Licence First – Don’t Shoot the Messenger #6

by Ben Reeve-Lewis

16:09 PM, 12th October 2011
About 8 years ago

Licence First – Don’t Shoot the Messenger #6

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Licence First – Don’t Shoot the Messenger #6

When a tenant has a beef with their landlord, I’m the guy they go to. My job is to either negotiate or prosecute, depending on the circumstances. This occasional and random series aims to let landlords know the common complaints that are made about them, the laws that cover them and how to deal with it.

I think my landlord is running an unlicensed HMO

A growing concern for local authorities this one.

Government and Shelter are leaning on councils to take enforcement action against unlicensed HMOs. What is the definition of a Licensable HMO?

An HMO is simply a property where there are 3 or more people occupying on separate agreements. If they were all on one agreement it would be a house-share as a ‘Joint tenancy’, which is not the same thing. However, an HMO becomes eligible for a license when a landlord has 5 or more tenants on separate agreements and the property has 3 or more floors.

Failing to license a proper HMO is a criminal offence.

Reality check

I will probably get sacked for saying this but the fact is that in inner city areas the amount of HMOs compared to the amount of licensing officers makes 300 Spartans against 1 million Persians look like a Saturday night pub fight.

The only time that most licensing officers can get at an unlicensed HMO is when a tenant comes in to complain and brings it to their attention.

Then, in order to carry out a successful prosecution, a bureaucratic course has to be embarked upon that makes negotiating between Jews and Arabs in the Gaza strip look like a cakewalk.

But let me introduce you to the RRO…The Rent Repayment Order. This is a little penalty enshrined in the Housing Act 2004; along with HMO licensing it allows a council to take a far more punitive route than enforcing mandatory licensing.

An RRO allows either tenants or the council to recover rent paid on an unlicensed HMO for a considerable period with minimum legal fuss. Certainly less fuss than actually chasing a license under the same legislation.

A tenant can apply for an RRO where the council have already successfully prosecuted a landlord for failing to license their premises, but there is also a provision that allows the council itself to chase an RRO without there having been a successful prosecution at all.

What does this mean?

Well, if a council identifies an unlicensed HMO and slaps an RRO on the property, rent can be claimed back
for 12 months prior to the RRO on all occupiers.

Imagine you have 2 HMOs with 5 tenants in each. All on housing benefit. The council can claim back 12 month’s rent on 10 people. Even if those original 10 tenants leave, any new tenants will not be paid out by HB because they will be clawing back 12 month’s rent on the previous tenants, because the sanction applies to the property, not the individual claimant.

The matter is actually dealt with by the Residential Property Tribunal on the same evidential basis as a criminal action, but if the paperwork is all in order there doesn’t have to actually be a hearing, everything goes through as an administrative process.

A couple of years back Liverpool City Council went a step further than an RRO and claimed back £23,000 against a general pay out of £39,000 under the Proceeds of Crime Act where a landlord continued to take housing benefit after a prohibition order was lodged.

This is serious stuff folks.

The government and Shelter are leaning heavily on local authorities to crack the whip. I don’t actually think this is the best way forward but it is what it is.

It doesn’t do any good to complain that the law is all slanted towards tenants, it doesn’t do any good to claim it isn’t fair, as I said above, it is what it is.

How do you avoid it?

License your HMO. It’s going to be cheaper in the long run than playing cat and mouse with the council. If you build a relationship with your council’s licensing officers they are less likely to go down this route.

Ask them how they can help you, take them for a pint, build a relationship with the people that can help you. Trust me, speaking as a prosecuting officer for a local authority the last thing I want is to do loads of paperwork. I like most of my landlords, I want to help, not whack you.

Build links not barriers.



Comments

HMOLandlady

13:48 PM, 13th October 2011
About 8 years ago

Good points, but taking council officers for pints? The cocktail hour is officially 6pm, council officers clock off 5pm at the latest which is why our landlord meetings have to commence by 6.30pm before they all claim overtime/ days in lieu. I think schmoozing the council is advantageous all round and, it's not for lack of trying, but our housing department look like they'd rather endure an evening with the homeless at the Sally Army food hall than engage in meaningful discussions with local landlords. Landlord/Council Officer Team Building Days - bring it on!!
Good to warn of RROs, good punishment for those that don't play by the rule book.

