3 bedroom house with converted loft but no license from the council rent as HMO

Skag

Hi,

I'm in the process of purchasing a house for buy-to-let. The house is advertised as a 3 bedroom with loft, with 4 students living in it.

The house itself is in a good condition, and the loft conversion seems decent, insulation and a window are provided and a carpet on the floor is fitted. However the LL hasn't acquired a HMO license as yet, and I will need to inquiry for one should I buy it. Furthermore, I've been told that the loft conversion hasn't been done through official channels i.e. the conversion is not registered with the Brighton city council (where the property is).
Now, as I mentioned there is man living there and it seems to be in a quite good condition. Obviously it cannot be regarded as a 4 bedroom house.

I'm thinking of renting it through a lettings agent.
What are the chances of the council prohibiting me from renting it as a 4 bedroom house?
Could I rent it as a 3 bedroom house, with a price of a 4 bedroom and inform the people that "one more person can stay in the loft" ? Can this cause any troubles down the road?
The estate agent told me that he doesn't think that the council might be fussy about regarding the loft as an extra bedroom.

Thanks

Guest101

You cannot market it as a 4th bedroom, and you could not have 4 tenants with seperate agreements, but if you had 4 people on one agreement, how they decide to live is upto them. However, u need to check the conversion was done to building regulations, as that could nulify your insurance.

Skag

I could not mark it as a 4 bedroom because it's not registered as such? That means that if I register it and the council approves the conversion, it could be marketed as 4 bed.

Guest101

If it meets the building regulatiosn and the council approves it, then yes absolutely.

PasturesNew

It's unlikely you'd get the Council to OK it, else the current owner would have probably done it. To get approval it'd mean taking down quite a lot of the structure to check the build quality, to see if meets regs - which is very invasive, not to mention some bloke's trying to live in there.

It sounds like a property to be avoided for many reasons.

Building Regs and HMO Licenses cover silly little things like: Is it safe? Are the joists strong enough to hold up the loft bedroom with its furniture and belongings in it? Will people die in a fire? Could they even get out? .... so nothing important then.

Werdnal

Guest101 wrote: »

You cannot market it as a 4th bedroom, and you could not have 4 tenants with seperate agreements, but if you had 4 people on one agreement, how they decide to live is upto them. However, u need to check the conversion was done to building regulations, as that could nulify your insurance.

I believe you are wrong here. A property rented to 4 unrelated tenants can still fall foul of HMO regulations - it is the property and number of tenants that counts, not the type of agreement they have. Even if the agreement was only with 1 tenant, and they took in 3 lodgers, it can still create an HMO - maybe not requiring a license, but HMO nonetheless!

If there are already tenants in place, new owner/landlord is bound by the existing agreement, and tenants can refuse to sign anything new. OP, you need to look into this in far more detail as any corners cut by the previous owner can come back and bite you. Taking on a property which is already tenanted brings its own issues and problems, and if there is someone already living in the "unofficial" loft conversion, you will be liable for their eviction if the converted room fails to meet building regs.

Skag

PasturesNew, your argument sounds about right. However would it be a problem if I get a HMO license for 3, marketing it as a 3 bed and having 4 people to stay in there? I mean, is it considered illegal?

Skag

Werdnal wrote: »

I believe you are wrong here. A property rented to 4 unrelated tenants can still fall foul of HMO regulations - it is the property and number of tenants that counts, not the type of agreement they have. Even if the agreement was only with 1 tenant, and they took in 3 lodgers, it can still create an HMO - maybe not requiring a license, but HMO nonetheless!

If there are already tenants in place, new owner/landlord is bound by the existing agreement, and tenants can refuse to sign anything new. OP, you need to look into this in far more detail as any corners cut by the previous owner can come back and bite you. Taking on a property which is already tenanted brings its own issues and problems, and if there is someone already living in the "unofficial" loft conversion, you will be liable for their eviction if the converted room fails to meet building regs.

Thanks for the info, however the tenants are moving out before any purchase completes.
Also, agreed about the "notion of HMO". Not sure about complications on the insurance though, i.e. if you sign a contract with 1 tenant for a 4 bedroom house, and insure it, and then he brings another 3 to live with him and something goes wrong, who's responsible in that case?

Tomm20

As I see it you have two issues,

1, Does the loft conversion comply with Building Regulations?, no by the sound of it.

2, Does the property comply with HMO regulation?, not sure it does.

My instant concern (with both issues) would be with fire precautions?

Has a Fire Risk Assessment been carried out, are there alarms, fire doors, compartmentation, means of escape and so on.

I would be asking the EA/owner for such details.

Ulfar

Skag wrote: »

PasturesNew, your argument sounds about right. However would it be a problem if I get a HMO license for 3, marketing it as a 3 bed and having 4 people to stay in there? I mean, is it considered illegal?

Yes you would be breaking the terms of the HMO license, which can involve some hefty fines and the licence being revoked.

Skag

Tomm20 wrote: »

As I see it you have two issues,

1, Does the loft conversion comply with Building Regulations?, no by the sound of it.

2, Does the property comply with HMO regulation?, not sure it does.

My instant concern (with both issues) would be with fire precautions?

Has a Fire Risk Assessment been carried out, are there alarms, fire doors, compartmentation, means of escape and so on.

I would be asking the EA/owner for such details.

As I've already acquired an HMO for another property of mine, I can say that for instance, one door with glass parts will need replacing, it will require wired to mains fire alarms, fireblanket etc, however these are expected costs. The tricky part is "what are the standards of loft conversion, so that the council approves it?".

So the general consensus is that I should get someone to look into the loft conversion and whether it complies with BR, and if it does, then apply for an approval from the council.