ARLA 2018 Conference: HMO and Selective Licensing Matters For Landlords

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It is important to be aware of the latest developments in the lettings market. There are many sources of news but when you have one of the leading bodies in the sector, the Association of Residential Letting Agents, or ARLA Propertymark as it is known these days, leading a conference, it makes sense to pay attention. In mid-April, there was a conference in London which touched on a range of topics that are hugely important for landlords, tenants and anyone with an interest in the rental market.

One issue that may impact on landlords is the Government confirming the extension of mandatory HMO licencing is likely to come into effect from the 1st of October 2018. This is still subject to Parliamentary approval, but it is expected to receive this without too much inconvenience. The regulation will see purpose-built flats, there are up to flats in the property block, being covered by the mandatory licensing. There will also be a removal of the “three-storey rule” which currently sees mandatory licensing applied to HMOs of three storeys or more and with five occupants comprising of at least two family units.

Many landlords will be affected by these changes

Studies by RLA PEARL suggests that 16% of landlords rent to tenants who are in HMOs and estimates suggest an additional 177,000 HMOs will now be subject to this mandatory licensing in England because of the extension.

If the following criteria is met, properties will fall under the new mandatory licensing

  • There is occupation by at least five people
  • There is occupation from at least two separate households; and meets
  • The standard test under section 254(2) of the Act;
  • The self-contained flat test under section 254(3) of the Act but where the property is is not a purpose-built flat situated in a block made-up of at least three self-contained flats; or
  • The converted building test under section 254(4) of the Act
  • It has also been announced that there will be no grace period and that all relevant parties must hold a licence on the 1st of October 2018.

Selective licencing is also an issue for landlords

Selective licencing is set to come into force on the 1st of August 2018. It is hoped that the scheme will provide tenants with greater confidence while targeting rogue landlords and removing them from the sector. It is hoped that this will be positive news for landlords who provide a high standard of service. Overall, there is an aim to raise the standards of the private rented sector across the UK but not every area will be subject to selective licencing.

This is a scheme that is only intended to be used for property areas and not the country. It is hoped that there will be robust reasoning applied in the decision of which areas require selective licencing. As always, some landlords will be concerned about the cost of this scheme and its implications, but it is hoped that the introduction of this scheme, and the penalties associated with non-compliance, will help trusted landlords to be recognised for the work that they do.

Matylda Nowak

CEO, Kings Accommodation

www.kingsaccomodation.co.uk