On 1st October the criteria for what constitutes an HMO will change. If a property houses five or more occupants from at least two unrelated households, irrespective of the number of storeys that the property has, it must have an HMO Licence. It is estimated that the extension will bring around 160,000 properties within the scope of the mandatory licensing regime.
However, the position in relation to flats as opposed to houses is rather more complex. Mandatory licensing will not apply to a purpose built flat in a block with 3 or more self-contained flats. A purpose built flat is a flat that was constructed as a flat as opposed to a flat located in a converted house.
Most flats within large purpose built blocks will therefore fall outside of the scope of mandatory licensing provided there are 3 or more flats in the block. However, purpose-built flats in smaller blocks with up to 2 self-contained flats will fall within mandatory licensing if the occupancy and household requirements are satisfied. This applies regardless of whether the flat is above or below commercial premises.
Mandatory licensing does not apply to HMOs that meet the converted blocks of flats test, otherwise known as s257 HMOs. A local authority has the discretion to designate s257 HMOs as licensable under additional licensing schemes. However, individual flats within a s257 HMO could still require a mandatory licence if they meet the mandatory test.
Each Local Authority has its own forms and procedure for making an application for an HMO licence. If in doubt, check with your local authority. Application forms are usually available through their websites. Once the form is completed it should be returned with the appropriate fee.
A landlord who fails to apply for the appropriate licence (or a temporary exemption) before 1 October will be committing a criminal offence. The penalties for operating an unlicensed HMO can include a prosecution brought by the local authority with unlimited fines imposed if found guilty or a financial penalty of up to £30,000. Other penalties include rent repayment orders brought by tenants or the local authority and a prohibition on serving a valid Section 21 notice to seek possession of the property. Repeat offenders may also be subject to banning orders and risk being placed on the rogue landlord database.