Welcome to Money Tips Daily this is Money Kelly bringing you money tips to help you save and make more money!The UK government recently
announced tough new minimum space requirements for private lettings in a bid to
reduce overcrowding and other problems in the HMO rental sector.
The widely expected new rules for
HMOs (Houses in Multiple Occupation) will bring the national mandatory
licensing, currently only applying if properties are three or more storeys, to
all flats and one and two-storey properties.
The new rules will allow local
councils to force more landlords to register their HMO properties, which should
raise standards. My own local authority has around ten times as many unlicensed
houses in some form of multiple occupation as those licensed as HMO’s.
The majority of buy-to-let landlords
in the UK are law abiding and should have no problems complying with new
regulations. However, based on the previous experience of other local
authorities, which have brought in blanket licensing for all rental properties,
many landlords will be probably fall short of the minimum safety requirements
for a rental property.
A housing officer in the London Borough
of Brent told me that when they brought in licensing in selected postcodes of
the borough, they discovered that hundreds of landlords did not even meet basic
minimum standards and many didn’t even have a smoke alarm installed or in
working order.
In addition to tightening the HMO
rules, the Department of Communities and Local Government has also specified
minimum room sizes for HMOs properties.
Single bedrooms will have to be a
minimum size of 6.51 square metres, and doubles, or those occupied by two
adults, 10.22 square metres.
Children’s rooms, for aged 10 and
below will have to be at least 4.64 square metres in size.
The new HMO licence will have to
specify the maximum number of persons occupying any room and the total number
across the different rooms must be the same as the number of tenants that the
property is deemed suitable to live in.
The requirements are yet to be
made law, but are expected to be on the statute books this spring. Despite the
heavy snow, today is in fact the first day of spring!
In a statement, the DCLG said:
“The increased demand for HMOs
has been exploited by opportunist rogue landlords, who feel the business risks
for poorly managing their accommodation are outweighed by the financial
rewards.
“Typical poor practices include:
overcrowding, poor management of tenant behaviour, failure to meet the required
health and safety standards, housing of illegal migrants and intimidation of
tenants when legitimate complaints are made.
“Tenants are sometimes exploited
and local communities blighted through, for example, rubbish not being properly
stored, excessive noise or anti-social behaviour.
“Although only a minority of
landlords, the impact of their practices are disproportionate, putting safety
and welfare of tenants at risk and adversely affecting local communities.
“They cause much reputational
harm to the HMO market and it is often pot luck whether a vulnerable tenant
ends up renting from a rogue or a good landlord.”
Although many of the above concerns are justified, when the government ran a public consultation
they received just 395 responses, which is extremely low when you consider that
there are millions of tenants and over one million buy-to-let landlords in the
UK.
I spoke to several HMO landlords,
who did not wish to be named, about the new regime. The mood was mixed, with
some favouring tougher rules to drive out the “cowboy landlords”, leaving more
tenants chasing fewer rooms and higher rents for them!
Others were more negative and even
angry, accusing the government of burdening smaller landlords with more red
tape and bureaucracy, which would ultimately make the housing shortage worse as
landlords are driven out of the market.
There is no doubt that HMO
letting has boomed in the last few years, as the demand for rooms and studios
has mushroomed for a variety of reasons including, relationships breakdowns,
lack of affordable single let properties and immigration.
AIRBNB has also opened up a market
for short term holiday lets and the
tax
free the rent-a-room scheme has encouraged people to let a room in their own
home to earn some extra cash.
We will have to see the exact
interpretation of the new rules, which currently varies from one council to
another, once they are in force.
Private landlords have already
been hit with punitive tax changes being phased in during the next tax year, as
well as higher stamp duty, which will reduce their net income and may drive up
rents.
Changes to the benefits system
(Universal Credit) are apparently making it more difficult for tenants claiming
housing benefit to find a landlord willing to rent a property to them.
Homelessness is on the rise according to the BBC and other commentators, although
the exact cause is not clear.
In terms of Money Tips, there are
still many investment opportunities in the UK housing market, seen by foreign
investors as a safe haven for their cash. As always, you should take legal and
financial advice and remember that financial education is key.
If you would like to learn more
about investing in UK property, I have a limited number of complimentary
tickets to a LIVE EVENT - Beginners Property Course (held in
the UK), which will give you the basic knowledge and techniques to get started.
If you are interested, email me your full name and telephone number to
charles@charleskelly.net.
