Should mandatory HMO licensing be extended in 2016?

Tuesday, December 22nd, 2015 - By Richard Tacagni, Managing Director at London Property Licensing

As many people will know, the government’s consultation on widening the mandatory HMO licensing scheme closed on Friday 18 December and a decision is expected early in 2016.

As a Chartered Environmental Health Practitioner with significant expertise in housing regulation, I wanted to share an excerpt from my own personal submission to government. It represents my own views based on knowledge and experience gained from over 20 years spent working in local government.

In publishing this response, I recognise that there are no simple answers to regulating the private rented sector and ensuring all tenants have access to safe warm and decent accommodation. That should be the aspiration of all of us. The question is therefore how we can best achieve this and my views should be read in this context.

Should mandatory HMO licensing cover all relevant HMOs regardless of the number of storeys or only apply to buildings of two storeys?

I am not convinced by the rational for expanding the mandatory HMO licensing scheme at this point in time. The Housing Act 2004 already provides local authorities with extensive enforcement powers to tackle unsafe and poorly managed properties.

From my experience as a Chartered Environmental Health Practitioner, the very worst landlords will never apply for a licence and will instead seek to operate beneath the radar. In this context, the expansion of mandatory HMO licensing is unlikely to have a significant impact on the very worst properties.

Local authorities already have power to implement selective and additional licensing schemes where the circumstances justify a more extensive area based approach. In London, a third of London boroughs have already implemented a discretionary licensing scheme and several other schemes are currently under development.

The only way to tackle the very worst housing conditions is through a risk based, intelligence led approach to enforcement, which requires effective multi-agency enforcement action at a local level.

Whilst some councils are very good at proactive and hard-hitting enforcement action, others have a poor enforcement record and the implementation of an expanded licensing scheme is unlikely to change that. In fact, one of my concerns is that more resources will be pulled into processing licence applications leaving even less resources to undertake essential enforcement activity against criminal landlords who fail to apply.

From research I carried out in early 2015, 24% of London Boroughs had taken no housing prosecutions over a 3-year period from 1 April 2011 to 31 March 2015 and a third had taken less than one prosecution a year.

When it comes to Rent Repayment Orders (RROs), the limited enforcement activity is even more stark. Over a 4-year period from 1 April 2011 to 31 March 2015, less than 20% of London boroughs had obtained one or more RROs. I think this reflects on a number of factors including the complexity of the legislation, the lack of staffing resources and the lack of a simple toolkit to assist councils in using these powers more effectively.

Of equal concern, my research has shown that almost 40% of London boroughs have no estimate for the number of properties within their borough that require a mandatory HMO licence; this being almost 10 years after the regime first came into force.

Of those boroughs that had prepared an estimate of licensable HMOs, figures suggest that only about half of those properties had been licensed so far. This tends to correspond to the latest published English local authority HSSA data returns for 2012/13 that show about 40% of properties that fell within the mandatory HMO licensing scheme had not yet been licensed.

Overall I think these results help to illustrate the challenge that lies ahead. In my opinion, it is not the absence of adequate licensing powers, but the lack of robust enforcement action that is the key to tackling the minority of rogue landlords who let out unsafe and poorly managed accommodation and place their tenants’ lives at risk. With budget cuts leading to a reduction of local authority staffing resources, this task is unlikely to get easier anytime soon.

I do think that the introduction of banning orders, as already proposed by government, will be an important step forward, provided the sanction for breaching a banning order carries the risk of a custodial sentence.

But it is also important to keep this in perspective. The majority of landlords and letting agents are professional and hard working. They are seeking to run a business whilst ensuring their tenants have access to safe, warm and decent accommodation. We should be adopting a more light-touch approach for professional and compliant landlords.

My closing comment would be that if the government is committed to widening the HMO licensing criteria, I would recommend that the criteria are restricted to two storey HMOs and not extended to all relevant HMOs regardless of the number of storeys.

Should poorly converted blocks of flats be brought within the scope of mandatory licensing?

Converted blocks of flats as defined in Section 257 of the Housing Act 2004 should not be included within the mandatory HMO licensing scheme.

Mandatory HMO licensing should not be applied to buildings that could contain owner occupied accommodation. Such a move could prejudice both the value and saleability of such properties. Before taking this step, the government should consult with organisations such as the Council for Mortgage Lenders, to fully explore the possible implications.

It is also important to note that very few people fully understand the complex definition and can accurately assess the HMO status of buildings converted into self-contained flats prior to 1992. It is a task that is likely to be beyond the ability of most landlords, letting agents and local authority licensing officers.

To make a definitive assessment requires an inspection of the property by a suitably qualified person with good knowledge of the Building Regulations 1991, who in turn can confirm whether the property is compliant with those regulations.

Given the serious consequences for failure to have a licence – a criminal prosecution with potential for an unlimited fine, combined with a Rent Repayment Order – it needs to be possible for the owner of the building to easily assess whether a licence is required. This is not the case with many Section 257 HMOs that were converted prior to 1992.

Further problems are likely to be encountered in defending a challenge against a Section 21 Notice of Seeking Possession on the basis it is alleged to be a licensable Section 257 HMO that requires a licence. It is unlikely that any party to the proceedings would be in a position to disprove the allegation and the possession action could therefore be delayed or dismissed.

Should there be minimum national room sizes for sleeping accommodation in HMOs?

I do not think there is a need to introduce a new national minimum room size for lettings in HMOs.

From my experience as a Chartered Environmental Health Practitioner, I have not come across major difficulties is setting appropriate room sizes in both licensable and unlicensed HMOs.

Room sizes can already be regulated in mandatory HMO and additional licensed properties by imposition of a maximum number of household and individuals on the licence. For selectively licensed HMOs and non-licensable HMOs, occupancy limits can be regulated using the overcrowding provisions in Part 4 of the Housing Act 2004. There are also the powers in the Housing Act 1985 and Part 1 of the Housing Act 2004 (the housing health and safety rating system).

It is right that there should be a mechanism for landlords to challenge local authority occupancy limits through the First-tier Tribunal, it negotiation fails to resolve the difference of opinion.

It is understandable that landlords and property developers are confused when it comes to local authority room sizes as there is so much variation in adopted standards. For example, some boroughs impose a minimum room size of 6.5m2, whereas others impose 10.2m2 for a single room. Larger rooms sizes are required if there is an en-suite kitchen facilities although these can vary from 10.2m2 to 13.5m2 for a single room.

These examples are only based on a small sample size, but illustrate the complexity of the task if new prescribed standards were to be introduced. I do not think an arbitrary minimum room size that provides no flexibility for minor variations will take us much further forwards.

If you have any comments on this blog post, I would be delighted to hear your views. You can you the contact form and I will read all your comments personally.