Can you transfer a mandatory HMO, additional or selective licence to a new owner?
With the roll out of property licensing schemes, it is much more common for investors to purchase a property that was licensed under a mandatory House in Multiple Occupation (HMO), additional or selective licensing scheme.
Knowing that a property has been licensed will provide some reassurance that a licence application was submitted and approved by the local authority. But being licensed is no guarantee that a council officer has ever inspected the properly, nor that it has planning permission or building regulation approval for the current use. So it is important to carry out your own due diligence and leave nothing to chance.
It is also important to understand the limitations of a licence that was issued to the previous owner. When you purchase a rented property, the old licence is no longer valid. It cannot be transferred into your name. This is not down to the rules imposed by your local authority but to the legislation implemented by government. If you want to check for yourself, see section 68(6) and 91(6) of the Housing Act 2004. You can find links to the legislation here.
This is really important as I have come across landlords who were given a copy of the old licence when they purchased the property and thought it now covered them. It doesn’t!
So what should you do? If you purchase a licensed property and want to continue renting it out, you need to apply for a new licence, not a licence variation. You will need to complete the full application form, undergo a fit and proper person assessment and pay an application fee.
The application fee to change the licence holder following a change of ownership can vary significantly. For example, Barking and Dagenham Council charge the same amount as for a new application – £700 for an additional licence and £506 for a selective licence, whereas Barnet Council charge just £84.50 (correct as of 15 September 2016). For other councils, the fee could be over £1,000.
The main issue is to make sure that an application is promptly submitted following a change in ownership, to ensure you comply with the law. You will also need to reapply if your managing agent is the licence holder and you want to pass the responsibility to someone else. Again, the licence cannot be transferred.
Make sure you seek advice before deciding who should be named as the licence holder as it could prove costly to get it changed once the licence has been issued.
If you have any questions and would like advice on a property licensing issue, please contact Richard Tacagni who is Managing Director at London Property Licensing. His email is Richard@londonpropertylicensing.co.uk.