At least two cases in the last year have highlighted the relevance of the statutory provisions in respect of Houses in Multiple Occupation (HMOs) to Property Guardian companies. In one case the company, Camelot Guardian Management Company Ltd, pleaded guilty to a number of offences arising out if its failure to license an HMO. In the other, a former guardian successfully pursued a rent-repayment order against the company, Live In Guardians Ltd.
It would seem essential, therefore, that Property Guardian companies understand the relevant legislation and their obligations under it.
This is the first of a series of Articles in which we look at the regulation of Houses in Multiple Occupation (HMOs), with particular focus on how these regulations apply to Guardian companies.
We shall look at these provisions in 3 stages:
- What is an HMO and which buildings fall within the definition;
- Which HMOs must be licensed and what are the penalties for failure to do so;
- What Health and Safety standards apply to HMOs and what are the penalties for breach.
PART 1. What is an HMO and which buildings fall within the definition.
The concept of the House in Multiple Occupation was introduced by the Housing Act 2004 (the Act). The definition of an HMO is given in Part 7 (Supplementary and final provisions) and it is not at all straightforward. Perhaps the best place to start is Schedule 14 which sets out when a building will NOT be an HMO for the purposes of the Act.
1) Where the person managing or having control of it is:
(a) a local housing authority,
(b) a non-profit registered provider of social housing,
(c) a body which is registered as a social landlord under Part 1 of the Housing Act 1996 (c. 52),
(d) a police and crime commissioner,
(e) the Mayor’s Office for Policing and Crime,
(f) a fire and rescue authority, or
(g) a health service body within the meaning of section 9 of the National Health Service Act 2006.
(h) a co-operative society within meaning of Co-operative and Community Benefit Societies Act 2014
(i) a profit-making registered provider of social housing within the meaning of Part 2 of the Housing and Regeneration Act 2008
2) Buildings occupied by
(a) Students (where the person managing or having control of it is the educational establishment in question)
(b) Religious communities,
(c) One or more owners with a freehold estate or a leasehold interest granted for a term of more than 21 years with no more than 2 lodgers.
(d) Any building which is occupied only by two persons who form two households.
If a building, the way it is managed or occupied falls within any of these categories it will not be an HMO in any event.
If the exceptions do not apply then a building, a part of a building, a self-contained flat or a converted building will be an HMO if it satisfies one (or more) of five tests:
1) The Standard Test (s254)
2) The self-contained flat test (s254)
3) The converted building test (s254)
4) Buildings subject to an HMO declaration (s255)
5) The converted block of flats test (s257)
Taken in turn:
The Standard Test:
(a) it consists of one or more units of living accommodation not consisting of a self-contained flat or flats;
(b) the living accommodation is occupied by persons who do not form a single household;
(c) the living accommodation is occupied by those persons as their only or main residence or they are to be treated as so occupying it;
(d) their occupation of the living accommodation constitutes the only use of that accommodation;
(e) rents are payable or other consideration is to be provided in respect of at least one of those persons’ occupation of the living accommodation; and
(f) two or more of the households who occupy the living accommodation share one or more basic amenities or the living accommodation is lacking in one or more basic amenities.
The Self-Contained Flat Test:
The self-contained flat test applies if the property is a self-contained flat and paragraphs (b)-(f) of the standard test apply with references to living accommodation being read as references to the flat.
The converted building test (s254)
The converted building test applies if the property is a self-contained flat and paragraphs (b)-(e) of the standard test apply.
HMO Declarations
A local authority has a power to declare that a property or part of it is an HMO even where the ‘sole use’ condition is not satisfied.
Converted Block of Flats Test (s257)
(a) It has been converted into and consists of self-contained flats
(b) The building work undertaken in connection with the conversion did not comply with the appropriate building standards and still does not comply with them; and
c) Less than two-thirds of the self-contained flats are owner-occupied.
When applying these tests:
“basic amenities” means (a) a toilet, (b) personal washing facilities, or (c) cooking facilities;
“converted building” means a building or part of a building consisting of living accommodation in which one or more units of such accommodation have been created since the building or part was constructed;
“self-contained flat” means a separate set of premises (whether or not on the same floor)
(a) which forms part of a building;
(b) either the whole or a material part of which lies above or below some other part of the building; and
(c) in which all three basic amenities are available for the exclusive use of its occupants.
“members of a household” means people who are ‘married to each other or live together as husband and wife (or in an equivalent relationship in the case of persons of the same sex) and a ‘parent, grandparent, child, grandchild, brother, sister, uncle, aunt, nephew, niece or cousin’ (including step-children and half-blood relatives) (s258).
“Occupier” means both tenants and licensees (s262).
“Person having control” means a person who receives or would receive the ‘rack rent’ (not less than 2/3 of full net annual value) (s263).
“person managing” means a person who receives the rent from the occupiers or has entered into an agreement with another person (who is also included in the definition of ‘person managing’) (s263).
In the Live In Guardians case referred to above, the company tried to argue that the guardian was neither a tenant nor a licensee – presumably the only argument that they could think of to avoid liability. Unsurprisingly, this argument got nowhere.
It can be seen from this definition that many of the common models under which large buildings are protected by Guardians, the HMO definition is likely to apply.
In Part 2 we will look at the provisions under which certain HMOs must be licensed and the penalties for failure to do so.