bedroom, who, hitherto, has been content with this accommodation for the level of rent paid. Its worth pointing out that so too were the Local Authority, as there is ample residual living space in the rest of the property.
Also, and as a consequence, the rent for the remaining three tenants will have to increase to the maximum that the market rate can bear. This will be more than currently payable, but no doubt still at some loss to the landlord.
Interestingly, there is a detailed 22 page Impact Assessment published by MHCLG, albeit omitting the number of units of accommodation that are foreseen to be lost by this legislation, the amount of rental increase other tenants in the property will incur and the resultant financial loss to landlords from rent not recoverable.
We have written to Cynthia Brathwaite , the author of the Impact Assessment to ask:-
Unbelievably, the Impact Assessment Report makes no reference to these fundamental issues!
It is suspected the reasons these factors are not covered is because the government believe, naively, that Landlords will just downsize without financial compensation and suffer the loss of rent ‘on the chin’ together with the license fee.
[ The above links to another piece of work about the causes of rent increases, soon to be published. Watch this space! ]
Whilst we are waiting for a response to the fundamental questions raised, it would be useful if members have any similar experiences that publicise in regards to “true consequences”. Please post comments below or email Press@Property118.com
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