Posts with tag: HMO regulations

Rogue Landlord Fined £39,000 for Breaching HMO Regulations

Published On: May 16, 2016 at 11:22 am

Tags: HMO,HMO regulations,rogue landlords

A rogue landlord in Southend has been handed a £39,000 fine for breaching House in Multiple Occupation (HMO) regulations.

Rogue Landlord Fined £39,000 for Breaching HMO Regulations

Last week, Chelmsford Magistrates’ Court ordered Robert Crow, of 19 Devereux Road, Southend, to pay £35,000 in fines and £4,000 in costs for 15 violations of the regulations that govern HMOs. Crow’s tenants were found to be living in appalling conditions.

After Crow ignored numerous prohibition orders and improvement notices from the council and refused entry to the property, an enforcement officer authorised a warrant on 20^th August 2015 to inspect the property with five police officers.

The officers found that the overcrowded property was being rented out in uninhabitable living conditions, with one tenant sleeping in a tiny bedroom with no windows and two people even found to be living in the backyard under tarpaulin.

Further breaches of HMO regulations include: an obstructed fire escape, an unclean bathroom and a category 1 hazard in the kitchen.

The court described the conditions as “appalling, deplorable and inhumane”, which have “no place in a modern Britain of today”.

The council’s Group Manager for Housing, Andrew Fiske, says: “Our enforcement officer who led the case said it was one of the worst cases they had seen in their professional career, and so this prosecution was vital and is welcomed.

“The police assistance and support was vital in this case, not only in order to gain entry to the property, but also with some of the information that they provided to help with the case, so we would like to thank them for that.”

He continues: “Mr. Crow was served numerous prohibition orders and improvement notices that were flagrantly ignored over a long period of time. Whilst we make every effort to develop good working relationships with private landlords, if rules are ignored so blatantly then we must and will take action to keep tenants safe.

“No one should have to be living in conditions like this, and this has ben recognised by the courts with a large fine that reflects the seriousness of the offences.”¹

Ensure that you keep up with the latest landlord updates at LandlordNews.co.uk.

¹http://www.southend.gov.uk/news/article/845/criminal_landlord_gets_35k_fine

HMO Market Set to Boom, but How are They Valued?

Published On: April 26, 2016 at 11:07 am

Author: Em Morley

Categories: Property News

Tags: HMO regulations,HMO's,property investment,property investors,property valuations

The House in Multiple Occupation (HMO) market is set to boom over the next year, according to Shawbrook Bank. However, many are confused about how these properties are valued.

Shawbrook Bank has found that over half (53%) of property investors are looking to either enter or expand in the HMO market.

As the need for HMO accommodation grows and investors realise the potential returns in this market, landlords are choosing to invest in HMOs rather than traditional buy-to-lets. Almost three quarters (72%) of investors name yields as the main reason for investing in a HMO, followed by capital growth, at 29%.

Shawbrook has identified the three main types of HMO investor:

Accidental landlord – A homeowner that rents out a spare room, becoming an accidental HMO, as the property would have been originally purchased as a residence rather than an investment.
Smash and bash crowd – Active investors seeking properties that would be suitable HMOs, after considering potential growth, often completely reconfiguring properties to house up to six or seven tenants.
Regular buy-to-let – An investor that has bought a large house as a standard buy-to-let, but uses it as a HMO because the property is suitable.

HMO Market Set to Boom, but How are They Valued?

Traditionally, HMOs are low quality accommodation lived in by people on a low income. However, they are becoming a more mainstream housing option, as many renters struggle with rental costs.

Data from Shawbrook shows that over a third (34%) of investors consider HMOs their most preferred property type – up from 16% in July last year.

While demand from both tenants and landlords is up, few investors are aware of the challenges they face in the market. If HMO regulations are increased, investors could experience lower returns.

And one of the most common concerns surrounding HMOs is how a property is valued. There is little guidance in this area, with mortgage lenders approaching valuations and stress testing differently.

The Sales & Marketing Director of Commercial Mortgages at Shawbrook Bank, Karen Bennett, says: “As far as we are aware, no real valuation framework currently exists that provides the necessary clarity. This is causing problems for both lenders and investors, as the perceived value of the property affects how much equity the bank is prepared to release in order to aid them in future investments. Too much and the bank is at risk, too little and it limits the investor’s potential for expansion.

“A lack of guidance in this area means there is a risk that houses being approved will be questionable in their quality and this will further increase the risk to lenders.”¹

With no standard valuation framework in place, Shawbrook is trying to provide at least some guidance on the issue by engaging with valuers around the country and releasing some clearly defined categories. They are as follows:

HMO1 – Small HMO, no Article 4 or planning exists, fabric of building remains largely unchanged, lending is against value as a private dwelling.
HMO2 – No Article 4 or planning exists, but there is demand for this property as a HMO, the fabric of the building has changed, lending is against market value.
HMO3 – Article 4 is in place, lending is against market value.
HMO4 – Sui Generis planning is in place, lending is against market value.

The Deputy CEO and Managing Director of Commercial Mortgages at Shawbrook, Stephen Johnson, explains: “As the spotlight continues to shine on the HMO space, it is becoming increasingly important for investors to have a good grasp of these more technical concerns and an understanding of future risks.

