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Housing Act 2004

Housing Act 2004 -- Guide to HMO Licensing

Introduction

The Housing Act 2004 introduces the licensing of Houses in Multiple Occupation. Local Authorities are required to license larger, higher risk HMOs, which initially will comprise those of three stories and above occupied by at least five persons who constitute more than one household. Councils will also be liable to license other designated types of HMO under additional licensing provisions.

Bridgend County Borough Council is participating in a Wales wide Landlord Accreditation Scheme

Definition of an HMO

The Housing Act 2004 introduces a new definition of what constitutes a House in Multiple Occupation (HMO). A House in Multiple Occupation means a building (or part of a building, such as a flat), that;

  • Is occupied by more than one household and where more than one household shares, or lacks an amenity, such as a bathroom, toilet or cooking facilities.
  • Is occupied by more than one household and which is a converted building, but not entirely into self contained flats (whether or not some amenities are shared or lacking).
  • Is converted self contained flats, but does not meet as a minimum standard the requirements of the 1991 Building Regulations, and at least one third of flats are occupied under short tenancies.

The building may be occupied by more than one household:

  • As their only or main residence.
  • As a refuge of people escaping domestic violence.
  • By students during term time.
  • For other purposes prescribed by the Government.

Persons do not form a single household unless they are members of the same family or they form a prescribed relationship defined by regulations. A household refers to:

  • Families (including single people, couples and same sex couples.)
  • Other relationships, such as fostering, carers and domestic staff.

Why the Need for HMO Licensing?

Larger HMOs, such as bedsits and shared houses, often have poorer physical and management standards than other privately rented properties. The people who live in HMOs are amongst the most vulnerable and disadvantaged members of society. As HMOs are the only housing option for many people, the government recognises that it is vital that they are properly regulated.

Licensing is intended to ensure that;

  • Landlords of HMOs are “fit and proper people”, or employ managers who are.
  • Each HMO is suitable for occupation by the number of people allowed under the licence
  • The standard of management of the HMO is adequate.
  • High risk HMOs can be identified and targeted for improvement.

Where landlords refuse to meet these criteria the Council can intervene and manage the property so that:

  • Vulnerable tenants can be protected.
  • HMOs are not overcrowded.

Which HMOs Need to Be Licensed?

Compulsory (required by law) licensing of HMOs affects properties that are:

  • Three or more storeys high and
  • Have five or more people in more than one household and
  • Share amenities such as bathrooms, toilets and cooking facilities.

The Licensing Procedure

Anyone who owns or manages an HMO that must be licensed has to apply to the Council for a licence. The Council must give a licence if it is satisfied that:

  • The HMO is reasonably suitable for occupation by the number of people allowed under the licence.
  • The proposed licence holder is a fit and proper person.
  • The proposed licence holder is the most appropriate person to hold the licence.
  • The proposed manager, if there is one, is a “fit and proper person”.
  • The proposed management arrangements are satisfactory
  • The person involved in the management of the HMO is competent.
  • The financial structures for the management are suitable.

The Meaning of “Fit and Proper Person”

The Council will carry out checks to make sure that the person applying for the licence is a fit and proper person. In deciding whether someone is fit and proper the Council must take into account:

  • Any previous convictions relating to violence, sexual offences, drugs and fraud.
  • Whether the proposed licence holder has broken any laws relating to housing or landlord and tenant issues.
  • Whether the person has been found guilty of unlawful discrimination
  • Whether the person has previously managed HMOs that have broken any approved code of practice.

It is advisable for the landlord or manager to be a member of a professionally

recognised body, or an approved landlords association that is affiliated to the National Federation of Residential Landlords.

The Licence

The licence will specify the maximum number of people who may live in the HMO. It will also include conditions concerning the following, which apply to every licence:

  • A valid current gas safety certificate, which is renewed annually, must be provided.
  • All electrical appliances and furniture are kept in a safe condition.
  • All smoke alarms are correctly positioned and installed.
  • Each occupier must have a written statement of the terms on which they occupy the property, for example, a tenancy agreement.

Councils may also apply the following conditions:

  • Restrictions or prohibitions on the use of parts of the HMO by occupants.
  • A requirement that the condition of the property, its contents, such as furniture and all facilities and amenities, bathroom and toilets for example, are in good working order.
  • A requirement for specified works or repairs to be carried out within a particular timeframe.
  • A requirement that the responsible person attends an approved training course.

Duration of Licence

A licence will normally last for a maximum of five years, although it can be for a shorter period.

Cost of a Licence

Landlords will have to pay a fee to cover the administration costs of the licence procedure. The fee has not yet been agreed but is likely to be in the region of £450 for a 5 year licence (£350 for the licence, payable per property - £100 per “Fit & Proper Person Assessment”, payable per landlord if applications for all of their licensable premises are submitted at the same time).

Arrangements if a Licence is Refused

The Council has powers to refuse a licence, if the property does not meet the conditions set out above and the landlord or manager is not a fit and proper person. If a landlord fails to bring an HMO up to the required standard, or fails to meet the fit and proper person criteria, the Council can issue an Interim Management Order (IMO), which allows it to step in and manage the property. The owner keeps their rights as an owner. This order can last for a year until suitable permanent management arrangements can be made. If the IMO expires and there has been no improvement, then the Council can issue a Final Management Order. This can last up to five years and can be renewed.

Rights of Appeal

The landlord may appeal if the Council decides to:

  • Refuse a licence.
  • Grant a licence with conditions.
  • Revoke a licence.
  • Vary a licence.
  • Refuse to vary a licence.

The appeal must be to the Residential Property Tribunal, normally within 28 days.

Temporary Exemption from Licensing

If a landlord or person in control of a property intends to stop operating it as an HMO or reduces the numbers of occupants and can give clear evidence of this, then he or she can apply for a Temporary Exemption Notice. This lasts for a maximum of three months and ensures that a property in the process of being converted from an HMO does not need to be licensed. If the situation is not resolved, then a second Temporary Exemption Notice can be issued. When this runs out the property must be licensed, become subject to an Interim Management Order, or cease to be an HMO.

Penalties

It is an offence if the landlord or person in control of the property:

  • Fails to apply for a licence for a licensable property or;
  • Allows a property to be occupied by more people than are permitted under the licence.

A fine of up to £20,000 may be imposed. In addition, breaking any of the licence conditions can result in fines of up to £5,000.

Rent Repayment Orders

A tenant living in a property that should have been licensed, but was not, can apply to the Residential Property Tribunal to claim back any rent they have paid during the unlicensed period (up to a limit of 12 months). Councils may also reclaim any housing benefit that has been paid during the time the property has been without a licence.

Commencement of Licensing

The Government has indicated that licensing will be introduced with effect from July 2006

For advice please contact Public Protection

Last Updated: 12/07/2013
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