Licence First – Don’t Shoot the Messenger #6

by Ben Reeve-Lewis

16:09 PM, 12th October 2011
About 9 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

11:49 AM, 20th October 2011
About 9 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. Can someone explain?

12:22 PM, 20th October 2011
About 9 years ago

Hello everyone, If the property is HMO does it mean it always needs fire alarm panel instead of interlinked mains smoke alarms? Who decides on that? In the Hmo house the emergency lighting is always compulsory in comunal areas? Thank you to anyone who would clarify these questions please. Thank you.

Jack Phillips

13:07 PM, 20th October 2011
About 9 years ago

I've looked around the direct.gov.uk site and found the page Ben may be alluding to here

What is an HMO?

A property is an HMO if it is let as a main or only home to at least three tenants, who form more than one household and who share a kitchen, bathroom or toilet.

A household consists of either a single person or members of the same family who live together, including:

people who are married or living together
people in same-sex relationships
relatives who are living together - including step-children, grandchildren, uncles, aunts, nephews, nieces, cousins and foster children
certain live-in domestic staff such as au pairs, nannies, nurses or other carers, gardeners, chauffeurs, servants (if certain conditions are met)

If you are a tenant in shared accommodation, you may live in an HMO. These properties can be an entire house, flat or converted building or any of the following:

bedsits
shared houses
households with a lodger
purpose-built HMOs
hostels
guesthouses - if rented out of season
bed and breakfasts providing accommodation for homeless people
some types of self-contained flats converted from houses

HMOLandlady

13:16 PM, 20th October 2011
About 9 years ago

Hello All. An HMO is any building shared by 3 or more people who don't have a relationship (e.g partners, children, grandmother, etc.) who share the bathroom/s. Only HMOs spread over 3 storeys are liable for licence and each council will vary in their fees for this. The licence lasts for 5 years and you will need to provide an electrical certificate, yearly gas safety certificate and install an appropriate fire alarm and smoke detectors in each room. The National Landlord Association have a whole section on HMOs in their library department on their website http://www.landlords.org.uk.

There have been noises about landlords needing planning permission to turn a residential home into an HMO under Article 4 of something but it's not a route our council has decided to go down. The best people to buddy up to are your local Environmental Health department who, with a smile and a courteous handshake, will tell you all you need to know.

14:26 PM, 20th October 2011
About 9 years ago

I just have an interlinked wired smoke alarm in my HMO and the council seem happy with that.

Ben Reeve-Lewis

8:11 AM, 21st October 2011
About 9 years ago

I was at my Niece's wedding yesterday and kept seeing all these posts dropping through on my phone. Difficult to follow when you are trying to entertain the lone bridesmaid on your table, seriously denting a bottle of red wine and having to back track yourself out of a conversation about an attractive woman in the red dress when you realise with horror that it is her father you are talking to.

Anyway

There are so many questions here that I have decided this weekend to write the definitive guide and trying to cut out the various case laws and exceptions for Mark and Jack to post up next week. I am going to be talking to our own licensing officers too because, as is becoming apparent different council's take different positions on many aspects of it, which seems to be greatly adding to the confusion.

Ben Reeve-Lewis

13:22 PM, 21st October 2011
About 9 years ago

For what it is worth, and to correct my legally slack wording the definition is 5 or more people AND 3 or more floors. Therefore 2 floors with 28 tenants isnt licensable

Martin McDonagh

13:49 PM, 22nd October 2011
About 9 years ago

Hi Ben,

I for one would really appreciate clarity on HMO's. I've read the direct.gov website, the NLA pages and spoken to my local Environmental Health department (in SE London too) and I'm still confused.

I am advertising a two storey, two bedroom house (one kitchen, one bathroom and one toilet) and have had enquiries from groups of 4 people (two unrelated couples) who want to share the house under one AST. I am not sure if this would create an unlicensed HMO or not .....

At the start of your article you say "An HMO is simply a property where there are 3 or more people occupying on separate agreements". I have not seen reference to separate agreements elsewhere, and if this is indeed the case, it solves my concern immediately.

Another area I have searched for without success is to find out what extra I would need to provide in the house if became an unlicensed HMO. Perhaps an idea for a further article.

Ben Reeve-Lewis

15:46 PM, 22nd October 2011
About 9 years ago

Hi Martin, Yeah its confusing isnt it? I have been spending my entire Saturday trawling through case laws and legislation and writing a users guide article on the matter, stripped of all the legalistic nonsense as there doesnt seem to be anyone else who has communicated it in a way that makes sense to non lawyers who have to work with it.

Be patient, it should be up late Monday. As you also suggest there is another article in there, on the various rules and regs that EHOs can impose and what they are looking for in terms of specific building standards, I'll be working on that too.

Believe it or not the Housing Act 2004 was supposed to simplify it all for everyone but it actually made it 10 times worse. Same with the deposit protection legislation that was built into the same Act. The intention was straightforward but once the lawyers were let loose on it the whole thing fell apart like candy-floss in a force 8 gale.

12:52 PM, 15th November 2011
About 9 years ago

Hi Ben, I've been away for a few weeks and was wondering if you got any further with your proposed User Guide. I'd certainly be very interested in seeing it. Thanks

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