HMO legislation’s failure?

New figures, achieved by Simple Landlords Insurance, showed that plans of the government to protect tenants from poor living conditions  with the Mandatory HMO licensing expansion, seemed to fall way short of their ambition.

The data says that most of the local authorities don’t know how many unlicensed HMOs are in their area, let alone where they are, leaving them ill-equipped to seek those who break the rules or take advantage of new enforcement powers.

According to one HMO licensing expert, the findings reveal that new rules are “practically un-enforceable” with the recent government commitment of £2m of additional funding to help implement the scheme unlikely to have any real impact.

The freedom of information requests (FOI) were returned by 90 local authorities and showed that two thirds (65/90) of local authorities have no idea of how many HMO owners are breaking the licensing rules, nearly one third (29/90) do not know how many properties should come in under the  new regulations and over a third (31/90) didn’t prosecute landlords for infractions of existing rules in the last two years.

Over the last twelve months there were only 103 HMO licences rejected at application, and 18,881 licenses were granted in total.

Houses in Multiple Occupation (HMOs) containing five or more people in two or more households with shared facilities such as a kitchen, bathroom or toilet must be licensed.

Landlords can gain a license after passing a “fit and proper” test, also they need to provide proof of compliance with fire safety regulations and provide tenants with a written statement of the terms of their occupancy. The rules were widened on October 1, removing a minimum three storeys high requirement, new conditions on minimum room size and waste collection were imposed.

The known unknowns

Heather Wheeler MP, the government’s Housing Minister, said that the new rules may increase the number of licenced HMOs in England from 60,000 to an estimated 220,000 properties.  

On the other hand, the research is showing that local authorities are disabled in their efforts to apply the new legislation – due to a combination of poor intelligence about housing stock.

The founder of The Home Safe Scheme and managing director of property management company Big Red House, Carl Agar, says: “It’s a big worry that local authorities don’t seem to have the resources available to manage this new workload. And the new rules are going to be practically impossible to enforce. The government is essentially relying on honest landlords coming forward to apply for a licence – leaving the so-called rogue or down-right criminal landlords that really need to be identified – out of scope. The £2m promised support is literally a drop in the ocean.”

Overwhelmed cities

Cities unsurprisingly show a major hike amongst the local authorities that have the intelligence and data to make a prediction about how many more HMOs would need a license.

Liverpool City Council had 1,195 HMOs with a mandatory license before October 1, and expects that 5,000 will require licensing. Birmingham expects numbers to increase from 1,853 to 4,000 and Southampton expects the numbers will swell from 551 to 2500.

Majority of London boroughs do not know how many additional HMOs would come under scope, whilst those who knows, are expecting a big jump – in Greenwich from 147 to 3,250 HMOs under scope.

66% of the local authorities who responded were able to measure how many HMOs were likely to require a mandatory license from October 1, and the average increase recorded was 227%.

“Many local authorities are now faced with at least twice as many licences to process and check with the same amount of human resource – leaving even less time for enforcement. The major conurbations will be swamped.” – added  Carl.

Mystery housing stock

Paul Fitzgerald, Environmental Health Officer and Chair of the National HMO Network,  explains: “Most local authorities simply do not fully understand the housing stock in their area, and they are kidding themselves if they claim that they do.

Trying to identify an HMO from scratch is an incredibly challenging job, made harder by the failure to join up systems like council tax and benefits registers, and immigration databases. Those who are determined to break the law do not apply for a licence in the first place.

Once they have been identified, dealing with criminal HMO landlords will be yet another problem. Pursuing a prosecution – or applying for a banning order – takes time, stretches resources and is not guaranteed. Many local authorities will opt for issuing fines, but there’s no guarantee that these will be paid without going to court, and that’s another resource and cost-heavy process.”

The bottom line” added Carl Agar “is that the Housing Act, in its current form, is no longer fit for purpose and the government need to prioritize helping local authorities know who is renting property in their areas and what type of properties are being let. A central government funded national register would be a major step forward.”

Head of Operations at Simple Landlords Insurance, Richard Truman, commented: “Earlier this year, we found that 85% of landlords we spoke to weren’t aware of the looming HMO regulations. A month on from their implementation, we wanted to find out exactly what those landlords are facing on the ground.

The changes may be well-meaning, but a failure to support local authorities to communicate about them and enforce them is bad news – for good landlords and for tenants.

We want to see the emerging class of professional landlords supported by central government and local authorities, and that can clearly only be achieved with more effective regulation and resource.”

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