How will new HMO licensing rules affect landlords? - HAS Property Management

How will new HMO licensing rules affect landlords?


In early March, 2018, the Government introduced new rules regarding licensing of houses in multiple occupation.

From October 1st, 2018, there will be an extension to the scope of mandatory licensing requirements for HMOs, under section 55(3) of the Housing Act 2004.

This means that more properties will require a licence before they can be let.

From October 2018, HMOs occupied by five or more people must have an appropriate mandatory licence, with the number of storeys no longer a consideration.

The changes go further; HMO licensing will also now apply to purpose-built flats where there are up to two flats in the block.

HMOs that currently require a selective licence, will be subject to mandatory licensing from October 1st, 2018.

Landlords will have to obtain a mandatory licence where their property meets the following criteria:

• It is occupied by five or more persons;
• is occupied by persons living in two or more separate households; and meets—
• the standard test under section 254(2) of the Act;
• the self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats; or
• the converted building test under section 254(4) of the Act.

A licence is valid for five years and a separate licence must apply to each HMO property.

Jorden Abbs, director of operations at Commercial Trust Limited, commented: “It is absolutely essential that you keep up to date with the changes taking place and ensure that you have the relevant HMO licence, if this is required. In the first instance, you should speak to your local council to learn if a licence is necessary and if so, what you must do.

“The changes coming in will impact on a number of London’s landlords, but represent a further effort to improve standards with the private rental market.

“Lenders already adopt differing approaches to investors who are looking to finance an HMO.

“If you are looking to obtain financing for an HMO, come and talk to us. We work with a broad range of buy to let lenders offering landlords a wide choice of products. With a telephone conversation, we can help to identify the best buy to let mortgage to fit your circumstances.”