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Antony Antoniou – Luxury Property Expert

HMO Landlords Voice Concerns Over New Regulations Threatening Property Market

HMO Landlords Voice Concerns Over New Regulations Threatening Property Market

In a surprising turn of events, the upcoming launch of a new housing scheme has sent shockwaves through the Portsmouth property market. With the scheme set to extend licensing to around 4,000 three- and four-bed houses from September 1st, HMO landlords in Portsmouth are raising their voices in strong protest.

The Portsmouth and District Private Landlords Association (PDPLA) has taken a firm stand against the new scheme, and tensions reached their peak at the association’s latest meeting. Faced with stringent new space requirements and increased costs, many HMO landlords expressed their frustration and concern over the future of their properties.

Vice chairman Alwin Oliver, who presided over the meeting, reported a scene of unease as nearly 95 landlords gathered in person, with an additional 25 participating online. The council’s plans were laid out before them, but reassurance was in short supply. Oliver noted, “Sadly, the landlords present did not seem reassured.”

One defining moment of the meeting was when a pivotal question was asked: how many landlords were considering exiting the HMO economy due to the new regulations? A staggering 60 hands shot up, painting a vivid picture of the distress many landlords are experiencing. Oliver recounted the passionate testimony of one landlord who had played a role in providing housing for former homeless individuals. Now, however, they are forced to consider giving notice to their tenants due to the unfeasible space requirements.

The prevailing sentiment among landlords is that the council’s intentions might not be as transparent as they seem. According to Oliver, the council’s efforts might be akin to stealthily eliminating HMOs from the housing landscape. “The council is trying to clear the streets of HMOs by stealth,” he asserted, encapsulating the fear that many landlords hold.

While the ripple effects of this brewing conflict will undoubtedly be felt across the property market, the most immediate impact could be on HMO tenants. Finding alternative housing options in an already competitive and overheated market presents a formidable challenge. Tenants caught in the crossfire might be tempted to wait for the bailiffs, believing that Section 21 offers them the possibility of rehousing.

However, the situation is not as straightforward as it seems. The costs associated with legal action and the loss of income for landlords can be detrimental. When multiplied across multiple tenants in an HMO that falls under the scope of additional licensing, the consequences could be dire. Oliver concluded with a somber reflection, stating, “Multiply it by three or four in an HMO that has fallen into additional licensing and few landlords will survive the experience.”

As the clock ticks down to the September 1st launch of the new housing scheme, the situation remains tense. HMO landlords in Portsmouth find themselves at a crossroads, torn between the desire to maintain their properties and the daunting prospect of navigating the intricate web of regulations and costs. One thing is certain: the outcome of this clash will undoubtedly reshape the landscape of the Portsmouth property market for years to come.

Meanwhile in Redbridge

Recent developments in the London Borough of Redbridge have led to the confirmation of new and specific licensing initiatives.

Additional Licensing:

In the past, the council’s supplementary licensing program was in effect from April 13, 2017, until April 12, 2022.

After conducting a public consultation between December 13, 2021, and March 7, 2022, the council approved a new comprehensive additional licensing scheme. This scheme, which encompasses a majority of Houses in Multiple Occupation (HMOs), received endorsement on May 30, 2023, and will become effective starting September 18, 2023.

This fresh approach applies to most HMOs occupied by three or more individuals, as well as specific converted flat buildings (Section 257 HMOs) where all accommodations are privately rented and both the building and individual units are under the same ownership or control.

Selective Licensing:

The previous initial selective licensing program, applicable to Clementswood and Valentines council wards in the southern part of the borough, was active from July 13, 2017, to July 12, 2022.

After seeking public input from November 1, 2022, to January 31, 2023, the council sanctioned a new selective licensing scheme. This scheme encompasses all privately rented properties within the new council wards of Valentines and Ilford Town. It is set to be enforced from November 1, 2023.

Concurrently, the second selective licensing scheme, covering council wards including Goodmayes, Loxford, and Snaresbrook, will conclude on September 30, 2023. The potential approval of a replacement scheme by the Secretary of State remains uncertain. Should such approval be granted, the council must provide three months’ notice prior to implementing the new licensing scheme.

Implementing two distinct licensing schemes with separate commencement dates could potentially create confusion for landlords and letting agents.

Increase in License Application Fees:

Redbridge has observed a continuous rise in license application fees, surpassing the London average, as reported by London Property Licensing.

For a mandatory HMO license for a shared house accommodating five individuals, the fee has escalated by 9% since the prior year, now amounting to £1,884.

Upon the initiation of the new scheme, an additional license for a shared house for four occupants will cost £1,800. Fees for HMO licenses differ based on the number of households residing within the property.

Acquiring a selective license for a single-family property now requires a payment of £735, indicating a 9% rise compared to the previous year. Starting from November 1, 2023, when the new scheme takes effect, the fee will further increase to £860, constituting a 17% additional rise.

Landlords with accreditation who apply for either an additional or selective license will be entitled to a modest discount of £35.

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