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John Corey · 24-07-2012, 09:50 AM

Samuel,

Everyone agrees a license is not needed. More important than the rest of us, the Council, who would oversee the license for the property, does not want you to have a license.

An HMO property will need to meet the national HMO guidelines for fire standards, etc. In other words, you liability is greatest if something happens and the fire inspector reports that the home was not up to the HMO standards of the time. That could be very costly. It could also impact your ability to collect on an insurance claim as the insurance company might deny coverage if you intentionally operate illegally (substandard HMO). A lender will also have a view in terms of an HMO and what they will lend on. Not needing a license is not the same. A lender who does not lend for HMO can call the loan or deny a request for financing. Many will not take action. You just need to be aware of the risks you face if you do not fully comply or disclose.

Here is an odd one that should concern some landlords.

Assume for a minute we are talking about a 2 bedroom home or flat. Three people sharing with 2 people in an active relationship so therefore a couple (related individuals). Technically the property and the use does not indicate an HMO. One night the couple have a fight and break up. From then on they are no longer a couple as they do not reconcile. Technically the unit has become an HMO as three, unrelated people are living there. With modern flats they will already meet the fire code for an HMO so much less of a risk from the fire liability POV.

Angela O'Connor · 24-07-2012, 10:17 AM

A couple and a friend do form an HMO anyways as they fall into the category of "3 or more people forming two or more households...."

Why they can't form a single household is beyond me. If they are all on one AST, share all facilities and cooking and shopping... The government has effectively managed to define "single household" as "related/family". It so wrong IMO and should be challenged.

Sam, in my opinion it needs to make financial sense to let a property as an HMO even if it's just a small one. If you can get the same rent from a family, it's not worth the effort. If you can achive more rent and it'sworth your while, then make sure it's all above board.

It looks like you don't need an HMO license and C4 use is permitted. So if you make sure your lender and insurer are ok with this and the property complies with all regulations.

John Corey · 25-07-2012, 08:59 AM

(24-07-2012 10:17 AM)Angela OConnor Wrote: A couple and a friend do form an HMO anyways as they fall into the category of "3 or more people forming two or more households...."

Looks like I missed that detail. Easy to get tripped up.

(24-07-2012 10:17 AM)Angela OConnor Wrote: Sam, in my opinion it needs to make financial sense to let a property as an HMO even if it's just a small one.

I think the benefits of making sure the property meets the HMO standards as related to the fire code is a great way forward. One HMO landlord felt that there was no real cost to upgrading the property to HMO standards (other than the central alarm facility) as things like fire doors lasted longer. The major cost was the installation and the labour is just about the same independent of the door quality.

Dave Reaney · 02-08-2012, 09:10 PM

There is a further confusion with regard to sole tenancies vs joint tenancies.

If 3 people occupy a property - one tenant & two lodgers, it is not a HMO
If 3 people occupy a property - 2 tenants and one lodger, it is a HMO.

Angela O'Connor · 02-08-2012, 09:21 PM

A homeowner and up to 2 lodgers fall under C3 ©, not a tenant and lodgers. See here

...C3© allows for groups of people (up to six) living together as a single household. This is to allow for those groupings that do not fall within the C4 house in multiple occupation definition to be provided for e.g. a small religious community may fall into this section as could a homeowner who is living with a lodger...

All 3 and more unrelated tenants forming 2 or more households are an HMO I am afraid.

Dave Reaney · 02-08-2012, 11:03 PM

I stand corrected Angela

I read your response and thought "yeah, but that's only planning regs" so I went looking for the regulations that specify that 2 lodgers are okay in order to disprove your statement with regard to HMO licensing and tenancy provisions.

But there it was in schedule 14 of the 2004 Housing Act, the exemption only applies when it is a homeowner, Doh!

Obviously I still have plenty to learn.

Cheers!

Angela O'Connor · 02-08-2012, 11:15 PM

No worries. It's good you brought it up. A friend of mine mentioned exactly the same to me today. So you are not alone and hopefully we have cleared that up.

I personally think the legislation is completely out of touch and discriminates. But I spare you all with having yet another rant but please sign the epetition to abolish Article 4 restrictions for HMO's here

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