A landlord in Westminster? Here’s what you need to know about changes to licensing
As a landlord, it’s important to be on top of all your legislation and compliance obligations. However, it can feel overwhelming at times, with so much to get your head around and a landscape that is forever changing.
Landlord licensing is a particularly thorny issue that causes a lot of confusion and frustration, but it is again something that landlords need to be aware of to ensure they aren’t breaking the rules.
In Westminster, for example, one of the main areas we cover at Intra Capital, many landlords are still unaware that the local council has reviewed its HMO and additional licensing, with implications for those letting homes in the heart of UK politics.
Here, we outline what is changing and why landlords need to partner with an experienced, knowledgeable letting agent to ensure they are remaining compliant at all times.
What is changing?
Westminster’s additional licensing scheme comes into force on August 30 2021 and will continue for five years. It will apply to almost all HMOs in the City of Westminster, including all properties shared by three or more people who are not all related and share facilities.
As a result, if you are letting a three-bed property to three or more people who are not considered family, you will need a license.
The council consulted on proposals to introduce HMO additional licensing in Westminster, from November 2020 to the consultation’s closure on February 18 2021, with the scheme being approved at a full council meeting on April 21 2021.
“Westminster has the largest private rented sector in England, and is home to a diverse mix of people, families and communities,” the City of Westminster website said of the proposals.
“We want to ensure that all rented Westminster housing meets high standards of maintenance and is run professionally.”
It added: “By introducing an Additional Licensing Scheme, we aim to improve conditions in the private rented sector, create sustainable tenancies with empowered tenants and reputable landlords.”
It said the scheme is part of a wider private rented sector strategy and that additional licensing was widely backed by respondents to the private rented sector strategy consultation in autumn 2020.
Which homes will be affected?
Most HMOs will require additional licensing. An HMO (house in multiple occupation) property is one that is occupied by at least three people who are not from one household. HMOs include buildings where facilities are shared, but can also include buildings divided into self-contained flats.
Licences are required for most properties with five or more people forming two or more households who share facilities. After August 30 2021, a broader range of HMOs will require licensing in Westminster.
You or your letting agent will be in charge of applying for the license. Applications for additional licensing will be accepted in advance from May 30 2021, City of Westminster council says. You can check if you need a HMO license or not here, with this handy licensing checker. HMOs in purpose-built blocks that aren’t currently licensed under the mandatory scheme will need the new license as well.
What about buildings converted into flats?
After the late August deadline, some buildings converted into self-contained flats will require licensing. These types of properties are considered Section 257 HMOs.
There are two conditions that must be met for a property to be classed as a Section 257 HMO. Firstly, more than a third of the flats must be let to Assured Shorthold Tenants or licensees (less than two thirds owner-occupied). Secondly, the building does not comply with the 1991 Building Regulations or later regulations that applied if the building was converted after June 1 1992.
Who holds the license?
The local authority says the most suitable person to apply for a license will be the ‘person having control’ of the property – which could be you or your managing agent, but is typically the person who receives the rent.
For those buildings converted into flats (the Section 257 HMOs), where a landlord does not have full control of the property, the order of preference would be:
· a right to manage company
· a manager appointed under the Landlord and Tenant Act 1987
· a leaseholder or freeholder of whole building
· an appointed manager
What are the potential penalties?
It is an offence to let out or manage a licensable HMO without a license and failure to comply could lead to significant penalties. Landlords could be hit with an unlimited fun upon conviction or a civil penalty up to £30,000.
It’s why it’s so important to work with an experienced, knowledgeable, local letting agent to ensure you are on top of compliance at all times.
For more guidance on the fees, and how they are split into parts depending on what type of HMO you have, as well as information about how to apply, possible exemptions, HMO standards and the public HMO register, you can click here.
Here at Intra Capital Estates, we are pleased to announce we have partnered up with one of the leading specialist companies in HMO and additional licensing who will take care of the full application on your behalf. To find out more and to check if you need a license please click here.