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  • A guide to HMO property for landlords

    HMO property (Houses in Multiple Occupation) is an attractive and profitable proposition for landlords as they are those properties that are let to a minimum of three tenants who form more than one household and share facilities such as a kitchen, bathroom or toilet. A ‘household’ can be a single person or a family living together or co-habiting couples. One common type of HMO property is a student let property.

    Under the Housing Act 2004, HMO status comes with a unique set of responsibilities for the landlord varying on the type of HMO property you own. The initial costs of an HMO property are higher than that of a standard property and as a landlord you will be required to pay an HMO’s Council Tax, as well as additional legal standards and demands that will need to be adhered to.

    Houses in Multiple Occupation

    Legal Responsibilities for an HMO property

    As a landlord of an HMO property there are a number of legal obligations that come under The Management of Houses in Multiple Occupation (England) Regulations 2006 and 2007. Failure to meet these obligations can result in a fine of up to £5000 so they are important to be aware of. Such obligations include:

    • Providing contact details of the property manager to each household
    • Taking reasonable steps to ensure tenants are not injured as a result of the property’s structure or condition.
    • Keeping fire escape routes clear, having fire safety equipment in working order, and carrying out and acting upon fire risk assessments
    • Keeping water supply and drainage clean and in working order
    • Inspecting electrical equipment once every 5 years
    • If requested by the Council you must provide a gas or electrical safety record within 7 days
    • Maintain and clean all shared areas for safety purposes
    • Ensure your property meets legal requirements on the number and location of shared bathrooms and kitchens required relating to number of occupants.
    • Keep the interior in good, safe working order
    • Provide regular disposal of refuse and litter
    • Ensure the correct level of Landlord Insurance is in place, you will require a special policy for an HMO

    In addition to this, those HMO properties that require a licence will be limited by a maximum number of occupants. Should your HMO property be deemed overcrowded by the council then you could be issued an order which if not complied with will result in a fine of up to £2,500.

    HMO properties can be issued a Management order if occupiers are at risk

    Should the occupants of an HMO property be deemed as being at serious risk in terms of their health and safety, or a landlord fails to meet the standards of the licence then the council can issue an interim management order.

    An interim management order is issued for 12 months maximum and transfers the management of the HMO property to the council or an approved council partner. In this instance the rent automatically becomes payable to the council rather than the landlord until the order is revoked. After 12 months the council decide whether to return control of the property to the landlord or to impose a final management order which can last up to 5 years.

    Either an interim or final management order can of course be appealed against via a Residential Property Tribunal at any time.

    HMO properties that require a licence

    Some HMO properties will require a licence to ensure that they are well managed and kept up to a safe standard. It is advised to check with your local authority to find out if your HMO property does require a licence. If your property requires a licence and you ignore it then you will be at risk of a fine, but could also risk other circumstances, such as being unable to evict occupants unless you had the licence in the first place.

    Should a landlord fail to acquire a required licence or allow for more occupants than their licence states then they face a fine of up to £20,000, and fines of up to £5,000 for any additional conditions that are not met. Be aware that if your occupants are receiving housing benefit, the council can also apply for a rent repayment order which will allow them to reclaim up to 12 month’s rent paid during the period when an HMO property should have been and was not licenced!

    Mandatory licencing

    Mandatory licencing is required for properties that are higher than three stories and have five or more occupants from two or more households.

    Additional licencing

    Additional licencing can be required is the council believes that a significant number of HMOs are being mismanaged in a certain area.

    Conditions of an HMO licence

    Once a licence is granted then there are a number of conditions that you will need to adhere to. There are certain mandatory conditions as well as some additional conditions that may or may not be issued by your local council. Once a proposed version of the licence is issued to the landlord and occupants then you have a period of 14 days in which you may propose changes via a Residential Property Tribunal.

    Mandatory conditions include:

    • Ensuring that you do not exceed the maximum number of occupants in the HMO property.
    • Provide a valid gas safety certificate annually.
    • Maintain all electrical appliances and furniture to a safe condition and provide proof when required.
    • Install and maintain smoke alarms and provide proof when required.
    • Provide each occupant with a written statement of terms.

    The local authority will need to carry out a Housing Health and Safety Rating System (HHSRS) risk assessment on your HMO property within five years of receiving your license application, and you will have to undertake any work as directed by your safety inspector.

    With all of these areas in mind managing an HMO property can be a very demanding prospect. Your first points of call for help in this area would be your local council’s Environmental Health Office and it may also be worth considering investing in a management agency. For all your Landlord Insurance requirements, whether HMO or standard property, Bluedrop Services are happy to advise.

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