HMO licensing changes could affect rental agreements

by Sarah Ashcroft

Landlords should be aware of forthcoming changes to the categorisation and regulation of rental properties, which could affect their rental agreements with tenants.

A number of local authorities around the country have suggested that they will enforce Article 4, meaning planning permission will be required when a property changes status from a dwelling house to a house in multiple occupation (HMO), according to the Association of Residential Letting Agents (ARLA).

have only applied to homes with six or more unrelated tenants sharing the same property and amenities over three levels, but since April 2010 a new class - C4 - has been introduced, which covers rental agreements with three to six unrelated tenants.

Not all local authorities will enforce the optional Article 4, but ARLA has urged landlords to find out - particularly if they are living in an area with a high density of HMO properties, such as university towns and cities.

HMO licenses usually cost between £400 and £600, although if planning consent is required landlords should brace themselves to shoulder additional costs.

Ian Potter, operations manager at ARLA, said: "HMO licensing and planning applications are not a new issue for landlords, but now there is the added complication of Article 4.

"There is no room for complacency - failure to comply could result in a hefty fine."

He added: "For landlords with portfolios spanning more than one local authority area, this may mean different rules apply for each property. Factoring in the possible additional costs of purchasing the licence is also vital."

Earlier this month, ARLA said the private rented sector may finally be running out of space to cope with tenant demand, after 74 per cent of members agreed that demand for rental properties is outstripping supply.

The need for more rented space is particularly prominent in London and the south-east.

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Published on: October 27, 2011

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