Should we get an HMO license or not?

gimmetheloot

Me and a friend are considering buying a four-storey, five-bed house. We intend to live in the property but also rent out the three other bedrooms. This means that living in the property would be the two owners, plus three other lodgers. A total of five people in five separate households.

Based on my understanding of HMOs we would require a license for this arrangement.

However, I also understand that acquiring a license is onerous in terms of meeting the required fire safety standards in particular, and is also quite expensive.

My question is, if we didn’t get an HMO license but rent the three spare rooms anyway, what would be the consequences?

I do realise this would be a little underhand but also I think the situation is very different to a normal rented house as we are live-in landlords and therefore will take much greater responsibility in terms of ensuring the house is maintained and run in a shipshape fashion! We intend to be responsible landlords and keep the property to a high standard. The rooms are all a good size, well above the minimum standards.

For the record I do support public oversight of the private rented sector but I also think it would be madness if we were prevented from renting a perfectly decent spare room by burdensome regs. In the middle of a housing crisis!

So what would happen - would the council find out? What then - would we get a fine? How much would a fine likely be?

I'm aware the maximum fines are extortionate but I'm looking for an idea of what they would realistically be in this situation.

I should add that we will be paying full tax on all the rental income because I do not believe in dodging tax.

Would HMRC share information on rental income with local councils? I suspect not but worth asking.

Any thoughts on the above much appreciated!

Comms69

gimmetheloot wrote: »

Me and a friend are considering buying a four-storey, five-bed house. We intend to live in the property but also rent out the three other bedrooms. This means that living in the property would be the two owners, plus three other lodgers. A total of five people in five separate households.

Based on my understanding of HMOs we would require a license for this arrangement.

However, I also understand that acquiring a license is onerous in terms of meeting the required fire safety standards in particular, and is also quite expensive.

My question is, if we didn’t get an HMO license but rent the three spare rooms anyway, what would be the consequences? - I believe there are civil and criminal possibilities.

I do realise this would be a little underhand but also I think the situation is very different to a normal rented house as we are live-in landlords and therefore will take much greater responsibility in terms of ensuring the house is maintained and run in a shipshape fashion! - Irrelevant. We intend to be responsible landlords and keep the property to a high standard. The rooms are all a good size, well above the minimum standards. - Irrelevant

For the record I do support public oversight of the private rented sector but I also think it would be madness if we were prevented from renting a perfectly decent spare room by burdensome regs. In the middle of a housing crisis! - Petition your MP

So what would happen - would the council find out? - Yes What then - would we get a fine? - You may have to repay all the rent collected, be fined and potentially get a criminal conviction (which would then exclude you from some professions and travel) How much would a fine likely be? - that would be for a court to decide

I'm aware the maximum fines are extortionate but I'm looking for an idea of what they would realistically be in this situation. - They are not extortionate.

I should add that we will be paying full tax on all the rental income because I do not believe in dodging tax. - the fact you think that is somehow a positive is worrying

Would HMRC share information on rental income with local councils? I suspect not but worth asking. - of course

Any thoughts on the above much appreciated!

I think my thoughts are obvious, but for the avoidance of doubt; get a licence

marcarm

gimmetheloot wrote: »

Me and a friend are considering buying a four-storey, five-bed house. We intend to live in the property but also rent out the three other bedrooms. This means that living in the property would be the two owners, plus three other lodgers. A total of five people in five separate households.

Based on my understanding of HMOs we would require a license for this arrangement.

However, I also understand that acquiring a license is onerous in terms of meeting the required fire safety standards in particular, and is also quite expensive.

My question is, if we didn’t get an HMO license but rent the three spare rooms anyway, what would be the consequences?

I do realise this would be a little underhand but also I think the situation is very different to a normal rented house as we are live-in landlords and therefore will take much greater responsibility in terms of ensuring the house is maintained and run in a shipshape fashion! We intend to be responsible landlords and keep the property to a high standard. The rooms are all a good size, well above the minimum standards.

For the record I do support public oversight of the private rented sector but I also think it would be madness if we were prevented from renting a perfectly decent spare room by burdensome regs. In the middle of a housing crisis!

So what would happen - would the council find out? What then - would we get a fine? How much would a fine likely be?

I'm aware the maximum fines are extortionate but I'm looking for an idea of what they would realistically be in this situation.

I should add that we will be paying full tax on all the rental income because I do not believe in dodging tax.

