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Here are the Government's proposed changes to HMO regulations
You have to wonder if anyone within the current Government is living in the real world following news of its latest proposals to crack down on rogue landlords in England.

Proposed changes to HMO regulations

These include extending mandatory licensing for large Houses in Multiple Occupation (HMOs) and the introduction of a minimum bedroom size of 6.52 square meters. It also wants landlords to be obliged to provide adequate storage, as well as somewhere to store and dispose of rubbish.

The Government says these measures, to be introduced as early as next year, are designed to tackle “sub-standard, dangerous and overcrowded accommodation”.

We have to agree there is some logic in its key proposal to extend mandatory licensing to include all HMOs let to five or more sharers, regardless of the number of floors. 

We also agree with the plan to extend licensing to all flats above or below business premises, assuming they are occupied by at least five unrelated sharers forming more than one household.

The health and safety of tenants is paramount and surely any over-crowded accomodation poses a risk to their well being, whether there are three storeys in a property or one.

At the moment, there are around 463,000 HMOs in England, of which only 60,000 have a license. Extending mandatory licensing to all large HMOs, even those with only one storey, should increase the number of licensed premises by around 170,000.

The new measures could cost a lot to HMO landlords

While this will increase the cost and regulatory burden for landlords with smaller HMOs, the rewards should still be worthwhile for many of them. Typical yields on HMO properties can be double those achieved on properties let to single households and should be at least eight per cent.

The cost of an HMO licence is set by the local authority so varies considerably, but it is not usually more than £1000 for a five-year licence. Landlords might also be required to make alterations to their premises to gain a licence, including installing safety measures such as fire extinguishers and heat detectors, but again, the increased returns should justify the cost.

The only silver lining is that an HMO license is tax deductable as an allowable expense (along with letting agents fees, service charges and others). With the Government's plans to scrap mortgage interest relief as a tax offset, and recent increases to the Stamp Duty Tax Rates, let's hope it stays this way.

However, it is debatable whether simply having more licensed properties will improve conditions for tenants unless local authorities are given more resources to use the powers they already have to tackle unscrupulous landlords.

Local authorities are already struggling to clamp down on those who are flouting the existing rules, so extending the rules alone won’t necessarily do much good.

Also, we can’t see the sense of introducing a minimum bedroom size of 6.52 square meters per person, or slightly larger for couples.

More costs could be passed on to tenants

Doesn’t the Government realise this will only increase costs for tenants, especially in expensive cities like London where there is already a dire shortage of budget accommodation? And to what end? There is no evidence that we’re aware of that small rooms are a health risk or a danger to tenants, so why not give tenants the option of paying less for less space?

The Government says it needs to take action now because of the growth of the HMO market, which includes those on low incomes, housing benefits, students and those from abroad. It says it wants to protect the vulnerable from being exploited by landlords, but offering these tenants small rooms at low prices isn't exploitation, it's sensible.

It’s not only low-paid or vulnerable tenants who rent rooms in shared houses; there are many professionals who are increasingly choosing to buddy up to reduce their living costs, and they are often happy to sacrifice a bit of space for a lower rent.

Also, there are many single people who choose to rent rooms in shared houses because they are more social than more expensive studio flats, and they don’t mind a small bedroom if they have a larger communal living room a kitchen.

As their smartphones double up as laptops, TVs, stereos, books, cameras, diaries and so much more, tenants often need no more than a bed and somewhere to keep their clothes.

We agree that rooms must be habitable, clean, safe and comfortable, but if they are large enough to hold an adult-size bed and somewhere to keep their stuff, surely that’s fine as long as the property isn’t otherwise overcrowded?

Whilst we are 100 percent in favour of routing out rogue landlords and improving living conditions, we think that with this new legislation the Government is in danger of removing tenants’ choice to find affordable accommodation.

Please share your thoughts below.

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By The Upad Landlord
01 Nov 2016

Categories: Legal, HMOs

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