With new HMO regulations potentially on the horizon, the regulatory burden on landlords is going to get tougher, which no doubt will bring extra costs for a sector that is already feeling the pinch reports rental property website LandlordZone and which also cites the StudentHousing website as a resource.

Often unfairly portrayed by the media, buy to let investors provide a much needed source of privately rented housing. Landlords already shell out for managing agents’ fees and landlord insurance policies, but now the latest batch of red tape potentially adds another layer of expenditure to the cost of having a buy to let property.

The regulations that govern HMOs (Houses of Multiple Occupation) formerly applied only to those flats or houses that accommodate six or more unrelated tenants who share basic amenities. Accordingly, it was typically student accommodation that fell into the class of buildings covered by the legislation. Landlords of HMOs had to comply with enhanced planning and licensing rules to ensure that their properties are situated in appropriate areas and meet strict and health and safety standards.

HMO legislation seeks to balance the needs of landlords, the tenants they house and the residents of local communities. Families and older people have typically been reluctant to see their neighbourhoods develop a high density of HMOs, particularly if students are involved due to the associated anti-social behaviour.

The forthcoming planned extension to this regime means that houses or flats where three or more tenants live and share amenities will be covered by the rules. This means that more landlords will be brought into this regulatory net, including those who let to working, adult flat sharers.

What might the changes mean in practice to landlords?

From a planning perspective, you will have to apply for a change of use if you buy or convert a home that is occupied by a single family into a HMO (occupied by three unrelated sharers). This means that the local planning authority will be able to effectively control the density of HMO properties in their area, based on considerations about parking, anti-social behaviour and the social make up of a neighbourhood.

From a practical perspective, there will no doubt be a hefty fee involved in submitting an application, which could put some investors off entering the HMO sector at all.
Then there is the licensing element of the proposals. The health and safety element is not really controversial among responsible landlords, who do not want to poison or gas their tenants and are prepared to take steps to ensure that they do not do any of those things.

On the other hand, it is the powers of the council to determine the suitability of landlords that is more objectionable to the industry. Whilst it may be a fine intention to ensure that a person is “fit and proper” person to run a HMO, this is difficult to measure and even more difficult to police. Currently not all councils have the power to license HMO landlords, but under the forthcoming regime, more will be able to do this.

Despite these proposals, LandlordZone reports that landlords may be most concerned about a website the government wants to introduce to allow tenants to comment on their landlord’s service and performance. It may be impossible to see how landlords can prevent disgruntled tenants from leaving unsubstantiated and untrue negative “feedback”. However, landlords should take comfort from the fact that this proposal is still in the planning stage, and by no means certain to be brought into force by a government that is about to be distracted by an election.