Penalties for non-compliance come into force after July 6 for landlords who have not applied to their local housing authority for a licence during the three-month grace period. Such landlords need to be aware that after July 6 they will be committing a criminal offence, the consequence of which could be a fine of up to 20,000. Applying for licences now will allow landlords to continue letting their properties and avoid additional charges being levied.Landlords with properties registered under previous HMO legislative schemes are not outside the new licensing laws, as prior legislation was revoked upon implementation of the provisions under the 2004 Housing Act. Application forms are available from local housing authorities and will only apply to properties within the catchments of the relevant authorities. Therefore landlords with properties across several authorities will have to get an application form from each authority, and these could all be different as there is no standard form. Even so, each form will require information about the property to ensure it reaches standards of suitability, and landlords will also have to show they are fit and proper people to hold HMO licences. This is why licences will not be transferable on the sale of properties. There is an urgent need for brokers providing advice on buy-to-let loans to become fully acquainted with the changes this new legislation brings. Applicants will have to provide concise details about the property they intend to buy and if it falls into an HMO category, be made aware by the broker of their need to be accepted by the local authority as an HMO landlord. Failure in this will result in fundamental errors being made when submitting mortgage applications to lenders and packagers and this could result in the loss of valuation and application fees. Bearing in mind the fact that landlords must make applications if they own properties that fall within the prescribed HMO categories, brokers could benefit significantly from their portfolio landlord clients. For example, one look at the requirements of the Housing Health and Safety Rating System for properties shows that some landlords’ houses will not meet the standards required and will need to be improved. Alterations could be costly, generating funding requirements via remortgages. The opportunity is there for imaginative brokers to generate fresh income by communicating the legislative requirements regarding HMOs to their business clients.
The mandatory licensing of houses in multiple occupation which came into force on April 6 this year will soon move up a gear.