March 5th, 2018 by James Goudie KC

The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018, laid before Parliament on 23 February 2018, and coming into force on 1 October 2018, SI 2018/221 (“the 2018 Order”), changes the prescribed description of houses in multiple occupation (“HMOs”) that are required to be licensed by a Local Housing Authority (“LHA”) in England. The instrument replaces the Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2006 (S.I. 2006/371) (“the 2006 Order”), which it revokes. This instrument has the effect of extending the scope of mandatory HMO licensing in England to certain HMOs of less than three storeys.

The Legislative Context is that Part 2 of the Housing Act 2004 (“the Act”) provides for LHAs to licence HMOs in their areas. Section 61 of the Act requires every HMO to which Part 2 applies to be licensed unless a temporary exemption notice or an interim or final management order is in force in relation to it. Part 2 applies to HMOs of a description prescribed under Section 55(3) of the Act and to HMOs in areas which are designated as subject to additional licensing by the LHA under Section 56 of the Act. In the latter case it is the designation that describes the HMOs that are the subject of the additional licensing.  Under Part 2, a licence may only be granted if the licence holder is a “fit and proper” person, the management standards are satisfactory and the HMO is suitable, or can be made suitable, for the specified number of occupiers, including shared amenity standards. Section 67 of the Act provides that an LHA may impose licence conditions relating to the management, use and occupation of the HMO and its condition and contents. Section 72 sets out licensing offences, including that it is an offence to manage or have control of an HMO that is required to be licensed, without a licence being in force.

The Policy background is that HMOs are an important form of accommodation within the private rented sector because they are typically cheaper than other private rental options and often house vulnerable tenants. It is estimated that there are around 508,000 HMOs across England. Currently, and since 2006, only large HMOs of three storeys or more housing five or more persons in two or more separate households are subject to mandatory licensing – capturing 60,000 HMOs. It is generally not disputed that licensing has been largely successful in improving management and safety standards in those HMOs. However, since mandatory licensing was first introduced there has been a significant increase in the use of smaller properties, notably two storey houses – originally built for families – and flats, as HMO accommodation. Although some of these HMOs are licensed under local HMO licensing schemes, many are not. Some of these HMOs are operated by landlords who exploit their vulnerable tenants, and in some cases the public purse through housing benefit, by renting sub-standard, overcrowded and dangerous accommodation, failing to meet the required health and safety standards; permitting overcrowding; and ineffective management of tenant behaviour. This has a significant impact not only on tenants, but also the local community through excessive waste, excessive noise and anti-social behaviour which can include the intimidation of local residents.

The 2008 Order revokes and replaces the 2006 Order. By prescribing a broader description of HMO than the 2006 Order its effect is that mandatory licensing will apply to HMOs that are below three storeys (if they are occupied by five or more persons in two or more separate households) as well as to those of three or more storeys. It is estimated that by doing this, an additional 177,000 HMOs (on top of the existing 60,000) will become subject to mandatory licensing in England.

Before the 2018 Order comes into force on 1 October 2018 LHAs must promote the changes the 2018 Order makes and the extension of mandatory licensing in their respective areas. During this period, LHAs must also process applications for licences relating to those HMOs prescribed by the 2018 Order. However, any licences issued in advance by virtue of the 2018 Order cannot come into force before 1 October 2018. Landlords of HMOs falling within the prescribed description who fail to apply for licences by 1 October 2018 commit a criminal offence from that date.

The Government will be issuing non-statutory guidance for LHAs on the extent of mandatory HMO licensing and associated rules.

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