I’ve said it before and I believe it bears repeating. Namely, if I had my way, all real estate would be HMO properties. One of the many reasons I prefer model of business is that, to encourage a more communitarian spirit, the government is helping local councils and developers in their work with their communities. After all, our passion is to plan and build better places to live. By making affordable housing available, improving the quality of rented housing, and by helping support vulnerable people to find appropriate housing, positive living environments are accessible for everyone.
The Housing Act 2004 introduced licensing for houses in HMOs and sets out standards of management for this type of property. There’s no need to feel intimidated. Just check with your council whether the act applies to you and proceed from there. Keep in mind that licensing is mandatory for all HMOs, which have three or more storeys, and are occupied by five or more persons, forming two or more households. Your council can also help with licence requirements on other categories of HMOs in its area. So, to apply, contact the council to request an HMO licence, apply for the licence yourself, unless of course, you use a managing agent. They can apply for you. You will then be charged a fee, which is set by the council.
Although some categories are not subject to mandatory licensing, they are important to know all the same. For example, your council may assess that one condition to your licence may be improving the standard of your facilities. The best guidelines to follow will be the licensing guidelines.
Among requirements for the licence, you must make sure that the house is suitable for the number of occupants, and that the manager of the house or agent is considered fit and proper. In other words, there must be no criminal record and no record of breach of landlord laws or code of practice. It is also important to send the council an updated gas safety certificate every year, and along with that, to be sure that smoke alarms are installed and adequately maintained. Safety certificates for all electrical appliances must be provided when requested.
Generally speaking, a licence is valid for a maximum of 5 years and must be renewed before it runs out. One item of interest to me, and you may find it intriguing as well, is that you can apply to have your HMO exempted from licensing. In such cases, you have to satisfy the council that you are taking particular steps to ensure that the building will cease to be an HMO or that it is one that is no longer subject to licensing. Remember, the council does not have to grant the exemption. After all, this provision is not available for avoidance or evasion. We don’t want to head down a road that is contrary to the purpose of the Act, or contrary to the purpose of an HMO.
Our objective is to invest in something that will be a great housing experience for those living there. Simply making a proposal to put an HMO on the market for sale and then reducing the number of occupants does not fit the purpose of what we are hoping to achieve. Our purpose and passion is the building of community.
Granted – licensing laws can be very confusing if you’re tackling them on your own. It’s always best to consult a solicitor and an accountant, so you can prepare for compliance accordingly. In my experience, attending property network events is always a safe place to find referrals to good solicitors and accountants. Over here, regular investors’ networking events include the PIN meetings under Simon Zutshi and the We Buy Houses Community Meetups under Rick Otton.