Articles

HMO legislation: challenging but necessary.

Industry experts have claimed that the Buy to Let revolution coupled with a more balanced legal regime has benefited everyone: tenants, landlords, the economy, the government. Buy to Let is now a major financial market contributing £30 billion to the UK economy each year and is attracting the attention of government legislators due to its shear size.

The HMO sector is high on the list of regulatory reinforcement due to greater health and safety risks involved in this type of rental property. A property which contains more than three storeys and is occupied by at least five tenants from two or more families legally requires an HMO licence. Social changes of recent years mean that HMOs are ever more common, with young people representing the largest group of occupiers of shared rental accommodation.

Home ownership is being postponed for many reasons such as greater flexibility and mobility or due to the growing problem of unaffordable housing and therefore moving into shared accommodation is no longer restricted to the “student way of life” and is adopted by a much larger group of society.

Seven months on since the introduction of HMO Regulations 2006 some confusion over HMO definitions and laws subsist. A major hurdle for regulation is overcoming the inconsistencies which seem to lie inherent to it. The guidelines sent to Local Authorities from central government on this issue are not specific enough and leave room for some ambiguity in the ways in which the legislation is put in to force.

The costs involved in acquiring one of these licences also depend on the individual authority to which the landlord is applying, and therefore can vary significantly. Moreover the timely process involved in acquiring one is off-putting for landlords and unintended consequences of the legislation may be a decrease in the number of landlords wishing to invest in HMOs.

One may ask therefore whether the introduction of these new laws will pose a great threat to the future of large investment portfolio holders.

Amid the administration and increased paperwork involved in HMO regulation, one must not lose sight of the fact that these new laws have been introduced in order to protect all parties involved in the letting process. The booming Buy to let industry requires legal control so that all parties involved are protected by official guidelines however experienced the landlord may be. HMO regulation can therefore be deemed to be a positive step in the name of health and safety and the legality of letting agreements.

In light of this dual sided argument what is the future for HMO legislation? The great worry is that the government will make the legislation too complex to be adhered to. There is almost definitely a wish for more transparency and the government may find that simpler rules will be more likely to be complied with.

Provisional approval number MAB 2295.