Proposed changes to Houses in Multiple Occupation (HMO) and amendments to Section 326 of the Housing Act 195.
Toby Carrington recommends that future development plans should keep abreast of the latest government consultation that is currently taking place regarding HMOs and bedroom sizes. This could have a major impact on profit margins, especially if that extra bedroom cannot be squeezed into a proposed conversion. Equally, if more properties are going to be classified as an HMO, then the cost elements of ensuring that the property is compliant will also determine the assets viability. Here is an outline of what is being proposed as written by Residents Landlord Association (November 2015)
“On Friday 6 November 2015, the government published a consultation paper on changes to mandatory Houses in Multiple Occupation (HMO) licensing in England. A new definition for HMOs could bring in smaller properties under mandatory licensing”.
At present mandatory HMO licensing is restricted to properties that are three or more storeys high, containing five or more people in two or more households with shared facilities such as a kitchen, bathroom or toilet. These proposals aim to amend the three-storey criteria for licensing, either by changing it to two-storey or extending licensing to all HMOs containing five or more people.
The Government is also considering a new national minimum room sizes along the lines of the statutory overcrowding standard in Section 326 of the Housing Act 1985 (6.5 sqm for a single room and 10.2 sqm for a double room). Councils would retain flexibility to set their own higher room sizes, possibly meaning an increase in minimum HMO room sizes in many areas.
The Government has said that they intend to introduce the changes in 2016.