New legislation for Houses in Multiple Occupation (HMOs)

There is a new law (which came in to effect on 6 April 2010) which is very relevant to Landlords and buy-to-let investors.

If you buy a house that is not currently used for letting, and you wish to let it out to three or more unrelated people (e.g. students) who share basic amenities, then the new rules mean that you have to apply for planning permission for ‘change of use’.

Excluded HMOs such as student accommodation provided by specified educational establishments and HMOs of more than six residents, continue to be unique.

These new planning regulations are not retrospective so only landlords who wish to accommodate three to six unrelated tenants within a previously unshared property after the 6th April date will be affected.

The changes will enable Local Authorities to assess and manage the impact of HMOs. If they are concerned about the impact of high concentrations of HMOs, they can introduce local policies to limit the number of HMOs in a particular area, or impose conditions in planning permissions to address specific issues. It is unclear how Local Authorities will treat properties that have already been HMOs for some time.

Since the permission may be turned down then this means you could buy a house and not be able to rent it out. It could also devalue the house. The change is expected to lead to a large number of planning applications so find out as soon as possible what you need to do with any residential properties you let as HMOs or want to let as HMOs.

Quick overview on who is likely to be affected:

The changes do not affect you if –

On 6th April 2010 your residential property was previously let to more than three unrelated tenants.

After 6th April 2010 you are considering letting your property to less than three unrelated tenants – even though in the past you have let it to four or five unrelated tenants. You may be required to get the planning permission however if you subsequently want to let the property to three to six unrelated tenants in the future.

The changes do affect you if –

After 6th April 2010 you wish to accommodate three to six unrelated tenants within a previously unshared property.

The changes may affect you if –

You let your residential property to more than six unrelated tenants. If the HMO has been occupied by more than six people for less than ten years the local planning authority may require planning permission.

The Order does not contain transitional provisions and it is unclear whether C4 planning permission is required for relevant HMOs where a landlord enters into agreements for lease prior to 6 April 2010, but grants the leases after 6 April 2010.

For more information, please contact Duncan Morter, Head of our property team on 01904 624185 or visit http://www.crombiewilkinson.co.uk

Sources
DCLG announcement of new use class for HMOs.