“While there are certainly new challenges on the horizon, there are still a great number of opportunities in this market that has produced excellent yields for property investors in the past. Taking a responsible approach means that a sustainable future for the market can certainly be found.”

He adds: “This is a market that is constantly moving, and investors and lenders will need to learn, adapt and move with the times if they are to continue to take advantage of the opportunities presented by this attractive asset class.”¹

¹http://www.mortgagesolutions.co.uk/specialist-lending/2016/04/25/69476/

RLA Offers Advice to HMO Landlords on New Energy Regulations

Published On: November 11, 2015 at 12:24 pm

Author: Em Morley

Categories: Landlord News

Tags: energy efficiency,HMO landlords,HMO regulations,landlord law

Eco-friendly ways to reduce running costs and add value to a property

The Residential Landlords Association (RLA) has offered some guidance to landlords operating Houses in Multiple Occupation (HMOs) that will be affected by new regulations on heat and energy use in shared accommodation.

RLA Offers Advice to HMO Landlords on New Energy Regulations

A European Union (EU) directive on energy efficiency was revised in 2012.

The directive is aimed at ensuring the people that directly use energy can see what they are using and take action to reduce their usage.

The Policy Director at the RLA, David Smith, explains: “As a result, the Government passed The Heat Network (Metering and Billing) Regulations 2014. These require that anyone providing heating, cooling, or hot water to someone who is required to pay for it whether directly or by incorporation in their rent must provide a metering system of some description to allow that person to measure their use and provide thermostatic valves to allow for a degree of control to be exercised by that user.”

The new regulations have caused great concern in the sector, as fitting these requirements in many HMOs would be expensive. Landlords are exempt from the rules if the cost is disproportionate.

In an attempt to resolve any complication, the National Measurement and Regulation Office (NMRO), the organisation responsible for enforcing the regulations, has updated its guidance.

Smith continues: “The new guidance makes clear that the regulations do not apply unless the energy user is in possession of a self-contained property, which contains sleeping, washing and cooking areas. Any communal provision of washing and cooking facilities will mean that the regulations will not apply.

“Therefore, the only landlords likely to be affected are those providing bedsit accommodation. These landlords will need to consider the technical feasibility and cost effectiveness of installing hot water meters, heat cost allocators and thermostatic radiator valves in each bedsit to allow measurement of the amount of heat energy being supplied.”¹

If the landlord believes that it is not technically feasible or financially viable to install these requirements, then they must repeat the assessment every four years.

If work is being planned that will create bedsits, the regulations must also be considered and metering is likely to be required. Landlords must also notify the NMRO of their status, alongside specified information.

Landlords are likely to need a thermostatic radiator value, as they cost less than £10. Meters may be more avoidable, as they are more expensive.

Failure to comply with the regulations is an offence with an unlimited fine.

The regulations will come into force on 31^st December 2015. Landlords of bedsits must notify the NMRO immediately. They should also install thermostatic radiator valves and conduct a written assessment of costs if they do not plan to fit meters.

Read up on the legislation here: https://www.gov.uk/guidance/heat-networks

¹https://www.landlordtoday.co.uk/breaking-news/2015/11/rla-offers-energy-advice-to-hmo-landlords

Landlord in Swindon Fined £16,000 for HMO Breaches

Published On: October 27, 2015 at 5:03 pm

Author: Em Morley

Categories: Landlord News

Tags: HMO landlords,HMO regulations,rogue landlords

A landlord in Swindon has been fined more than £16,000 for breaching House in Multiple Occupation (HMO) regulations.

Javaid Lone, 59, pleaded guilty to 13 breaches at a hearing at Swindon Magistrates’ Court last week.

The court was told that Lone allowed at least 15 tenants to rent rooms in a converted guesthouse on County Road, Swindon. One tenant was living in a converted bathroom and Lone had erected an illegal structure in the living room to form another bedroom.

Landlord in Swindon Fined £16,000 for HMO Breaches

The landlord had converted numbers 31 and 33 County Road into a single property with multiple bedsits and shared kitchens and bathrooms.

In 2014, Swindon Borough Council discovered a series of hazards in the property, including a lack of fire exits, covered smoke alarms, dangerous electrical wiring and unhygienic communal areas.

After the inspection, Lone worked alongside the council to improve the property. However, in June 2015, new breaches were uncovered, such as tissue stuffed down toilets, rat droppings in the only usable kitchen and an outstanding £9,598 electricity bill, which led to the supply being cut from the home.

When the council tried to contact Lone regarding the bill, it found that he was in America. The council and Lone’s daughter were then left to pay half of the bill.

Kirsty Real, prosecuting for Swindon Borough Council, said that Lone took advantage of the tenants’ naivety.

She told the court: “These people were of multiple nationalities and in a visit, one woman could not understand the council officer’s questions, and as a result, were vulnerable due to this.

“The council inspector saw rat droppings in the kitchen, the kitchen was in a complete state of disrepair. He tried to cram in as many residents as possible and the effects of that were all around the property.

