Since the new legislation surrounding HMO licensing came into effect in October 2018, councils have increasingly been cracking down on landlords letting homes without the proper licence. Although whether or not a property requires an HMO is a slightly grey area (for properties of under five residents that contain more than one household* the licensing requirement varies council by council) the resulting penalties and fines are not.
- Unlimited fines – it has been wrongly reported that the maximum fine for renting out an HMO without a licence is £20,000, but the reality is it’s unlimited, and councils are not afraid to get punitive. Barnet council issued £49,900 in fines in the first half of 2019, while one rogue landlord in Birmingham was charged over £180,000 in fines for breaches relating to HMO licences. If you’re unsure whether or not you require an HMO licence for your property, contact your council as soon as possible. Most councils will give landlords 28 days to secure an HMO licence before they begin legal proceedings (though this does vary on a case by case basis).
- Rent repayment – if you’ve been renting out your home without the relevant licence, your tenants are also eligible to claim for a rent repayment of up to 12 months, depending on the duration of their tenancy. A recent high profile case involved five students who took their landlord to court and won back £15,000 of their rent money, all down to an improperly licensed HMO.
- Criminal conviction – perhaps most seriously of all, the penalty for renting out a property without the right HMO licence is now classed as a criminal offence and could lead to a criminal conviction. As councils are toughening up in this area, it’s not inconceivable that repeated offenders could face jail time, while in extreme cases the council could revoke the landlord’s property licence and take control of the property themselves (via a management order).
HMO licensing is a complex subject and the penalties for getting it wrong (as evidenced above) are potentially severe. Those seeking further information should download our guide to property servicing and HMOs. It is, however, intended as a point of reference rather than a legal guide.
Staying abreast of the ever-changing legislation, asking for guidance from your relevant council or seeking external advice from a company specialising in this area are the best ways to make sure you don’t fall foul of the penalties for non-compliance, and pay a hefty price for doing so.
* In these circumstances, a household is defined as a single person, married or cohabiting couple or members of the same family.