99.4% of HMO applications are being approved but 72% of Councils are not enforcing license law

As you all know, my lettings company specialises in management of Houses of Multiple Occupation (HMO) so I always have a vested interest in the HMO market. In October last year, one of the most important legislations for HMOs changed; the mandatory HMO licensing rules removed the three storey rule (previously licensing applied to HMOs of at least three storeys with two or more-family units), effectively extending mandatory licensing to a further 160,000 properties across the country. The new legislation is designed to help protect tenants from poor living conditions but the data I’ve just read seems that is a long way off being achieved. Amid tax cuts and budgetary constraints, councils across the country are simply failing to enforce HMO licensing law.

Landlord Today have published some incredible data which really show the truth of the HMO regulation situation. Of 90 local authorities asked, 72% have absolutely no idea how many landlords are in breach of HMO licensing rules. But even more concerning is that almost one third cannot even quantify how many properties should fall under the new regulations. The clear message being that most of these local authorities have no clue about the volume of unlicensed HMOs in their boroughs. So not only can they not enforce the rules, they don’t know who is breaking them. This is a real disappointment because – as always – the small minority of landlords that let substandard and overcrowded homes, leave a stain on our industry. While conscientious, diligent landlords are drowning in paperwork, rules and regulations.

The newest initiative from the Government to tackle this is to plough more cash into local authorities to help them find rogue landlords. They’ve pledged £2 million worth of funding to this endeavour, but how will that help the 34% of councils who made absolutely no prosecutions for HMO license infractions, enforce the law? Of course you could argue that the 31 Councils who didn’t prosecute simply didn’t have any rules breakers, but I think we all live in the real world and have to assume that would be highly unlikely. So what powers do local authorities already have in terms of dealing with rogue landlords?

  • Banning orders prevent landlords from renting properties if they have criminal convictions. The bans range from 12 months to life, with those who ignore their ban facing criminal sanctions.
  • A nationwide rogue landlord database was introduced in April by the Government.
  • Rent repayment orders can be issued if a landlord is found guilty of a qualifying offence, with up to 12 months of rent, Housing Benefit, or Universal Credit being order to be repaid to a tenant or local authority, usually in addition to other fines.
  • Civil penalties are probably the heavyweight alternative to prosecution. Issued under the Housing Act 2004, they carry fines of up to £30,000 and can be issued to landlords for a range of reasons, including HMO license breaches.

Coming back to focus on HMOs, I found it incredible is that over the past 12 months, 99.4% of the 18984 HMO license applications made, have been approved. Again this either speaks to the strength of the argument that rogue landlords simply operate outside of the system, unlicensed, or that HMO licenses have become an unenforceable tick box exercise. My personal opinion is the first option – rogue landlords have always continued to operate outside the letter of the law and continue to do so. I also believe HMO licenses bring improvements to the standards of our industry BUT – and here’s the key point – the enforcement of them needs to be addressed or else they will eventually become nonsensical. So how will that £2 million of government money actually make a difference? Hopefully it will target those who operate outside of the law, the truly rogue landlords. But that still leaves HMO license law enforcement out of the equation, ergo there is still a major flaw in the system…

I have to reiterate that the data I’ve quote is from 90 local Councils, but I have now requested data from Medway Council so I will hopefully be able to share specific information on Medway within the next month. In the meantime, let me know what you think? Are you as surprised as me by these stats? What’s your feeling on the crackdown on rogue landlords – what’s the most realistic approach? Email me at hasan@home-share.co.uk, call on 07944 726676 or on LinkedIn or Facebook.

Hasan

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