New HMO rules put landlords in the spotlight

Generally speaking, a House of Multiple Occupation (HMO) can be defined as a property let to three or more unrelated people forming more than one ‘household’ and, usually, who share common amenities at the property, i.e. for washing and cooking. 

It is not necessary for all HMOs to be licenced, however larger HMOs where at least five people forming one or more household occupy, and the building is three storeys, and those in occupation share kitchen or bathroom facilities will almost certainly require a licence. 

The requirement for HMO licencing can vary between local authorities. Therefore landlords in any doubt as to the status of a property should enquire with the relevant authority.

On 6 April 2017, new powers were introduced by the Housing and Planning Act 2016, enabling local authorities to issue a fine to landlords, and also letting agents, of up to £30,000 (without needing to bring a prosecution) in the following circumstances: –

• Not having a HMO licence, where one is required;
• A breach of any condition attached to an HMO licence;
• Breaching HMO Management Regulations;
• A breach of an enforcement notice served on a landlord by a local authority in respect of housing improvement or overcrowding

The new provisions also allow a local authority to issue penalties if a landlord of any let property evicts a tenant unlawfully. Therefore, as has always been the case, landlords must ensure that they are using the correct procedure to obtain possession of properties to avoid financial claims and prosecution. 

This means landlords must serve a valid notice and obtain a possession order from the Court and, if a tenant refuses to leave, by obtaining a warrant for possession and bailiff eviction appointment.

Landlords can, and likely will, still face criminal prosecution in relation to these matters. Furthermore, if such convictions or fines are applied, a landlord’s options for recovering possession will be severely limited.

A separate penalty may be issued for each separate offence, meaning landlords could face multiple fines of up to £30,000 for multiple offences.

Rent repayment orders

Previously Rent Repayment Orders were only awarded for a failure to licence an HMO where a licence was required. 

However, under the new provisions, it is possible for a local authority or tenant to apply for a rent repayment order in relation to any of the above offences. If a rent repayment order is granted, a landlord can be required to pay up to 12 months’ rent or Universal Credit (formerly Housing Benefit) back.

Action to take

To avoid costly fines and the consequences of a rent repayment order, it is crucial that landlords and letting agents ensure that they take steps to confirm their position as to properties which may require an HMO licence, and where such a licence is issued, to ensure compliance. Landlords must also follow the correct procedure for recovering possession of their property.

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