Over 130,000 Unlicensed HMOs Operating in London

New research made has found over 130,000 unlicensed HMOs in London which should be licensed under either selective, additional or mandatory HMO licensing schemes.

The research, made through Freedom of Information (FOI) requests, found there are over 310,000 private rented properties in London that need licensing under mandatory HMO, additional and selective licensing schemes implemented under the Housing Act 2004. 

However, non-compliance in the capital is popular. Licence applications have been submitted for only 25% of the 138,500 HMOs that need a licence – a non-compliance rate of 75%. These properties are being operated illegally if they stay unlicensed.

For operating an unlicensed HMO landlord and managing agent can face prosecution and a hefty fine, or a civil penalty of up to £30,000. The HMO owner can also be ordered to repay up to 12 months rent. In some cases many could be falling foul of the law through ignorance of the complex regulatory framework.

Since October 2018, the mandatory HMO licensing scheme is required for HMOs with five or more residents whereas it was previously restricted to properties three or more storeys in height. In some boroughs, additional licensing schemes have extended licensing to HMOs rented by three or four unrelated occupants. 

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At the same time, selective licensing is markedly different. These schemes apply licensing to all private rented properties including single family lets within a certain geographical area. Licence applications have been submitted for 85% of the 173,000 private rented properties that require licensing under selective licensing schemes in London- a non-compliance rate of 15%.

Plus to all this HMO confusion, many London Boroughs are struggling to process over 24,000 licence applications which can lead to long delays in issuing licence approvals. Nowadays, around 40% of boroughs still rely on paper applications.

Safeagent CEO, Isobel Thomson, said: “The results of the survey are concerning. Consumers are not being well served and indeed many are being placed at risk through this mishmash of licensing schemes. Right now, the system isn’t fit for purpose and Councils are drowning in paperwork. Landlords needing property licences are either deliberately evading the schemes or are in the dark concerning their legal responsibilities and tenants are being placed at risk.

If the compliance rate for HMO licensing schemes is only 25%, how can these schemes be effective? Ultimately this is about proper use of public money and consumer protection. Where are the assessment procedures for Councils who have schemes in place? Isn’t it time we went back to the drawing board to come up with a simple, streamlined system that works for all?”

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