Rental sector must heed HMO licensing changes

Wednesday, October 26, 2011

ARLA warns of potentially costly implications for landlords in cities and student towns

The Association of Residential Letting Agents (ARLA) is today urging landlords to be aware of forthcoming changes to the categorisation and regulation of rental properties.

Many local authorities  have indicated they wish to enforce Article 4 - a piece of legislation which means planning permission will be required if a property is being changed from a dwelling house (Class C3) to a House in Multiple Occupation (a 'small HMO' - Class C4).

Previously, HMO licenses only applied to homes where there are 5 or more people, forming two or more households in one property, with shared amenities such as a bathroom and kitchen over three levels; however in April 2010 the new Class C4 was introduced, covering any rental home with three to six unrelated tenants, who share common facilities.

As Article 4 is optional it may not be implemented by all local authorities, but according to ARLA it  is more likely to be enforced in areas with a high density of smaller and larger HMO properties - for example in city centres or where there are student communities. Therefore ARLA is advising landlords to check with their local authority or a licensed ARLA agent before altering a property to accommodate an increased number of tenants or purchasing such a property for investment.

Ian Potter, Operations Manager at ARLA, said: "HMO licensing and planning applications are not a new issue for landlords, but now there is the added complication of Article 4. There is no room for complacency - failure to comply could result in a hefty fine. 

"It is therefore important for any landlord considering changing the use of a property to fully research the regulations in their area. For landlords with portfolios spanning more than one local authority area, this may mean different rules apply for each property. Factoring in the possible additional costs of purchasing the licence is also vital."

Once the relevant planning application is approved, the cost of an HMO licence will usually be approximately £400-£600, although this can vary across the country and of course if planning consent is required there will be additional associated costs.

ARLA recommends that landlords consult their local authority or a licensed ARLA letting agent for up-to-date advice on planning-related issues. This is just part of the professional service that it is not unreasonable to expect from an ARLA Member to complement the Client Money Protection and Independent Redress through an Independent Ombudsman Scheme Membership