Change in mandatory licensing

The long-awaited announcement of the change to the mandatory HMO definition, is to be welcomed. This extends mandatory HMO licensing from three-storey properties in multiple occupation to two and one-storey properties. Other positive changes are that councils will be able to set minimum bedroom sizes and limit the number of people who can live in a single room in a licensed multiple occupancy home.

Councils will also be able to enforce new rules to make sure landlords provide adequate waste storage facilities for the number of people in the premises. A common complaint from residents is that areas have become blighted as rubbish piles up in the street outside houses with multiple occupancy

However, its implementation in October 2018 will be a real challenge for Councils’ already hard-pressed resources to meet this extra demand. The government’s own impact assessment published with the consultation estimated that there would be an additional 174,000 properties which would require a licence, although experience on the ground of proactively enforced licensing schemes indicate that this may be much higher, perhaps a quarter of the PRS. Due to the dual factors of a growth in demand for this affordable accommodation as rents continue to rise and increased rental returns available to landlords renting by room rather than renting as a house, a tempting proposition.

Existing mandatory licenses usually number in double figures or low hundreds in each Council area meaning that many Councils have relied on manually processing paper applications, with many taking up to 8 hours each. A quick calculation shows that this could be expensive to administer, as well as cumbersome and costly for landlords as well. The only credible solution is to make technology work for both landlords and Councils, easier applications and quick processing.

There are of course some real barriers to efficiency;

  • one being that the licensing form is long, mainly due to questions prescribed in the legislation, perhaps the government missed the opportunity to simplify the many pages of regulations around this
  • another is the up-front investment required by Local Authorities to make sure their IT systems and processes are fit for purpose. Local Authorities have now had nearly 5 years of budget cuts with still more to come before the revenue support grant disappears in 2020. Trying to argue for increased funding to build the infrastructure with many other priorities will be difficult.

With the implementation date only 6 months away Councils are going to have to move quickly and find solutions fast or be faced with expensive staff costs for administering licensing and charging landlords more to license.

Pip Watson

Pip Watson MCIEH

Director Metastreet Ltd

25th April 2018

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