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HMO calming measures must ‘strike a careful balance’

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  • 13/07/2017
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Local authorities imposing restrictions on the number of Houses in Multiple Occupation (HMO) which can be set up in a given area must be careful to strike the right balance, industry experts caution.

The warning was sounded following the news that Bath and North East Somerset Council revealed plans to increase its controls over the number of HMOs in the city.

Local authorities have been granted powers to restrict the volumes of HMOs or request additional licensing measures above statutory requirements which can apply to single streets or whole boroughs. Authorities can refuse permission where a standard property would end up sandwiched in between two HMOs.

Bath proposes to refuse HMO applications in areas where 10% or more of properties have already been converted.

Owner of Connect for Intermediaries Liz Syms said the council needed to be careful it was not damaging a vital source of lower-cost housing.

“Plans to restrict HMOs need to strike a careful balance as these properties are beneficial in addressing the shortage of housing problems that we have. Many landlords now run professional HMOs which are let to working professionals, whom despite having a good salary, do not have sufficient income to rent a whole property on their own.”

Gavin Dick, local authority policy officer at the National Landlords Association, said demand for HMOs was strong and if supply was restricted, rents for tenants looking for cheaper accommodation may rise.

He said: “Bath has high demand for shared housing from students but also from other types of tenants, including those on housing benefits and lower incomes, and while bringing in tougher restrictions on the proportion of shared housing might appease local residents it won’t dampen the demand for these kinds of properties.”

Dick said while plans such as these were unlikely to have any real impact on landlords looking to obtain finance, it would crystallise the market and contribute to higher rents, leaving the vulnerable in the hands of rogue landlords or homeless.

Syms said HMOs were gaining in popularity with landlords, as the potentially higher yields offered them a way of being able to meet the rising costs of buy-to-let property investments.

She said it was important that landlords checked with local authorities what restrictions prevailed before purchasing a property to turn into a HMO. Syms also warned additional licensing requirements could reduce landlords’ options when choosing a mortgage.

“If the local authority requires the landlord to hold a licence for a multi-let property which falls outside the definition of a HMO, not every lender will accept this type of security,” Syms added.

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