HMO Planning Consent - An Attack on Student Lettings

From 6th April 2010, a new law means that most new Houses in Multiple Occupation (HMOs) will require planning consent before they can be let to tenants. This law is in addition to the extensive raft of measures affecting HMOs and their owners – and it is likely to significantly reduce the volume of private rented sector accommodation currently available to students and other sharers in most of our towns and cities.

Anyone who chooses to invest in HMOs must be a glutton for punishment, because no other avenue in the lettings sector suffers as much from overshadowing and extraordinarily onerous regulations. Quite apart from the complex and punitive fire, health and safety regulations inflicted upon these investor landlords, they have more recently had to contend with mandatory and/or selective licensing. And all of these laws and regulations are in addition to the rest that all landlords have to observe.

On the plus side, HMOs are probably the most profitable type of let unit and I can only imagine it is this fact that makes their owners so tenacious and determined to stay involved. HMOs are commonly referred to as shared housing and by far the biggest group attracted to this type of accommodation are students, who by their nature enjoy the financial advantages of sharing expenses and the social benefits of collective living.

Measures affecting HMOs to date ensure minimum standards of management and health and safety issues are maintained. However, the introduction of this latest planning consent law means that some new HMOs may never be allowed to come into existence, regardless of whether they meet the stringent building regulation and health and safety standards or not. The intention of government is quite clearly to stop the spread of HMOs flooding certain neighbourhoods. In recent years, some towns and cities have been overwhelmed by student let style accommodation and other local residents and owner-occupiers have seen the value of their own properties plummet as a result. It was only ever a question of time before government acted to prevent the spread of student ghettos in residential areas, particularly within or close to university towns and cities.

The New Law

An amendment to the Town and Country Planning (Use Classes) Order 1987 became law on 6th April 2010, known as the Town and Country (Use Classes) (Amendment) (England) Order 2010. In short, Statutory Instrument 653 splits the existing ‘use class’ C3 for dwelling houses into two, and adds a new ‘use class’ C4 for houses in multiple occupation. A ‘use class’ defines how a dwelling will be used, obviously, and by creating one specifically for HMOs, the government is able to inflict a planning consent requirement on any owner that wishes to convert a standard family home (C3) into a HMO (C4).

Planning consent will be mandatory for properties intended for letting to three or more tenants who do not form a single household and who share some amenities such as bathrooms and kitchens. The full definition of what constitutes a HMO is contained within the Housing Act 2004. The minimum cost to affected landlords will be the £335 planning application fee, but as the application demands floor layout drawings and other site plans, there are likely to be substantial additional costs payable to professionals employed to assist with the application.

One Way Application

The planning consent requirement is apparently only going to be operated one way and will not be applied retrospectively to properties that operated as HMOs immediately prior to 6th April. So, those landlords that have planning consent in place should not need to re-apply if they switch from having three tenants sharing to two tenants and then back again to three tenants at a later date. Similarly, landlords that operated their property as a HMO on 5th April 2010 will not need planning consent to continue operating it as a HMO beyond 6th April 2010.

Local Authority Control

The new law will be managed and operated through the local authority planning department. This is likely to mean that different local authorities will apply the law in different ways, some more stringently than others. Much will depend on the impetus of the particular local authority and to what degree they wish to restrict the spread of HMOs in their region. In the short term, it is probably wise to consult your own local authority planning department before investing in a HMO or in any property you intend converting for HMO use.

Excluded from this specific amendment are HMOs with over six occupiers (these are covered by existing legislation) and properties of a certain type (these include secure units such as those owned and managed by prisons). Landlords who share their own property with two lodgers will not require planning consent – but those that take in three or more lodgers might require consent. Finally, it is probably useful to be aware that a property does not have to be specifically adapted or converted for it to be defined as a HMO under current regulations.

The new law has been introduced exclusively in England, but other similar measures are likely to be introduced for the rest of the United Kingdom over time. Keep abreast of changes to your own planning obligations by consulting your local authority planning department.

Footnote

In an interesting development, Housing Minister Grant Shapps announced on 10th June that the coilition Government does not intend following up with regulation proposals responding to the Rugg Review of the Private Rented Sector. Shapps has said there are adequate regulations in force for local authorities to control the sector and an established legal framework creating a fair balance of rights between landlords and their tenants.

The plans to introduce a national register of landlords, compulsory written tenancy agreements and greater regulation of letting and managing agents has - it seems - been scrapped. There are also rumours the HMO planning amendment may be reviewed in due course, potentially resulting in the new regulations just introduced being further amended, relaxed or scrapped completely. Watch this space!

And according to 24dash, reporting on 10 June, council officers are to be given powers to enter a premises with 24 hours notice and without a warrant to check whether people are living in breach of the planning rules. This is certain to dismay any HMO landlord that is acting in a somewhat clandestine way and hoping to evade this and other regulations.

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