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Understanding HMOs

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Understanding HMOs and HHSRS

Houses in Multiple Occupation (HMO) is a significant area of growth in the private rental sector. Studies suggest that by 2020 a significant percentage of the Private Rented Sector (PRS) will be made up of HMO occupiers and this sector is fundamental to our ability to continue to house people in the future. At the same time, it is a sector which houses some of the most vulnerable people in our society and it is a sector which is increasingly regulated, in part to protect those people. However, some of that regulation is poorly designed and thought-out and is often enforced in an illogical and selective basis by local authorities.

The Housing Health and Safety Rating System (HHSRS) is also a big issue in the PRS. It has had a slow start and has suffered due to its time consuming and complex structure. However, it is growing in importance due to changes made to Section 21 by the Deregulation Act and has also been promoted as a possible mechanism for a wider definition of disrepair in both England and Wales.

What is an HMO?

One of the difficulties associated with HMO work is the multiplicity of definitions associated with HMO’s, which fulfil slightly different purposes.

There have been as many as three definitions in use at various times for:
1) Licensing under the Housing Act 2004;
2) Planning under the Town and Country Planning Act;
3) Council Tax Liability under the Local Government Finance Act;
4) Council Tax Valuation under the Local Government Finance Act.

HMO’s Under the Housing Act 2004

An HMO is defined in Section 254 of the Housing Act 2004.

There are a series of separate tests known as the;
– standards test;
– self contained flat test;
– converted building test.

The Tests

The standard test is the main test which applies to most HMO properties, so it is the most important. The test is set out in Section 254 as follows;
-s257 Test
There is an entirely separate definition of an HMO in  Section 257 of the Act. This states that the whole building is an HMO for the purpose of the section where;
– it is a building which was a single dwelling but has been converted into multiple dwellings.
– the conversion does not accord with the Building Regulation 1991 and still not in accordance with it.

HMOs for planning purposes

Planning classes:
– C3 use Class
– General permitted development
– Larger HMOs and sui generis use
– Article 4 Directions
– Material change of use
– Council tax
– Council tax valuation

Licensing
– Mandatory licensing
– Having control and managing
– Temporary exemption notices
– Owners & Lodgers
– Additional & selective licensing
– Understanding standards
– Licence conditions

HMO Management

All HMOs, irrespective of licencing status are required to comply with the Management of the Houses in Multiple Occupation Regulation 2006 and their equivalent in Wales. Failure to comply with these regulations is an offence with an unlimited fine for each account.

The Regulation
– Clean property at the start of tenancy
– The property and environments are kept tidy
– Property is kept in repair
– Property is fire safe
– Notice board on display with managers details and emergency contact
– Electrical test every five years

Active Management
– Prosecution
– Fines
– Other penalties

The HHSRS

The Housing Health and Safety Rating System:
– the Operating Guidance
– the Enforcement Guidance

Overview of the HHSRS

The HHSR, uses a three-stage approach:
– property inspection
– hazards identification or surrounding the property
– action plan, landlord cooperation
– the average standard
– the hazard profiles

Scoring
The hazard score is calculated by multiplying the probability of an event within the 12 months by the scale of harm that will be caused by that event happening, and this will reduce the score from 0 to 1 million.

Harm
There are four classes of harm, ranging from extreme to moderate:
– Extreme harms
– Severe harms
– Serious harms
– Moderate harms

Enforcement
Local authorities must take enforcement action with regards to category 1 hazards and have a choice as to whether they should act in regards to category hazards.

Actions that can be taken include:
– Hazard awareness notice
– Improvement notice
– Suspended improvement notice
– Prohibition order
– Suspended prohibition order

Recovery of Charges and Expenses on Enforcement Action
Local authorities are entitled to make reasonable charges and recover money in respect of expenses incurred for:
– Serving an improvement notice
– Making a prohibition order or an emergency prohibition order
– Serving a HAN
– Making a demolition order

The expenses that can be recovered are those incurred in:
– Determining whether to serve the notice or order or whether to take the action
– Serving the Notice or order
– In the case of a HAN or improvement notice, identifying the necessary works to be specified in the notice

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