Before you buy or create an HMO (House in Multiple Occupation), you need to be pretty confident that you will be granted any necessary licences and/or planning permission.
As you might have read in last week’s blog, any property let to three or more tenants who form more than one household and share facilities such as a kitchen or bathroom is an HMO.
Mandatory licensing exists for larger HMOs with three floors or more, let to five or more tenants who aren’t related. However, some local authorities have introduced selective licensing for smaller HMOs too, so you need to check with your council to see if you need to apply.
To get a licence, you or the person you have appointed to manage the property, must be a “fit and proper person”. In other words, you mustn’t have any criminal convictions or have breached any landlord laws or codes of practice.
You can apply for the licence yourself, or you can appoint a managing agent to do it for you, but an HMO licence can’t be transferred to anyone else. So if you buy an existing, licensed HMO, you will need to apply for your own licence and you won’t be able to pass that on to the new owner when you sell it.
You might also need to make several changes to the property itself before the the council will grant a licence.
The council will want to make sure that the property isn’t overcrowded, that there are adequate bathrooms and cooking facilities and that it’s safe for the number of people living there.
You will have to install and maintain smoke alarms on every floor and, depending on the size of the property and number of tenants, you might also have to install fire-fighting equipment such as fire blankets and extinguishers, fire doors and emergency lighting.
You will also need to show you have enough easily-accessible fire escapes for the size of property. You might also have to make some changes to the layout of the property, depending on its size and the number of tenants, to ensure their safety.
In addition, you will have to produce an annual gas safety record, supply declarations of the safety of all furniture and electrical items, and have the electrical installation and fixed wiring checked every five years.
The council might grant a licence without visiting your property, but they have the right to visit later. If at any point it decides to restrict the licence to fewer tenants than are already living there, you won’t have to evict anyone but you won’t be able to replace any tenants when they leave if this means you’ll have more than the number on your licence.
Failure to meet the conditions of a licence without a ‘reasonable’ excuse could lead to a fine of up to £5,000 and you might have your licence revoked.
In addition to all of the above, you might also need planning permission for “change of use”, especially if you intend to run your property as a large HMO. You might even need planning permission to convert an existing small HMO to a large HMO with six or more tenants.
As councils are often inclined to restrict the number of HMOs in certain areas, it would be wise to check the necessity and likelihood of gaining both planning permission and a licence before you invest.