“There were tenants living in the rooms who also had another bed in the room, so there was subletting involved there. There was a significant fire and safety risk in this property and the tenants could have suffered serious harm in the event of a fire.”¹

Lone’s defence claimed that the landlord had become “overwhelmed”¹ with new tenants at a time when he was trying to fix the problems.

Paul Sample, the Bench Chairman, ordered Lone to pay £16,650 in fines and £1,500 court costs.

A council spokesperson comments: “We hope this case sends a strong message to rogue landlords, who fail to fulfil their legal obligations to tenants to make their properties fit, safe and healthy places to live.

“Tenants of larger HMOs like this are particularly vulnerable because they may be less able to seek alternative accommodation and therefore endure squalid conditions.

“Our enforcement work focuses on this area, as such properties can be riddled with hazards, ranging from rat infestations to inadequate fire exits and faulty electrical installations.”¹

¹https://www.landlordtoday.co.uk/breaking-news/2015/10/16-000-fine-for-swindon-landlord

Landlord Fined £265 for Faulty Gas Appliance

Published On: October 22, 2015 at 2:07 pm

Author: Em Morley

Categories: Landlord News

Tags: gas safety,HMO landlords,HMO regulations

Landlord Fined £265 for Faulty Gas Appliance

A landlord has been fined just £265 after a faulty gas appliance was discovered to be in use in his rental property.

Ashby Bedeau rented the home in Bedford. In February this year, his tenants became unwell and contacted the gas helpline.

When an engineer arrived, he stopped the property’s gas supply, as carbon monoxide was found in the home. He advised the renters to go to hospital.

Subsequently, it was discovered that the gas hob was defective, causing British Gas to cap off the hob as immediately dangerous.

The Health and Safety Executive (HSE), which brought the case against Bedeau, told Luton Magistrates’ Court that the gas hob, gas cooker and boiler were under contract from a gas provider

However, the landlord did not have the hob gas safety checked in January 2015, as is required by law.

The HSE informed the court that landlords must ensure that all gas appliances are not only checked for safety, but are maintained to a safe standard.

Bedeau, of Bedford, admitted breaching Regulation 36(2)(a) of the Gas Safety (Installation and Use) Regulations 1998 and was fined £265 with costs of £845.

Letting Agents Should Open Up to HMOs, Says Expert

Published On: August 20, 2015 at 2:41 pm

Author: Em Morley

Categories: Landlord News

Tags: HMO investments,HMO landlords,HMO letting agent,HMO licensing,HMO regulations

Houses in Multiple Occupation (HMOs) are becoming increasingly popular with property investors, or as lettings expert Sally Lawson puts it, they’re “having a love affair at the moment”.

Landlords can buy one property and charge rent to six individuals, therefore making significantly higher returns. Lawson claims: “Every investor either has one or wants one”.

But landlords may face problems when it comes to their letting agent. Lawson has found that many agents will not manage an HMO or house share, despite the chance to earn a much higher percentage of a higher rent.

Letting Agents Should Open Up to HMOs, Says Expert

HMOs are properties with three or more non-related tenants. In most of the country, HMOs can house up to six individuals before the investor requires planning permission. If the house has five or more occupants and is over three storeys, it needs a license.

Although the love of them may be increasing, HMOs are not a modern phenomenon.

Lawson has been an agent since 1990, when HMOs were often “squalid hovels that I would not put animals in, which therefore would attract a certain type of tenant”.

She also remembers the student house shares that were often destroyed by tenants who received many complaints. Lawson, and other agents, would not even contemplate managing one of these properties. They didn’t want the hassle of the tenants or the type of property that would “[lower] the perceived standard of our property stock to our local market”.

But times have definitely changed. Or so Lawson thought; after speaking to fellow Association of Residential Letting Agents (ARLA) members, she found that many in outer London still won’t manage HMOs.

It is a known fact that housing supply is seriously lacking and demand is ever growing. More people are moving for work and house shares will naturally fill the void in their housing needs. Due to this desire for flexible living, HMOs have vastly changed and the market has “cleaned itself up”.

In the Housing Act 2004, requirements and specifications required for an HMO property changed hugely, with stricter guidelines for landlords as to “how they should be constructed and managed”. Many regulations regarded fire safety and suitability for the number of residents.

This meant that the standard of HMOs greatly improved and more responsible landlords began investing in the market. Now, the professional house share is the norm – properties in good locations, with spacious rooms, communal areas and high quality fixtures and fittings, are attracting young professionals.

But still, agents are saying no to HMOs. Lawson understands that some cases are a no-no: “I would not deal with any non-compliant, run down, overcrowded type properties or any that are owned by a landlord that does not take their responsibilities seriously.”

Lawson believes that all agents need is some education about the regulations applying to HMOs, communication with the council regarding planning laws, and understanding of fire regulations.

“If an agent can take the time to understand and adapt their processes for the individual issues that are unique to house shares, like sourcing tenants, managing the communal areas and getting the right mix of residents that will live well together… they can be an extremely profitable and rewarding new market,” she says.¹

¹http://www.sallylawson.co.uk/hmo-property-future-letting-agents-ready/