What are the benefits of getting a HMO license?

judywoody

I am a tenant and I was talking to my landlord today about the possibility of registering the property as a HMO.

Our house is occupied by both students and working people. The flats are so tiny they can be considered as bedsits (I think none of the flats has a bedroom). As we are a working couple, we have to pay council tax. All flats are self contained however, I believe it's not necessarily a requirement for HMO properties to NOT be self-contained. The house was converted to 8 flats several months ago.

My landlord asked me what would be the benefit for him - at the moment we pay £ 375 all in (apart from council tax).
I guess that's about as much as most landlords already make with HMO student flats. I would be happy to pay £400 if I didn't have to pay council tax. But I was wondering if he would have to pay Council Tax for every single occupant or just for the whole house as one property (£ 1000 per year)? In that case it would only be about 10£ extra for each occupant. If he asked for every working person to pay 25£ more that would cover any students who wouldn't have to pay CT anyway....and he would make a bit more money. I realize that the HMO license would cost money as well but that's only every 5 years. I guess that would be covered by the extra profit.

Can anyone think about any other benefits for the landlord?
All the responsibilities he has with an HMO license he would have anyway as far as I'm aware.

Werdnal

Licensing rules and criteria vary from council to council, so check the local authority website for your area to see if there is anything specified.

I don't really think it is down to the LL to "choose" if he "wants" to license the property - it either falls within the council's license requirements or it doesn't. If it does, they can impose the license on him and enforce any changes, updates or improvements required under their licensing rules.

There are higher specs for health and safety, insurance, fire regs etc in HMO's so the LL may "gain" slightly in some areas, but be paying out in others.

If they modify the property to allow "shared" areas rather than self-contained units, they will also have the issues of damage and cleaning in the shared areas not being able to be appportioned to particular tenants. If current tenants are all on AST's within their own "flat" they are ultimately liable for all costs and damage associated with that flat. If the communal areas are open to all tenants, there is no proof who has caused any damage etc.

I am no expert on HMO regs, but suspect that if the let units are all self-contained, and do not share kitchen/bathroom with other tenants, they will be considered "studio flats" and fall outside the HMO regs.

dancingfairy

I think there are various types of HMO ie registered and unregistered. Some bits pertain to bulding regulations, fire exits etc etc and some rules/regulations affect council tax.
Maybe have a search on your local councils website and see what they say.
You could also contact the licensing person at the council who will advise you, but obviously if it isn't a HMO and it should be then the landlord will then have to comply with the legislation.
df
Edit: in terms of benefits to the landlord, I can't think of any, apart from the fact that they can state they have been inspected by the council and have satisified various fire safety regulations etc. I doubt they could achieve more rent or anything and as stated above, it's actually likely to cost them. I guess it's more a matter of complying with the relevant regulations.

00ec25

judywoody wrote: »

All the responsibilities he has with an HMO license he would have anyway as far as I'm aware.

no way
depending on whether the local council enforce selective licensing then the LL could face considerable extra expenditure to meet HMO requirements. For example: mandatory fire door installation, mains wired smoke/heat detectors and fire alarm

dimbo61

You need a HMO licence if the property is over 3 stories and has 5 or more unrelated tenants.
The rules, regulations and costs of bring a property up to full HMO standards can cost thousands ( Mains wired smoke alarms with PANEL),
Fire doors, fire fighting equipement, emergency lighting, etc
If it is not needed then a Landlord would be MAD to apply or spend the money just so you do not have to pay COUNCIL TAX

G_M

My landlord asked me what would be the benefit for him

If the property falls within the catagory that requires licencing, the benefit for him is that he avoids prosecution, and a potential fine of £20,000 plus costs.

More here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/15652/HMO_Lic_landlords_guide.pdf

Now, I also have a question. Perhaps you can help:

What is the benefit to me of paying tax on my income?

CIS

If they are all self contained flats with their own council tax band then unless your particular flat is either 'constructed or adapted for multiple occupancy' or you rent only part of the flat it cannot be a HMO for council tax purposes (unless it was registered as licensed HMO but this would be very unlikely for a single small flat).

If they are not banded as separate flats and the house is banded as one property then there is one of two issues which could apply - either they should all be banded separately as self contained units and the tenant is then responsible for the council tax OR the whole house is one banding which is let by the room to separate individuals and therefore it already meets the council tax definition of a HMO and the landlord should be paying the council tax anyway.