Mandatory licensing of Houses in Multiple Occupation (HMO) is being extended to include property occupied by five or more people forming two or more separate households regardless of the number of storeys. Previously this rule applied to properties with three or more storeys.
There will be also be the introduction of new minimum bedroom sizes within HMO’s. Breaches of the rules could lead to a conviction of a criminal offence which in turn could result in an unlimited fine or civil penalty of up to £30,000.
These changes will impact landlords as lenders, valuers, borrowers and brokers will all be affected. It’s standard practice for lenders to issue valuation guidelines to their surveyors. Come October, many of the current guidelines will be out of date, particularly the ones issued by lenders which value properties on a single dwelling basis, i.e. bricks and mortar.
These lenders should be issuing new guidelines now so that their surveyors can prepare. There is much to do in terms of training, roll-out and ensuring indemnities are fit for purpose. All this could lead to delays in carrying out valuations and may push up the price too. It’s unlikely that surveyors will absorb the additional costs, rather, they will pass on the cost to the landlord.
Yet again, brokers and landlords are awaiting action and announcements from lenders. This time, surveyors are waiting too. Inertia and silence could lead to a bumpy ride in a market that is still trying to get to grips with a whole raft of other tax and regulatory changes. Brokers need to keep an ear to the ground if they are to help their clients avoid disappointment and delay this autumn.