A House in Multiple Occupation (HMO) has many rules and requirements that is must meet to be in a lettable condition – as set out by central government and your local council. These conditions can also affect your ability to obtain a HMO Mortgage on the property.
UPDATE - October 2018This article has been updated to reflect the 1 October 2018 HMO rules. These change when HMO’s will require a Mandatory Licence & Minimum Room Sizes.
Mandatory HMO Licensing is being extended to any property renting to five or more people, from two or more separate households, sharing basic amenities.
Previously HMO licencing was mandatory if it was three or more storeys. No more.
You will need to apply to your local authority before 1 October 2018 in order to comply with the rules.
Failing to obtain a licence where one is required is a criminal offence, you can be prosecuted and fined up to £30,000.
Article 4 Direction – Selective Licensing
In addition to HMO Licencing (of 5 or more people) some local authorities have Selective Licencing, often contained in certain areas of a city.
The requirements for obtaining a licence, your obligations and costs are varied from a council to council.
Always check with your Local Authority if they operate a selective licencing scheme and obtain a licence where applicable.
Failing to obtain a selective licence where one is required you can be prosecuted and fined.
In addition to HMO Licencing or Selective Licencing – your HMO may need planning permission to operate.
The permitted developments order allow a class C3 (family dwelling) to become a class C4 (HMO) without the need for planning permission and vice versa.
This new permitted development basically makes all HMOs up to six persons lawful in England as long as the local authority has not issued a direction that the permitted development does not apply to a certain area.
Class C4 and permitted development are only permitting the use for up to six persons.
Therefore any property let to more than this has no specific class within the use classes order. The use of a property as an HMO with more than six people sharing is therefore known as a “Sui Generis”. This type of use will normally require planning permission
Failing to obtain a planning permission where one is required you can be prosecuted and fined.
Rented Properties have had minimum room sizes and enforced under the Housing health and safety rating system ( HHSRS ).
This has changed for licenced HMOs, from 1 October properties will have to meet national minimum room size conditions.
A sleeping accommodation room for the use of one person over 10 years of age must be at least 6.51sqm in size. For two people over 10 that rises to 10.22sqm. For one person under 10 the room can be smaller, down to 4.64sqm. Nobody can sleep in a room smaller than 4.64sqm
There is consensus on other room sizes established by RICS. As an example, A kitchen for four persons needs to be 6m2, to 9m2 for six persons and 11m2 for ten persons.
A planning consultant will be able to assist you with the regulations regarding nationwide regulatory room sizes and RICS established minimum room sizes.
Your HMO Licence or Article 4 Selective Licensing area will have conditions you must follow. These are varied from a council to council so you will need to ensure compliance of these conditions.
HMO Licence conditions are typically around safety, your local authority may recommend the use of Interlinked Fire Alarms, Fire Doors and Escape Windows.
Selective Licensing conditions are typically around Anti-Social behaviour and may require amendments to your Tenancy Agreements.
In addition to HMO Requirements – you will have to meet standard Private Rented Sector regulations. These, for example, include up to date Gas Check Certification, Electricians Certification, Installation of Smoke Alarms & Carbon Dioxide Alarms, Energy Performance Certificate, Deposit Protection and so forth.
You will also have to ensure the property is free from housing health and safety rating system ( HHSRS ) list of 29 Hazards.
Damp & Mould Growth, Excess Cold, Excess Heat, Asbestos & MFF, Biocides, Carbon Monoxide, Lead, Radiation, Uncombusted Fuel Gas, Volatile Organic Compounds, Crowding & Space, Entry by Intruders, Lighting, Noise, Domestic Hygiene, Pests & Refuse, Food Safety, Hygiene, Sanitation & Drainage, Water Supply, Falls associated with bats, Falls on the level, Falls associated with stairs, Falls between Levels, Electrical Hazards, Fire, Hot Surfaces & Materials, Collision & Entrapment, Explosions, Position & Operation of Amenities and, Structural Collapse & Falling Elements.
How it affects HMO Mortgages?
On Mandatory HMO Licencing and Selective Licensing, most HMO Lenders are ok with you not having it at application. What they do request is evidence that the application for an HMO Licence has been submitted.
On Planning Control Consent this should be obtained prior to a mortgage application.
On Room Sizes if the rooms are too small then you require short-term bridging finance. To change the layout of the property before applying for an HMO Mortgage.
The surveyor will identify small rooms and bring them to the attention of the mortgage lender, which can often cause a case to be declined. Unless it is viable for example the small room to be used as storage (and not living accommodation).
Misleading a lender about its use is bad enough but council enforcement officers can prosecute and fine you – if it is used otherwise. In addition to notifying your mortgage lender. The consequences are not worth being a “slum landlord”.