Government plans to crack down on rogue landlords through the expansion of mandatory HMO licensing look set to fall short – according to new figures from Simple Landlords Insurance.
The changes will not only leave most criminal landlords outside of the licensing system, but will increase the administrative and cost burden on both honest property investors and local authorities.
I’ve worked with Simple for some time to gather news and information on the sector for growing landlords. Earlier this year, we found that 85% of landlords Simple spoke to weren’t aware of the looming HMO regulation changes. A month on from their implementation, Simple decided to find out exactly what landlords are facing on the ground, and sent Freedom of Information (FOI) requests to the top 100 most densely populated local authorities in England. 90 replied.
Houses in Multiple Occupation (HMOs) are those containing five or more people in two or more households with shared facilities such as a kitchen, bathroom or toilet must be licensed. The rules were widened on 1 October, removing a minimum three storeys high requirement whilst new conditions on minimum room size and waste collection were imposed.
To gain a license, landlords must now pass a ‘fit and proper’ test as well as providing proof of compliance with fire safety regulations and provide tenants with a written statement of the terms of their occupancy.
The FOI research reveals the majority of local authorities simply don’t know how many unlicensed HMOs are in their area – let alone where they are – leaving them ill-equipped to seek those who break the rules or take advantage of new enforcement powers.
The FOI requests returned by 90 local authorities reveal:
- Two thirds (60/90) of local authorities don’t know how many unlicensed HMOs are operating in their area
- Over one third (31/90) have no idea how many properties are now in scope and require a license
- There were only 103 HMO licences rejected at application over the last 12 months, versus a total of 18,881 licenses granted.
Perhaps not surprisingly, of those local authorities that did feel informed enough to make a prediction, it was the major conurbations that expect real hikes. Liverpool City Council had 1,195 HMOs with a mandatory license before 1 October, and expects that 5,000 will require licensing. Birmingham expects numbers to swell from 1,853 to 4,000 and Southampton expects the numbers will increase from 551 to 2500.
And whilst many London boroughs had no idea at all how many additional HMOs would come under scope, those that did are also expecting a huge jump – in Greenwich from 147 to 3,250 HMOs.
It highlights a real knowledge gap in many local authorities over their own housing stock – which is hampering their efforts to enforce the new rules. This knowledge gap is one that has deteriorated over the last 20 years following the abolition of a requirement for local authorities to conduct a stock condition survey every four years and the privatisation of the Building Research Establishment (BRE) in 1997. Predictive modelling services, such as those provided by the BRE are still available but at a cost and many councils have not invested.
And with many local authorities now faced with at least twice as many mostly voluntary licences to process and check, with the same amount of human resource, their ability to track down and prosecute the rogue elements is also weakened.
Yes, local authorities now have greater powers to prosecute landlords, including the ability to apply for banning orders – but these are all resource heavy endeavours. And whilst many local authorities will opt for issuing simple fines instead, again, finding the rogue landlords is the first challenge – and then when they are fined, many won’t pay up without going to court – another resource and cost-heavy process.
Housing Minister Heather Wheeler MP claimed the new rules would increase the number of mandatory HMO licenced properties in England from 60,000 to an estimated 220,000 properties and clamp down on rogue landlords. However, as our research shows, the rules are practically unenforceable – and the government’s recent commitment of £2m of additional funding to help implement the scheme whilst welcome is unlikely to have any real impact.
The government’s changes are clearly well-meaning, but the local authorities charged with communicating, administrating and enforcing the rules are swamped, and working in the dark.
Historically, private landlords have not been required to be on any sort of register, and the rules and how they’re enforced have very much been interpreted on a local level. This needs to change. One positive action would be for the government to prioritise helping local authorities know who is renting property in their areas and what type of properties are being let. Another option worth considering, and one that has been implemented in Wales, is for a central government funded national register of all rental properties.
Traditionally, landlords can be resistant to regulation as it can make daily landlord life more difficult. But many are increasingly seeing the lack of structure and national standards as part of the problem, leaving good landlords confused, criminal landlords unchecked, and tenants no better off than before.
Carl Agar is a landlord, property developer and letting agent at Big Red House, Founder of the Home Safe Scheme, and resident blogger at Simple Landlords Insurance.