Consultation on HMOs and student housing

An overview of the consultation

The Government has issued a consultation paper regarding its decision to extend the number of houses in multiple occupation (HMOs) that are subject to mandatory licensing in England. This is part of a Government drive to try to raise standards in relation to poor quality HMOs.

A building or part of a building is likely to be an HMO if two or more households share the premises and the use of basic amenities. Currently, HMOs are likely to be subject to mandatory licensing if the HMO:

i) is occupied by at least five people who do not form a single household, and
ii) is of three storeys or more.

Under the planned changes, the second of these two limbs will be removed so a house that forms a single HMO (and limb (i) applies) would be subject to mandatory licensing even if it has only one or two stories. For HMOs which are flats the rules will be more complex. Where a HMO which is a self-contained flat is in a building that also comprises commercial or non-residential premises, the flat will be subject to mandatory licensing if any of the following applies to the building: (a) it also comprises an HMO which is not self-contained (eg a bedsit); or (b) it is a converted building which includes one or more self-contained flats in multiple occupation; or (c) it is a purpose built building and includes one or two (but not more) HMOs that are self-contained flats. Mandatory licensing is not being extended to all flats in multiple occupation; the consultation suggests it is targeting those flats where there is perceived to be a particular problem.

The consultation also looks at the implementation of statutory national minimum room sizes for sleeping accommodation in licensable HMOs (this would be given effect by way of a mandatory condition in a HMO licence). It also asks for views on criminal record checks for licence holders/property managers (which are currently not a universal requirement across all local housing authorities) and mandatory conditions in HMO licences in relation to adequate rubbish disposal.

The Government specifically considers purpose built student housing. It is proposing a discount on fees for purpose built student blocks owned by private providers which are required to be licensed, if the owner complies with an approved code of practice (the theory being it is the code provider which maintains standards rather than the local housing authority). It is possible in light of the consultation that a new code of practice may be introduced, aimed at purpose built blocks in the private sector where a nomination agreement is in place, which would need to be complied with in order to qualify for this discount.

More detail

The term HMO applies to a wide range of situations. Two friends living in a flat would count as two households so if at least one of them is paying rent and they share any of the bathroom, toilet or cooking facilities that would be an HMO. However, not all HMOs require licensing. HMOs only need to be licensed if:

• they are caught by mandatory licensing requirements, or
• a Local Housing Authorities (LHAs) has used its discretion to extend the licensing requirement to HMOs of a certain type of housing within a particular area even when they do not fall within the mandatory scheme, and
• they do not benefit from an exemption.

Among the exemptions, buildings occupied mainly by full-time students at specified education establishments that manage the building in accordance with an approved code of practice are exempt from HMO licensing. However, if the building is owned and managed by private providers and caught by the mandatory licencing requirements there is no exemption from the licensing obligations even if they manage the building in accordance with an approved code of practice. The usual approved code for large student developments is operated by Accreditation Network UK (ANUK).

Subject to the exemptions, there is currently mandatory licensing for HMOs that are occupied by five or more persons who together do not form a single household and the HMO is of three or more storeys. A household might be a family (including unmarried couples), a single person, an employer and domestic employee, or a carer and the person receiving care. At the moment, it is the HMO unit rather than the building that has to be of three storeys or more. This requirement would capture a  three storey house that has five or more students living in it but a self contained cluster flat for five people (sharing a kitchen) in a block of flats that might be three storeys or more would not be captured if the self-contained flat itself is only on one storey. In basic terms, it is not currently captured because it is a flat not a house. The government’s stated intention is to increase the number of properties subject to mandatory licensing and that it should apply to “most” HMOs occupied by five or more people forming two or more separate households. As noted above, one of the current proposals is to remove the “three storey” rule. This would mean that even a one-storey house (with shared amenities) that had five or more people in it that do not form a single household (ie a fairly typical student house) would be subject to mandatory licensing. It would also capture the older style of hall of residence where students are let rooms but share bathroom, toilet or cooking facilities.

For flats, there would be a more complex set of rules. The consultation paper states that “it is also intended that a flat which is occupied by five persons or more, in households of two or more, will also be subject to mandatory licensing if the flat is in a converted building or in certain circumstances is in a building where part of the building is used for commercial or other non-residential purposes” (my emphasis). However, it then goes on to suggest that it would apply only where a flat is in a converted building and the building also comprises commercial or other non-residential premises. This is, of course, an important difference as the first option would capture all converted student blocks with self-contained flats for five persons or more, while the second would only capture these where they are above, for example, a ground floor retail unit.

In addition, it is proposed that where the building also comprises commercial or other non-residential premises, and it contains an HMO that is not a self-contained flat (eg bedsits or letting rooms), then any self-contained flats (where there are five persons or more forming two or more households) in that building would also be subject to mandatory licensing (regardless of whether the building is converted or purpose-built).

Where the building is purpose-built and comprises commercial or other non-residential premises, a flat with five persons or more forming two or more households would be subject to mandatory licensing if there are only one or two such self-contained flats in the building but not where there are more than two. This means that the flats in a purpose-built student block (assuming more than two student flats) that has a retail unit on the first floor would not be subject to mandatory licensing. However, if they are in a converted student block they would be.

The LHAs will retain their right to impose licensing obligations on HMOs even where they are not ordinarily subject to mandatory licensing.

The consultation proposes that the new rules would come into force during 2017. There would be a grace period of six months for landlords, and others, to familiarise themselves with the new licensing requirements but penalties for not obtaining a licence, including criminal prosecutions, financial penalties and rent repayment orders, would apply from the end of the grace period.

A further proposal would mean that providers of student accommodation who are subject to licensing could receive discounts. There is no proposal to allow private bodies the same exemption as educational establishments but the consultation recognises that is that it is the code providers rather than LHAs that are doing the work of ensuring standards are met and in recognition of this it proposes that where built housing is provided by a private body complying with the relevant approved code, the fees paid for such licensing should be discounted. The suggested discount is 50%. However, this would only apply to purpose-built student housing so it is likely that it will not help student housing providers that would be caught by the new measures.

The consultation runs until 13 December 2016.