An HMO is any house or flat that is not a self-contained flat, which is occupied by more than one household, and where more than one household share an amenity, such as bathroom, toilet or cooking facilities. Mandatory licensing is required of Ls who rent HMOs that are three or more storeys high, and have five or more people in occupation who are not members of the same family. Since mandatory licensing only applies to these larger HMOs, there will be many smaller HMOs (such as shared flats and houses in less than three storey buildings) that will not require mandatory licensing. Also exempt from mandatory licensing are two-person flatshares, buildings occupied with a resident L with up to two Ts, and student halls of residence.

Most LAs have set licence fees in the region of £300-£500 (although Wandsworth was looking for £1,100). The licence will specify the maximum number of people who may live in the HMO, and it will require L to have a valid current annual gas safety certificate; proof that all electrical appliances and smoke alarms are safe; and a written statement of terms for every occupier (eg a tenancy agreement).

If L did not apply for a licence before 5 July then the LA will, in theory, be able to prosecute. However, the filing of an application will be a defence to any prosecution, and therefore it seems likely that many Ls will seek to circumvent having to pay the licence fee by simply doing nothing until threatened with prosecution. However, that is a dangerous route because an L who operates an unlicensed HMO cannot seek rent from any T during the period when the premises are unlicensed. Moreover, T can recover any rent that is being paid during that period (by applying to the Residential Property Tribunal). In addition, L cannot serve a notice under s21 HA 1928 (ie seeking to recover possession from an assured shorthold T at the end of the tenancy). Also, the LA has the power to take over the management of the premises if it wishes.

The new definition of HMO is very wide, and it will catch many premises that were not previously within the legislation. The real bite, however, is for those premises where mandatory licensing is now required. Moreover, it should not be forgotten that LAs have a discretionary power to also specify specific areas where all HMOs must be licensed (even if they do not come within the mandatory criteria). Accordingly, these provisions are likely to be very important for many Ls. Conversely, those acting for Ts or occupiers should always check whether a property is an HMO and should have been licensed (in which case, there may be a claim for a rent refund!). For an introductory article see [2006] SJ 630. © Practical Lawyer