Thanks to everyone who took part in our little bank holiday weekend quiz. It’s been fascinating to watch the results roll in (don’t worry – it was all anonymous), and I’m relieved to see that most letting agents – at least the one who read this blog – know their CMP from their CPI, and understand exactly what they need to do to comply with advertising and transparency regulations.
It looks like – if local councils ever get around to enforcing – you’ll be safe from fines for the time being.
Always room for improvement
Interestingly the knowledge gaps that do seem to exist became apparent in those questions concerning your clients liabilities – specifically when it comes to planning for, and licensing of, houses in multiple occupation.
I can almost hear the rejoinder from lots of agents “we don’t do HMO’s”, but unfortunately a policy such as this is no-longer enough to make sure that you, and your clients are not operating in an area where even the smallest ‘shared’ house or flat can carry with it pretty onerous and unforgiving legal responsibilities.
Don’t worry, no-one’s expecting you to recite the National Planning Policy Framework verbatim, or provide every new client with a copy of the area’s local plan. But it is a good idea to get your head around planning use classes for residential use – and crucially if there are any restrictions in place in your particular patch.
Most residential premises are classified as C3 (dwelling house), in fact up until 2010 all premises other than large HMOs housing more than six people fell into this category.
This all changed in early 2010 when the outgoing Labour Government introduced the C4 (small HMO) use class. The intention was for all properties let to three or more people forming two or more households to need planning permission. Long story short; this was amended by the incoming Coalition Government later in 2010 and the situation is that a state of permitted development exists for movement between C3 and C4. i.e. you can let to single households, or sharers without applying for permission – it will be deemed permissible.
Unless an Article Four Direction is in place!
Without getting into the details of the process and justifications, an Article Four Direction can be introduced by a local authority in respect of a defined area, in order to remove permitted development rights. As a consequence if you agree to let a property previously occupied by a family, to a group of sharers in an area with an Article Four in place – you need planning permission and odds are you may not get it since they are usually introduced to limit the number of new HMOs. Failure to comply with the planning regulations can result in a considerable fine.
Most agents are up to speed with HMO licensing, it’s probably one of the reason lots of us choose not to manage larger shared houses – leaving it to those who specialise (and with considerable patience).
However, when it comes to discretionary licensing it can be more difficult to keep up; especially if you operate within the M25 or in the North West of England where the schemes are more common.
Discretionary licensing refers to schemes introduced by local authorities to cover a defined area within their locality. It can be focused solely at HMOs, which do not match the mandatory licensing criteria, this is additional licensing. Alternatively it can cover all private rental property in the area; this is known as selective licensing.
These schemes run for up to five years, and must be consulted on by the proposing authority. However, it can still be easy enough to miss the introduction of a new scheme if property owners are based out of area or if managers are operating across borough boundaries.
Penalties for operating an unlicensed HMO are severe, amounting to fines of up to £20,000 and the possibility of rent repayment orders.
Most parts of the country are not subject to discretionary licensing, but there are more than 70 schemes currently in place – with more under consideration.
For more about new proposals and upcoming schemes, check out the NLA’s website at: www.landlords.org.uk