In the first in a series of complementary articles, Quentin explains of the consequences of non-compliance with the HMO regime. Whilst Adam Smith,
Partner at Eastwoods and expert in regulatory law, talks about the new rules regarding HMOs
Houses in multiple occupation are subject to a plethora of rules and regulations. Breach of these provisions by landlords can lead to criminal prosecution. In the event you’re found guilty, not only will you face a criminal sanction, but you could also be vulnerable to confiscation proceedings with the potential to deprive you of significant assets.
On the 1st of October, a new regime governing HMO comes into effect. There are two key changes coming into force.
The first is that, no longer will a house need to be three stories high in order to be classified as a HMO. The criteria that a HMO is a house where at least 5 occupants forming 2 or more separate households sharing at least one basic amenity will now be the only requirement.
The second change is the introduction of new minimum floor space requirements which will function as licence requirements. These are:
• Landlords won’t be able to let rooms to a single adult where the usable floor space is less than 6.51sqm, and 10.22sqm for a room occupied by two adults.
• Rooms under 4.64sqm can’t be used for sleeping accommodation
What does this change mean? Well that an additional 177,000 houses will become HMOs for the purposes of the legislation. This means the landlords of all of those properties will now be liable for breaches of the statutory regime. Moreover, all existing licenced HMO’s will need to comply with the new floor space requirements.
So what happens if you fall foul of the new regulations?
What if I don’t get a licence?
It is an offence to let a HMO without a licence. If you do so, the Local Housing Authority will have two options. The first will be to impose a civil penalty of up to £30,000 under section 249A of the Housing Act 2004. The other option open to the Local Housing Authority is to pursue a prosecution against you under section 72 of the Housing Act 2004.
If the Council do prosecute you then your trial will be sent to the Magistrates Court where a fine of up to £20,000 can be imposed. There have been cases where following conviction, Proceeds of Crime Act 2002 confiscation proceedings have been used to seize rental and associated income from the convicted landlord.
What if I breach the terms of my licence?
If you have successfully applied for a licence for a HMO, then that licence will stipulate a number of conditions. The most important condition is likely to be the maximum number of tenants allowed to be in occupation of the house.
If you breach these conditions, you will be committing a prima facie offence under section 72 of the Housing Act. If you have more tenants in the house than you are permitted to then you will be committing an offence under s.72(2)(.c). If you breach any other condition, then you are committing an offence under s.72(3).
The difference in sentence for the two breaches is significant. Having too many tenants will attract a fine of up to £20,000 while a breach of any other condition will be punished with a fine of up to £5,000.
What if I am an existing HMO licence holder and can’t meet the floor space requirements?
The good news is, if you already hold a licence, you will have an 18 month grace period to make the adjustments needed to comply with the new floor space requirements before enforcement action can be taken.
Do I have a defence?
There’s a very narrow defence under section 72 of the Housing Act of “reasonable excuse”. Whether the circumstances of your case would give rise to this defence would require close examination. The general rule appears to be that in order to have the defence of reasonable excuse available to you, the failure to apply for a licence must have been out of your control.
The new regulatory regime from October 1st will lead to a significant increase in landlords subject to HMO regulation and the obligations imposed on existing licencees.
Seeking early legal advice in matters relating to HMO enforcement is crucial in limiting the risk of serious fines and potential confiscation orders. Quentin Hunt has significant experience in housing matters involving potential criminal liability. He can be contacted for a no obligation consultation involving any investigation or prosecution.