Property Agents beware … increasing financial penalties for failure to manage HMOs

Property agent ESRA Property Services Ltd was fined a total of £16,000, with an additional £1,427 costs following a prosecution by Cambridge City Council in January for 11 offences of failing to comply with The Management of Houses in Multiple Occupation (England) Regulations 2006.

The prosecution followed an investigation by the local authority which uncovered multiple management failings, including failing to take safety measures to protect occupiers from injury in the event of fire.

This case was the 10^th housing related prosecution brought by Cambridge City Council in the last 3 years, with fines and costs totalling £118,000 paid by those found guilty of offences, and local authorities up and down the country have similar stories to tell.

The Housing Act 2004 requires all houses in multiple occupation (HMOs) to be licensed to ensure that these properties are managed and occupied safely.  Compliance may be the responsibility of the owner and/or the property agent depending upon how the property is managed and you need to ensure that responsibilities are clearly set out within any property management agreement. There is nothing stopping local authorities’ from taking enforcement action against both property owners and management agents when there is any doubt.

What is an HMO?

A house in multiple occupation is a property rented out by at least 3 people who are not from 1 ‘household’ but share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’.

You must have a licence if you’re renting out a large HMO. Your property is defined as a large HMO if all of the following apply:

• it’s rented to 5 or more people who form more than 1 household
• it’s at least 3 storeys high
• tenants share toilet, bathroom or kitchen facilities

Even if your property is smaller and rented to fewer people, you may still need a licence depending on the area in which the property is located.

Restrictions

A licence is valid for a maximum of 5 years.  You must renew your licence before it runs out.

You need a separate licence for each HMO you run.

Conditions

You must make sure:

• the house is suitable for the number of occupants (e.g. size and facilities)
• the manager of the house – the owner or property agent – is considered to be ‘fit and proper’, e.g. no criminal record, or breach of landlord laws or code of practice

You must also:

• send the council an updated gas safety certificate every year
• install and maintain smoke alarms
• provide safety certificates for all electrical appliances when requested

Fines and penalties

Failure to comply with the regulations carries with it unlimited financial penalties.  In addition to prosecution the local authority can also seek a rent repayment order against landlords following prosecution.  Tenants may be able to claim up to 12 months of rent paid via the Residential Property Tribunal.