New HMO rules around licensing have been on the minds of investors for months now, with a lot of speculation around what changes will be made to the current HMO licensing requirements.
After months of deliberation the wait is over, with government agreeing on February 23rd to what exactly the new HMO regulations will look like, and when they’ll come into effect.
It’s worth keeping in mind that as well as being aware of these new HMO rules for mandatory HMO licensing, HMO investors also need to be aware of the additional and selective licensing requirements that are applied to specific areas across the UK.
So what are the new HMO rules in 2018?
The new HMO rules are covered by “The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018”, which can be read in full here. This was agreed by parliament on February 23rd and will come into effect across England on the 1st of October, 2018.
The main thing this Order changes is the definition of an HMO under the Housing Act 2004. When it comes into effect later in the year, the new definition of an HMO for licensing purposes will be any property occupied by five or more people, forming two or more separate households.
This is in contrast to the existing HMO definition which is a property occupied by 5 or more people, forming two or more separate households and comprises three or more storeys.
Ultimately, this is the only significant change we need to be aware of. The order removes the number of storeys from the HMO definition criteria.
Will I need to apply for a HMO license?
If you already have a license for your HMO under the current “Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2006” definition, then your license will continue to be valid until the license expiration date (usually 5 years from date of issue). After the expiration you will need to apply for a new license as usual.
If you currently rent an HMO which didn’t previously require licensing but will do after the new order comes into effect later in the year, then you will need to apply for a license through your local council.
You will also need to ensure you comply with your local council’s HMO licensing standards, which may involve making changes to your property to comply with minimum room sizes, amenity standards (kitchen facilities, number of bathrooms etc).
Do the new HMO rules introduce any other changes?
There was discussion and speculation around other changes that might be introduced with this order, including things like an increase to minimum room sizes. As it stands, none of these other changes seem to be agreed upon and certainly aren’t included in this Order.
That’s not to say they won’t be introduced in the future, but at the moment the only change being introduced on October 1st is the removal of the number of storeys from the HMO licensing definition.
If this changes, we will of course update you.
Keep in mind that the rules for licensing are different from the rules for planning, and the main risk surrounding planning for HMOs at the moment seems to be coming from the increasing introduction of Article 4 Directives. We recently discussed some of the main points around where and when article 4 directives can be introduced, so check that out to cover all bases.
If you want to download a free copy of our HMO Deal Analysis spreadsheet that we use to analyse every deal then you can get your copy here.