HMO: WHAT YOU NEED TO KNOW
“HMO” stands for House of Multiple Occupancy. Under the Housing Act 2004 it is a criminal offence to operate an unlicensed HMO, where a licence is required. This can be a confusing area for even experienced practitioners to negotiate, so it is no surprise that an increasing number of people seem to be getting caught out.
The bottom line is that if you intend to – or currently do – let a residential property to tenants, it is vital you check whether you need an HMO licence. If you don’t check, you risk being caught by your local council. They will then almost certainly wish to interview you under caution. They may then prosecute you. If you plead guilty or are found guilty, you could be fined up to £20,000.
Even worse, you will then have a criminal record.
If you’ve been renting your property out without the necessary licence and you submit an HMO application, you are unlikely to be prosecuted if you see the process through successfully. The fee will set you back anywhere from £400 to £1000 depending on where the property is.
The Housing and Planning Act 2016 also allows councils to impose civil fines of up to £30,000 as an alternative to prosecution. Until recently, under s.73 of the Housing Act, “Rent Repayment Orders” could be made, requiring the reimbursement of up to 12 months’ rent. The Housing and Planning Act 2016 has also greatly increased the availability and scope of these Orders as of April 2017, and both tenants and local authorities can now initiate the process for any offence committed on or after April 6th 2017.
So local authorities don’t even need to secure your conviction to take a great deal of money from your pocket.
Do you need to get an HMO licence?
The mere fact that a property comes under the definition of HMO does not necessarily mean that it requires a licence. Some HMOs do not require a licence, whereas others do.
Licensing is mandatory for all HMOs with three or more storeys occupied by five or more persons forming two or more households. Councils can impose additional licence requirements on other categories of HMOs. Oxford, for instance, requires an HMO to be licensed if occupied by 3 or more persons forming two or more households, regardless of the number of storeys, due in part to the large numbers of students in the city.
To fall under the definition, tenants must share basic amenities such as toilet, bathroom and/or kitchen. It must be their main residence. This includes full-time students, asylum seekers and use as a refuge from domestic violence. It must be residential, and rent (or other consideration) must be payable.
Certain buildings are exempt from the HMO definition, for example, those occupied by the resident landlord and a maximum of two other persons who are not part of his or her household, and those occupied by no more than two people.
What is a “household”?
Whether there are two or more households often causes an evidential problem for local authorities, and consequentially a reason they may prefer you to be interviewed without a solicitor.
A “household” can be a single person or several members of the same family, all related by blood, marriage or the equivalent co-habiting arrangement. For instance, two people in a same-sex relationship living with grandparents would constitute one household. This can be an area of evidential difficulty for local authorities because they don’t tend to take statements from tenants. Without statements, they can struggle to prove the relationships between them. This is why they often rely on admissions made by unwitting landlords during interviews. A simple question such as “are any of your tenants related to each other” will seem innocuous to a landlord.
Most of the people I represent are landlords who were simply unaware of the licensing requirements. Frequently, the first they hear of a problem is when council inspectors raid the property, often in the early hours. Inspectors will take detailed notes of the interior of the property, including details of those residing within it. They will take photographs. They may try to take statements from tenants. They then invite the landlord in to attend an interview under caution at the council offices. It is at that stage that I am usually contacted.
I regularly assist startled people who have never been on the wrong side of the law and do not know the first thing about being interviewed under caution. Landlords often do not seek legal advice and make unnecessary admissions to HMO offences in interview, handing local authorities the ammunition they need to successfully prosecute.
It is vital to seek legal advice before, during and after any interview with the local authority, as this can dramatically reduce the risk of prosecution.
If you have any HMO related legal issues, whether as landlord or tenant, please feel free to contact me at firstname.lastname@example.org or on 0333 2407373 and either myself or one of my colleagues will assist you.
Stuart Matthews is a senior solicitor in our private crime department.