As the author of the first book on HMO (House in Multiple Occupation) properties, HMO Property Riches, I’m always receiving emails from property investors regarding how they can best invest in HMO properties and hence benefit from the additional cash flow.
More recently, I’ve been getting a lot of questions regarding the new planning laws that came into effect on 6th April 2010.
On General Election day, a couple of days ago, I had a bit of time on my hands so thought I’d do a bit of investigative work regarding HMO licensing. I wanted to determine how much housing professionals actually knew about HMO legislation and HMO use classes.
My first trip was to a local letting agent whom I picked out at random – I won’t mention their name as I don’t want to embarrass them. However, if they do ever come across this post I’d hope they’d take on board my comments. (ps. I didn’t tell the agent that I was a landlord, but instead hinted that I was a first time investor).
I asked the letting agent owner if he knew anything about the new HMO planning laws and how they would affect existing and potential landlords. In all honesty, his response didn’t surprise me. Firstly, he asked me which law and then he told me that every property was different and it’s probably best that I spoke to the council regarding this.
In other words, he didn’t have a clue.
Anyway, I decided to take this on board and hopped down to the local council. I asked the lady at the main desk for some information regarding HMO planning laws – she turned around and looked at me as if I’d gone mad AND as if I was speaking a foreign language – she then told me that I was probably in the wrong place! I then told her that it was probably something to do with the Environmental Health Officer and the planning department.
She then gave me a ticket and asked me to wait in a waiting room.
I went into the waiting room and found myself behind people looking to be re-housed by the council and also those affected by physical violence and drug abuse etc. It was after I overheard someone talking about their door being kicked down that I decided to leave!
On my way out, I noticed this poster on the wall:
So I rang the number on the poster – and guess what – the number was no longer in use! I then went back to the front desk and asked for the phone number of the Environmental Health Officer – I was given the number and so I called him.
I asked him about the new HMO planning laws and what I need to do as a HMO landlord to ensure that I comply and stay within the law. He told me that he didn’t really know much about them as they had only just come out! He then put me through to the planning department indicating that they should know more about it as it comes under planning.
I then spent 10 minutes on the phone with a planning officer only to be told the same thing – the law had just come out and the council wasn’t really ready for it yet!
Now, interestingly enough, I expected all of the above. As with previous Housing Laws, no one really knows much and it’ll take several years before the council is actually ready to start implementing the law by which time a new law will have come out.
Now, here’s my take on what’s going on.
From 6th April 2010 if you intend to let a property as a House in Multiple Occupation, you will need to apply for planning approval. This will cost you £335 for each additional room above single occupancy, in other words for a 3 bed HMO, you will need to pay 2x£335=£670 to apply for planning permission.
This is in addition to any other costs you will incur to make your property HMO compliant.
If your house was already a HMO prior to April, then you will not need planning approval.
As a professional landlord, you will now need to factor the above into your costs prior to any property purchase.
You could run your HMO without planning approval for 10 years, after which an application would not be required. However, in this case, you do run the risk of being caught by the council and possibly fined for breaking the law.
My advice would be to phone your local council – some of them are better versed on these laws than others. Speak to the Environmental Health Offcer and ask him for advice regarding your specific property. If he can’t help you, you could run the HMO on the premise of applying for planning once your local council is ready to accept applications – whether you do or not is up to you!
To summarise, although there could now be an additional cost to running your HMO, this should by no means deter you from the additional cash flow you can achieve from Houses in Multiple Occupation which are still a very lucrative form of investing in property.
If you have any questions or comments give me a shout and I’ll try and help you the best I can. Alternatively, go to your local council who will probably ask you to leave because they are not yet ready to implement any new changes!
Happy investing!
Javaid Kiyani
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