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David Smith Solicitor, Anthony Gold
HMO Prosecutions
As local authorities finally get to grips with HMOs, we see a growing problem with the number of prosecutions rising dramatically – and many agents remain unaware of their responsibilities.
What is an HMO?
An HMO is defined in s254 of the Act. In short it is a property occupied by three or more persons (of any age) who form more than one household (ie they are not related or cohabiting), who pay rent or similar consideration for their occupancy, and who share basic amenities (cooking and washing facilities). If you are dealing with more complex arrangements or are unsure about your situation then you should seek specialist advice.
N
early six years after the introduction of Houses in Multiple Occupation (HMO) licensing as part of the Housing Act 2004, local
authorities are finally getting to grips with these properties and the number of threatened and actual prosecutions is starting to rise dramatically. This number is being increased further by the changes in licensing which have made it easier for individual local authorities to increase licensing to additional categories of HMO as well as a new concentration on appropriate management standards through the HMO Management Regulations. Regrettably many agents, never mind landlords, remain unaware of their responsibilities.
Obligations Any person who is receiving rent money from a property, even if on behalf of another person, is deemed by the Act as managing that property. A person managing is fully responsible for ensuring that any HMO is compliant with all the requirements of the Act. That means ensuring that a licence is in place, that the obligations of the licence are adhered to, and that the HMO Management regulations are obeyed. This, of course, puts an agent fully in the frame for these obligations. An agent acting on a pure tenant
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find basis may be able to escape liability if they have received none of the rent money but care should be taken with this approach as local authorities dislike it intensely and will closely scrutinise agents who adopt this attitude.
Management It should be remembered that the HMO management regulations apply to all HMOs, irrespective of their licensing status. This means that an HMO may not require a licence but might still have management arrangements more complex and detailed than those for an ordinary family property. The Management regulations require that a property be in repair, that it be safe for use, that is be fire safe, that it has a gas safety certificate, that there is a check of the fixed electrical wiring installation every five years, that there are proper arrangements for disposal of rubbish, and that there is a notice in the property specifying the name and address of the person who is managing it. Increasingly local authorities are threatening prosecution against agents where the property is not compliant with these requirements even where this is due to tenants blocking stairwells, disconnecting fire alarm systems, or refusing access. This is despite the fact that there is actually an obligation within the management regulations requiring a tenant not to obstruct or frustrate a manager in the execution of his duties and a power for the local authority to prosecute tenants for many of these issues.
The Penalties A failure to obtain an HMO licence or overcrowding a property in excess of the permission granted in a licence is punishable by a fine of up to £20,000. In practice the fines rarely exceed £8,000 and are often less where there has been a genuine error or some other mitigating factor. An agent who has been deceived by their landlord may be able to escape with a fine as low as £1,000.
Breaches of the management regulations are punishable by a fine of up to £5,000 but the fine is more usually in the £1,500 to £2,500 bracket. However, it is normal for a number of breaches of the management regulations to be prosecuted together and so the fine can rapidly reach significant levels. More seriously, any prosecution for an
HMO or other landlord and tenant offence is required to be declared on any future application for an HMO licence. Agents who have been successfully prosecuted will then find that local authorities will tend to refuse any further licence that has their name on it, whether as licence holder or manager. This can be immensely destructive to the agent’s business over the longer term and the increasing spread of licensing only increases the damage.
Recommendations for agents Know your areas Make sure you know about current and proposed licensing schemes in you area. While local authorities are under an obligation to consult on these schemes and notify stakeholders of their introduction they are often lazy about doing so. It is important to be engaged with appropriate local authority user groups and to attend meetings of these groups as they will often get informed first of planned licensing schemes.
Accept your liability Do not try to avoid the liability for HMOs. There is little point, as some agents still do, in ignoring the situation or, even worse, suggesting to landlords that they do not need to worry about licensing. Take it seriously and develop internal procedures to manage these properties or make a clear policy decision not to let to anyone other than a family.
Are you managing enough? Make sure you are actually managing the properties enough. The standard quarterly management visit may be insufficient for
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