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Potential risks to tenants as statistics reveal a low compliance rate for HMO licensing schemes in London

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Houses of multiple occupancy - changes to mandatory licensing

There are over 310,000 private rented properties in London that require HMO Houses in Multiple Occupation (HMO) licensing. However, recent research has confirmed that over 130,000 properties in London remain unlicensed under the HMO licensing scheme and as a result, numerous landlords are breaking the law.

Mandatory HMO licensing applies to all HMOs across England, whereas additional and selective licensing schemes apply selectively when introduced by local authorities on a borough by borough basis. Statistics show that there is a non-compliance rate of 75% when it comes to mandatory and additional licensing schemes and a non-compliance rate of 15% in respect of selective licensing schemes. Licensing is required in order to improve standards in the private rented sector where greater control is necessary. In particular, in the absence of a mandatory licence approval, lettings are being operated illegally and are potentially putting lives at risk. It is thought that landlords are falling foul of the law through ignorance of the regulatory framework.

In addition, many London boroughs are struggling to process over 24,000 licence applications. This is a huge administrative burden that can lead to long delays in issuing licence approvals. Currently, approximately 40% of boroughs still rely on paper applications. As such, a simple, streamlined licensing process is needed, hopefully one which would make it more cost-effective, easier for councils to enforce, and clearer for landlords and agents to understand whether a property should be licensed.

Safeagent CEO, Isobel Thomson, has stated that:

“The results of the survey are concerning. Consumers are not being well served and indeed many are being placed at risk through this mish mash of licensing schemes. Right now, the system isn’t fit for purpose and councils are drowning in paperwork. Landlords needing property licences are either deliberately evading the schemes or are in the dark concerning their legal responsibilities and tenants are being placed at risk.

“If the compliance rate for HMO licensing schemes is only 25%, how can these schemes be effective? Ultimately this is about proper use of public money and consumer protection. Where are the assessment procedures for councils who have schemes in place? Isn’t it time we went back to the drawing board to come up with a simple, streamlined system that works for all?“

It is the case that landlords and/or agents caught operating unlicensed properties face heavy penalties with a criminal prosecution, hefty fines, or a civil penalty of up to £30,000 as well as rent reclaims of up to 12 months’ rent.

If you are a landlord and you are unaware of your regulatory responsibilities in respect of HMO licensing, we have a team of specialist regulatory solicitors who would be happy to assist you. You may be faced with a civil penalty, a rent repayment order, an interview-under-caution or a summons to court due to alleged non-compliance. You may have been issued with a notice of intent in relation to the revocation of your licence or a banning order. If any of these apply to you, you can contact our team of specialist HMO solicitors now on 01616 966 229.