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Ask the experts: What do the HMO changes mean for my clients?

  • 22/03/2018
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Ask the experts: What do the HMO changes mean for my clients?
Adrian Moloney, sales director at OneSavings Bank, answers the questions causing you most frustration in the mortgage market. This month he tackles the changes to houses in multiple occupation.

Landlords have been asking me about the changing rules on houses in multiple occupation (HMOs) – what do they need to know?


Adrian Moloney answers:

As an industry, we have endured an unprecedented amount of change affecting the tax and regulatory environment over the past two years.

Sadly, for HMO landlords – and many that may not consider themselves to be in this bracket – it looks like 2018 isn’t going to be any different.

Last year the government undertook a consultation looking at HMOs and residential property licensing.

The consultation aimed to give councils best-practice guidance on standardising living conditions in HMO properties across the country.

After being side-tracked by the general election, the government published its response to the consultation in December.

Although the new legislation surrounding the licensing of HMOs is yet to be enacted, we expect it to pass through Parliament in the coming months and enforceable from October.


What do you really need to know?

The new rules plan to extend the scope of licensing for HMOs, meaning that a licence will be required for HMOs with five or more occupiers.

Currently, the licence only applies to properties with three or more storeys that are occupied by five or more people from two or more households. This will mean substantially more properties will be required to have a licence.

Alongside the mandatory licencing, the government has proposed a minimum room size for bedrooms in licenced HMOs.

This is something that has been hotly debated between councils and landlords, and is often (quite rightly) called out in the press in cases where bad practices have come to light.


Floor space requirements

The new guidance will recommend floor space be no less than 6.51sqm and 10.22sqm for single and two adults sharing respectively.

The new rules are estimated to impact roughly 170,000 properties, on top of the existing 60,000 already under licence.

For brokers with existing or prospective clients with HMOs, understanding the new rules will be vital, particularly if clients come to them for advice.

In addition, these new regulations provide an opportunity for brokers to approach existing clients, raising awareness and helping them navigate the new processes to ensure they are compliant.


What you will need to do to make sure your clients are compliant?

While these changes are yet to be made law, there a number of steps you can take to educate clients ahead of the changes.

Raising awareness among those landlords whose properties will now be classified as a HMO when the new rules come into play is vital.

Once landlords are fully aware, being able to give practical advice on the licence process will also be a beneficial way that brokers can help their clients.

Should landlords find that rooms within their property are smaller than the required dimensions, they may need to find funding for renovations; being able to help the landlord find suitable funding for the work is another way brokers can help landlords.

Finally, once the new rules have been legislated, landlords will have to be licenced by the local council, which will be valid for five years.

It is important to remember that a licence will be required for each individual property either from the landlord or property management firm.

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