Ben Reeve-Lewis

17:15 PM, 13th October 2011
About 8 years ago

The cocktail hour works for me, Mojitos in the summer, Whisky sours in the winter.

I'm being a bit tongue in cheek about the schmoozing but I really mean it, relationships are all so much can be done with a quiet word and an exchange of personal phone numbers, bypassing all this injunction nonsense.

Can I just mention a wonderful LL I met today. He was selling his flat to a geezer and he foolishly/trustingly gave him a set of keys to measure up for curtains. The sale fell through but the bloke cut keys and rented to a woman and her 10 year old son without the owner's knowledge. Things have gone very tits up and the pseudo landlord has cut off the woman's electricity and locked her out, piling all her clothes and belongings in a heap on the kitchen floor that we can see through the hole oin the door where the lock once was.

The real owner turned up today armed with a notice (hopelessly non legal) and a bit of an attitude to him, who wouldnt given the circumstances? I ignored his temper and worked on building a relationship with him, listeneing to how bad it was for him to be scammed too.

She burst into tears and said she didnt know what would become of her, at which the true owner collapsed and sat with his arm around her telling her it would be alright and they were both in this together. He said he would get her back in and she could stay there for a month rent free and he would pay her deposit if I could find her a place. What a little star. He was £2,400 down on the whole deal and with an authorised occupant to deal with. Am I gonna take him to task about his legally ineffective notice? Come on He needs a medal, not an injunction

22:58 PM, 19th October 2011
About 8 years ago

Hi Ben, great article but as with every definition of an HMO I’m still confused!!! I own the Freehold to a purpose built (2003) block of 5 flats, each of the flats has its own front door off a communal entrance and each flat is tenanted under its own AST. So I think I’m ok so far but what always gets me is the property has 3 floors (Ground, 1st and 2nd) so is it an HMO????

Ben Reeve-Lewis

6:54 AM, 20th October 2011
About 8 years ago

Sounds like you're fine. If they are all seperate self contained flats it isnt an HMO, just a block of flats. Think of HMOs as just being a load of bedsits in a house all let to people on seperate contracts and sharing bathroom, kitchen etc. Remember the TV Comedy Rising Damp? That was an HMO

Mark Alexander

8:21 AM, 20th October 2011
About 8 years ago

Hi Ben

I'm confused now. I'm no specialist when it come to HMO's as that's not my market but I was under the impression that blocks of flats are technically HMO's due to fire regs etc.. How confident are you about this?

Regards

Mark

Abel Stronge

9:20 AM, 20th October 2011
About 8 years ago

I am also confused about the HMO definition. I was under the impression that you had to have 5 or more separate tenant AND (not 'or') 3 or more floors. Thus a house with six tenants (bedsits) on 2 floors is not licensable neither is a house with 4 separate tenants (bedsits) on 3 floors licensable. But if you have 5 bedsits on 3 floors then you have to have a license.

Can you clarify?

A

9:32 AM, 20th October 2011
About 8 years ago

Hi Ben,

We have a two storey House with five seperate Bedsit Tenants, one in the attic room, all sharing two bathrooms, is it a HMO ?

Regards
John

Mark Alexander

11:07 AM, 20th October 2011
About 8 years ago

I can see the makings of a great debate here.

Since the local councils have taken over deciding what an HMO is very few landlords seem to have a clue what's going on as the policies are totally inconsistent in different areas. The councils only communicate with a tiny percentage of landlords, presumably as they don't have details of those that are not receiving LHA directly.

Anybody fancy writing an article and having a rant? We need more guest writers.

Mark Alexander

11:38 AM, 20th October 2011
About 8 years ago

MESSAGE POSTED FOR BEN

"Mark

I'm at a wedding, can you post on the thread that I will get back on HMOs later?

In the meantime direct.gov has the clearest definition I recall

From the phone of Ben"

11:46 AM, 20th October 2011
About 8 years ago

I have 5 tenants in a two story building, The council are fully aware that I am operating and have classified it as a HMO but not asked it to be licensed. The word AND links the 5 or more with the three story building. If Ben Reeve-Lewis is right then is should be worded OR. Any thoughts?

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