Recent years have seen an uptick in investor interest in houses of multiple occupation (HMOs), such as the student housing sector. Where investment goes regulation is sure to follow: this October will see significant changes including a new definition of an HMO and the permitted occupancy rate for smaller bedrooms.
A new definition of HMOs
The first day of October will see the introduction of a new definition of HMOs, with the effect that around 160,00 more properties will be subject to mandatory HMO regulation. Compared to other rental properties, HMOs are subject to additional regulations around issues such as fire safety and monitoring tenant behaviour.
The old definition says an HMO is a property over three storeys let to three or more tenants who form two or more households and share a bathroom, kitchen or toilet.
The new definition determines that a property is an HMO if it meets these criteria:
- It is occupied by five or more persons;
- It is occupied by persons living in two or more separate households; and meets the standard test under section 254(2) of the Housing Act 2004 (the ‘Act’);
- The self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats; or
- The converted building test under section 254(4) of the Act.
Critically, the three-storey rule has been scrapped, so a property can have one or two storeys and now be an HMO.
The new rules apply to landlords seeking new licences. Landlords operating HMOs under existing licences will be given up to 18 months to make necessary changes when re-applying for a licence. Landlords found to be in breach of the rules could face a fine of up to £30,000.
New rules on minimum bedroom size
Under the new rules, a single bedroom used by one person over 10 years of age must be no smaller than 6.51 square metres. Double rooms used by two people over ten years of age must be at least 10.22 square metres in size. Children’s bedrooms can be smaller, with a minimum size of 4.64 square metres for children aged 10 years or under.
The HMO licence will also state the maximum number of occupants who are permitted to inhabit a room, with an additional rule that the combined number of occupants in the different rooms must be no greater than the total number of people permitted to occupy the house as a whole.
Will you be hit by a council crackdown?
Some councils in the UK are also putting additional constraints on HMOs in their area. For example, Portsmouth City Council recently decided that developers would be banned from building three or more HMOs in a row or ‘sandwiching’ residential homes by putting an HMO on either side.
An online register will also allow local Portsmouth residents to check whether an HMO on their street is known to the council. Landlords can also be fined up to £5,000 if residents let waste build up in forecourts.
Are you protected?
Here at Stride we understand that every property portfolio is unique. So whether you’re a property portfolio owner or a managing agent, we can help you find the right level of cover for your investments. Talk to one of our experienced team members today on 023 9224 8790.