Investing in buy-to-let property can be an exciting and profitable venture. As more people look to maximise the return on their property assets, many landlords have opted to rent rooms on an individual basis to multiple tenants rather than to a single tenant. This is referred to as a ‘House of Multiple Occupancy’.
These tenancies are occupied by three or more unrelated people, for example students, young professionals or social benefit tenants to name but a few.
Although the rewards from investing in such tenancies can be vast the law regulating this area is complex and can at times seem daunting and fraught with pitfalls for even the most experienced of landlords.
A HMO is defined as an address which consists of one or more units of living accommodation which is occupied by persons who do not form a single household and who share basic amenities such as a bathroom or kitchen facilities. The Housing Act 2004 introduced licensing for HMOs and standards of management for this type of property which is granted and enforced by the Local Authority.
The conditions of HMO licences are detailed and it is the responsibility of a landlord to comply with them and protect their tenants. So what should landlords be aware of?
Firstly, it is important to note that the penalties for breaching these conditions can be severe with a possible fine of £20,000 for operating without a licence and unlimited fine for a breach of conditions.
Earlier this year a Manchester landlord was fined over £15,000 for failing to renew the HMO licence after he declared it was no longer needed as there were less than five occupants. However following an inspection, eight people were found to be living there.
Licence compliance is key to help avoid the prospect of a prosecution.
A Local Authority has the power to inspect a property on a regular basis and can apply to a magistrate’s court to obtain a warrant in order to force entry if necessary. In addition, a Local Authority can apply on notice to question landlords over licence conditions and even interview individuals under caution if they believe an offence has been committed.
The demand for single rooms as part of a HMO has risen dramatically and many Local Authorities have successfully prosecuted landlords for HMO problems. If you have been accused of breaching a HMO licence condition it is vital to obtain legal guidance at the earliest opportunity, this can help to ensure that any complexities are dealt with from the outset.