Anyone who owns or manages a licensable HMO, whether under the mandatory scheme or an additional or selective scheme, has to apply to the local authority for a licence.
The local authority must give a licence if it is satisfied that the:
• HMO is reasonably suitable for occupation by the number of people allowed under the licence;
• the proposed licence holder or the proposed manager (if there is one) is a fit and proper person;
• the proposed licence holder is the most appropriate person to hold the licence;
• the proposed management arrangements are satisfactory;
• the person involved in the management of the HMO is competent and the financial structures for the management are suitable.
Fit and Proper Person Test
In determining whether the licence applicant is a ‘Fit and Proper Person’ the local authority will take into account a number of factors, including:
• any unspent convictions relating to violence, sexual offences, drugs and fraud;
• whether the person has breached any housing or landlord and tenant law;
• whether they have been found guilty of unlawful discrimination.
Licence Conditions
A mandatory licence will normally last for the maximum five year period and the local authority normally charges a fee to cover the cost of issuing the licence. In some local authorities discounts are given if the landlord or property is accredited or if an application is made with a plan of the property.
The licence will specify the maximum number of people who may live in the property. The following conditions must apply to every licence:
• a valid current gas safety record, which is renewed annually, must be provided (for properties that have gas);
• proof that all electrical appliances and furniture are kept in a safe condition;
• proof that all smoke alarms and emergency lights are correctly positioned and installed;
• each occupier must have a written statement of the terms on which they occupy the property. This may be, but does not have to be, a tenancy agreement.
The local authority may also apply other conditions of their own which may include any of the following:
• restrictions or prohibitions on the use of parts of the property by occupants;
• action necessary to deal with the behaviour of occupants or visitors;
• ensuring the condition of the property, its contents, such as furniture and all facilities and amenities (e.g. bathroom and toilets) are in good working order and to carry out specified works or repairs within certain time limits;
• a requirement that the responsible person attends an approved training course in relation to any approved code of practice.
Properties Which Cannot be Granted a Licence
If the property is not suitable for the number of occupants, is not properly managed or the landlord or manager is not a fit and proper person, a licence will not be granted. If a property cannot be granted a licence the council must make an Interim Management Order (IMO), which will allow the local authority to manage the property (either directly or indirectly through a nominated partner).
The IMO can last for a year until suitable permanent management arrangements can be made. If the IMO expires and there has been no improvement, then the council can issue a Final Management Order (FMO). This can last up to five years and can be renewed.
Temporary Exemption from Licensing
If the landlord or person in control of the property intends to stop operating as a licensable property or legally reduce the numbers of occupants and can provide evidence of this, then they can apply for a Temporary Exemption Notice (TEN).
This lasts for a maximum of three months and ensures that a property in the process of being converted from a licensable property does not need to be licensed. If the situation is not resolved, then the landlord can apply for a second Temporary Exemption Notice for a further three months.
When this expires the property must be licensed, become subject to an IMO, or cease to be a licensable property. TENs also apply where the licence holder dies. The property will be treated as if it is subject to an exemption notice for three months, during which time the estate can either apply for a new licence or cease to run the property as a licensable property. If it takes longer than the initial three months the estate can apply for one further exemption notice.
Right of Appeal Against a Local Authority’s Decision
A landlord can appeal to the Residential Property Tribunal Service (RPTS), normally within 28 days, if the local authority refuses a licence, grants a licence with conditions, revokes or varies a licence.
More information about the work of the RPTS and the jurisdiction of Residential Property Tribunals under the Housing Act 2004 can be obtained from the Residential Property Tribunal Service website.
Offences
It is a criminal offence if the landlord or the person in control of the property fails to apply for a licence for a licensable property or allows a property to be occupied by more people than are permitted under the licence. A fine of up to £20,000 may be imposed. In addition, breaking any of the licence conditions can result in fines of up to £5,000. Note also, that no section 21 notice [see section 5.4.1 for more information about section 21 notices] may be given in relation to a shorthold tenancy of a part of a licensable HMO so long as it remains unlicensed.
This means that where a licence is compulsory, unlicensed HMO landlords will be unable to evict their tenants by the notice-only section 21 procedure.