Would HMRC share information on rental income with local councils? I suspect not but worth asking.

Any thoughts on the above much appreciated!

Just wow, and the bold bit in particular. Meeting the required fire standards are too expensive?

Hint, if you don't want to play by the rules, just give up the idea to begin with and don't do anything "underhand" and illegal, putting the lives and safety of yourself and others at risk.

Fines are not extortionate, they are designed to be a deterrent, the fact you are asking because you would prefer to try and get away with it, paying the fine only if caught suggests that you will happily cut corners, legal or not.

Don't be a landlord, too many laws that you feel are clearly designed to be an inconvenience to you and not designed to keep people safe.

I pity your potential tenants

BM5118

I know an HMO is mandatory on rented properties over 3 stories or 5 occupants.

I had an issue as a student a few years back where our rented property didnt have an HMO and a major damp problem. Our landlord put 5 dehumidifiers in the property drinking the electricity and didn't contribute to the electricity bill.

Ultimately I managed to get 6 months rent back off of him essentially under the threat of reporting him for not having an HMO or any fire safety precautions. No idea if he ever did solve it, I got a decent chunk of money back and moved on. Some of my housemates weren't as lucky but that's their problem!

In short, you need a license!

pphillips

I'm not sure if this is a serious post but the regulations exist for good reasons (not just to make your life more difficult). If you don't want the hassle then don't buy a HMO property!

theartfullodger

If it should have been licensed and wasn't then you could suffer from a "rent repayment order" where YOU have to pay back ALL the rent to the tenants. Plus costs, fines, etc etc.


Apply for a license:

marcarm

Gimmetheloot, well as long as I don't have to follow any of those pesky laws and regulations

davidmcn

gimmetheloot wrote: »

we are live-in landlords and therefore will take much greater responsibility in terms of ensuring the house is maintained and run in a shipshape fashion!

Apart from fire safety.

We intend to be responsible landlords and keep the property to a high standard.

Apart from fire safety.

The rooms are all well above the minimum standards.

Apart from fire safety.

00ec25

Welwyn Hatfield v Neil Carroll: DJ Pilling sitting at St Albans Magistrates 30/11/16

Neil Carroll fined £33,950 for 20 charges over two separate dates relating to various matters including inadequacy of a fire wall, failure to provide handrails, failure to maintain all means of escape from fire and a lack of intumescent strips and cold seals on doors.

Some credit was given for a guilty plea but it was reduced on the basis that there had been no indication of such a plea prior to the first day of the trial.
Character references were taken into account.

The approach adopted had been to arrive at a figure for each offence reflecting the level of culpability, then to go back over each offence and determine whether the overall figure (including any award of costs) was proportionate. As a result no additional penalty had been awarded for some offences.

In relation to some of the more serious offences the levels of fine were:

£3,600 in respect of a door which would need to be used as a means of escape from fire and which needed a removable key in order to exit;
£4,500 in respect of an inadequate partition wall which did not offer 30 minutes fire protection;
£5,400 for each of failing to maintain all means of escape from fire, a missing door catch to a kitchen door which was a means of escape from fire, and a lack of intumescent strips and cold smoke seals;
£2,250 for each of missing handrails and an inadequate balustrade.

July 2, 2018 Barnet & Camden Councils

• landlord fined a total of £24,170 including costs, for failing to have a licence for a House in Multiple Occupation (HMO).
  
• Highbury Corner Court, landlord fined £6,000 and ordered to pay £2,000 costs for failure to license a flat in multiple occupation in Swiss Cottage.

5 January, 2018 Harlow Council
A landlord who failed to apply for a house in multiple occupation (HMO) licence has been fined £3,000 and ordered to pay £2,700 in costs.
(fine reduced to £3,000 for an early guilty plea)

gimmetheloot

Thanks for the responses.

@Comms69
Thanks and yes you've made yourself clear. For the record though I don't consider paying tax to be a virtue, I mentioned it only as a prelude to the following question re HMRC.

@marcarm
No, I said the requirements are onerous and I meant that they can be impossible to meet, regardless of investment in time or money. If it was simply a cost and some hassle then I wouldn't be asking the question.

The threshold for requiring an HMO is clearly arbitrary so to suggest it is somehow morally wrong to consider sharing a house between five people I do resent.

@BM5118, pphilips, theartfullodger
Thanks, all useful info

Comms69

Seriously get the licence. You can consider it arbitrary; but it’s the law.