HMO trouble!

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    HMO trouble!

    Hi everyone,

    I've been renting a property out to a family and one of their friends for the last 2 years. The council have just told me that I should have applied for an HMO licence for the property as it now fits under new HMO rules. The problem is, that I remortgaged the property as a single let mortgage, but this was before the new rules were put into place.

    I'm in a bit of a catch 22 as The council are demanding I apply ASAP, the mortgage company I have would need to be notified and would apparently not allow me to switch from single let to HMO without first terminating the initial contract, which would lead to having to pay a huge early repayment charge! (£16k!) Plus then be on much higher interest! The tenancy contract is up so I was planning on serving them their notice ASAP, but apparently it isn't that easy according to the council man! I couldn't quite understand why!

    If it is easy enough to evict the tenants, do you think the mortgage company will be lenient at all? If I say it was an honest mistake and wasn't aware changes had happened! Also technically the HMO application takes 3 months so I could potentially keep it quiet and just say I was planning on changing the house to an HMO after the tenants left, but then changed my mind! Just thinking of any way to avoid pay a huge bill!

    Any thoughts greatly appreciated

    Thanks

    James

    #2
    Is there any possibitlity the council are wrong? What criteria do they claim?

    Comment


      #3
      No they are right annoyingly! I believe It used to be 3 or more families to make it HMO, now, In Haywards Heath, its 2 or more.

      Comment


        #4
        Originally posted by Jamesp1986 View Post
        No they are right annoyingly! I believe It used to be 3 or more families to make it HMO, now, In Haywards Heath, its 2 or more.
        There is a distinction between a place being an HMO and a licensable HMO. Look that up, and check they are correct.

        Comment


          #5
          Originally posted by Jamesp1986 View Post
          No they are right annoyingly! I believe It used to be 3 or more families to make it HMO, now, In Haywards Heath, its 2 or more.
          The general rules for HMOs in England and Wales are described at https://www.gov.uk/house-in-multiple-occupation-licence:

          A house in multiple occupation (HMO) is a property rented out by at least 3 people who are not from 1 ‘household’ (for example a family) but share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’.

          If you want to rent out your property as a house in multiple occupation in England or Wales you must contact your council to check if you need a licence.

          You must have a licence if you’re renting out a large HMO in England or Wales. Your property is defined as a large HMO if all of the following apply:
          • it is rented to 5 or more people who form more than 1 household
          • some or all tenants share toilet, bathroom or kitchen facilities
          • at least 1 tenant pays rent (or their employer pays it for them)
          So assuming that the friend of the family counts as a separate household, if there’s five or more people in the property, you probably need a licence. If there’s fewer than that, it depends on your local council’s rules.

          If the Haywards Heath in question is the Haywards Heath in Mid Sussex then https://www.midsussex.gov.uk/housing...ccupation-hmo/ has the relevant details:

          Since 1st October 2018 mandatory licensing’ will apply to all HMO’s or any type of property occupied by five persons or more, in two or more households, regardless of the number of storeys and where they share one or more of the basic amenities, will require a licence.
          Later on the same page:

          Is a property with 3/4 people sharing considered a HMO?

          Yes it is an HMO but it does not require a licence.

          Please refer to Housing enforcement team should you require any advice on fire protection etc.
          So at least in terms of the number of people/households, it seems Mid Sussex only requires a licence when the national rules do.

          So it looks like the pertinent question is: are five or more people living in the house in total?

          Comment


            #6
            Single-let doesn't necessarily mean a single family, and HMO doesn't necessarily mean multiple tenancies. It's perfectly possible to be both single-let and HMO.

            What's the definition of single-let in your mortgage? If it just mean a single tenancy, is that what you have? If not, then you were probably already in breach of your mortgage regardless of the change in HMO regulations.

            In regards to HMO, you need to either apply for the licence as per the council, or apply for an exemption on the basis that you are taking immediate steps to cease being an HMO, i.e. by serving notice to the tenants and evicting if necessary.
            I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

            I do not answer questions through private messages which should be posted publicly on the forum.

            Comment


              #7
              a) Inform the mortgage company "I have been inadvertently fallen within a potential category of HMO through no wish of my own. My understanding is that it remains a single-let tenancy as there is only one AST and one single joint tenant. I am taking steps to evict the tenants as soon as possible. Kindly let me know what further information you require and if there is anything further you wish me to do before the eviction is complete."

              b) Write to the council to say that as a result of their change of rules you are evicting the tenants and informing them who is responsible. Hope they are happy with making these folk homeless.

              c) Advise the tenants that the friend has to go to avoid eviction and a very hefty rent increase.

              It must be fairly common that inadvertent (or unwilling) HMOs are created in mortgaged properties. Sometimes the tenants create them, sometimes Councils.

              Comment


                #8
                If the lender accommodates lending onHMO’s there is a very good chance that you will not be disadvantaged by having to take a new mortgage; as AndrewDodd so correctly states inform the lender before the Council notifies them explaining the situation and you may get a positive response.

                Comment


                  #9
                  Originally posted by Jamesp1986 View Post
                  No they are right annoyingly! I believe It used to be 3 or more families to make it HMO, now, In Haywards Heath, its 2 or more.
                  Three people or more in more than one household creates an HMO - that hasn't changed.
                  So the basic regulations for an HMO apply to a property that meets this criterion.

                  The rules for whether the HMO needs a licence are different in different areas, but nationally, the basic rules used to be that an HMO with 5 people and three or more stories would require a licence.
                  That changed recently to remove the requirement for three stories, which brings a lot more HMOs into scope.

                  Hopefully, your lender will be sympathetic.

                  The most likely issue you will face next is that the local authority will issue an improvement or safety notice if the property is not set up in line with the HMO regulations (which most standard residential properties won't be).
                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #10
                    If your HMO requires a licence and does not have one, then a S21 notice will not be valid.

                    Comment

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