The 4th May 2018 will be an important date for large numbers of landlords as new HMO legislation comes into effect.
That’s because the rules change with respect to HMOs (Houses in Multiple Occupation).
It has been coming
There have been numerous reminders in various media to the effect that this date was fast approaching on the horizon. Now it’s almost here.
This is, of course, all about new government legislation first proposed back in 2015, relating to HMOs. As with all legislation, there is quite a bit involved but we’ll pick out here some of the most pertinent points and ones which you really should be aware of:
- the minimum living space for renters is now defined in law;
- mandatory licensing requirements will now include flats above shops or any other form of commercial business;
- it will be obligatory for landlords to provide facilities for the disposal of rubbish – for tenants use;
- the removal of any reference to the number of storeys in terms of defining what is or is not an HMO.
That last point is particularly important because it means a very significant number of properties that were previously excluded, by definition of the storeys qualification, will now be included and re-categorised as HMOs.
What this means
There are various estimates as to how many properties that were previously not classed as HMOs will now, in fact, be clearly confirmed as such, and will need to comply with current HMO legislation. Some estimates put the number at 175,000 and others at 150,000.
Whichever it is, this is going to affect a lot of landlords!
Perhaps the two most immediate implications for landlords now finding themselves letting HMOs will be:
- if your property is in England, this may make it much more likely that you will need to formally register to comply with local authority licensing requirements;
- you may need to review your landlord insurance.
Why insurance is an issue
Typically, landlord insurance providers differentiate between cover for properties classed as HMO and cover for those which are not.
If you currently have a property that is not classified as an HMO but which becomes so after May 2018, then you are going to need to discuss the position with your insurance provider. In all probability, you will need to take out a revised policy providing HMO cover.
This isn’t just a question of bureaucracy and terminology with the insurance providers. The risk profiles associated with the two types of let property are substantially different. They therefore require substantially different cover and hence different policies.
If you are in any doubt at all as to the applicability of your existing landlord insurance, it would be highly advisable for you to engage in a discussion with your insurance provider sooner rather than later. As part of that, they may wish to know whether your property will be now included in the definition of HMO and in order to answer that, it might be highly advisable to read the government guidelines thoroughly.
As a final warning, don’t take the subject of HMO legislation lightly or get caught out.
The fines for operating an HMO but without the appropriate licensing can be significant. The potential costs of failing to be able to make a claim for a problem in an HMO property because you have the incorrect form of cover might be even more significant.