Inspecting your property regularly – worth the effort

Having a robust inspection regime is not just worthwhile and advised, it is an essential part of being a responsible landlord. This is particularly the case for landlords of HMOs – an increasingly large portion of the sector – who are subject to a stringent set of health and safety standards and licence conditions with potentially criminal consequences if they are found to have been breached.

Few people would deny that it is important to look after and protect your assets. Your car, for example, is required to have regular inspections and pass MOTs which must all be recorded in the vehicle’s logbook. Those of us who drive know that proactively checking the oil levels and the tread on the tyres can prevent a major headache if something goes wrong down the line. Nobody wants to be pulled over by the police for something entirely avoidable like a broken headlight.

However, just as many of us can admit that we don’t get around to inspecting the tyre pressure of our cars on the advised monthly basis, many landlords equally fail to inspect their rental properties regularly enough and find themselves in hot water as a result. If you own or manage a property and you aren’t inspecting often enough (or at all), you could be missing out on something vital which could cost you in the future and even end your career as a landlord. For HMO landlords, failure to inspect regularly or at all and keep records of their observations is a very common mistake which can make it very hard to defend any prosecution which may come their way.

Fortunately, these mistakes are easily rectified. It is straightforward and relatively inexpensive to establish an inspection regime that will keep you and your tenants safe and happy and ultimately save you money.

 

Keep your property safe and secure

Perhaps the most obvious reason that you should inspect your property regularly is to ensure that repair issues and health hazards are identified promptly. There is a common misconception among landlords that you are only obliged to undertake repairs and address safety concerns when they are reported by tenants and many landlords are surprised that they can be prosecuted for disrepair that they have not had a chance to rectify.

For HMO landlords, it is important to remember that you are required by the HMO Management Regulations and the conditions of your licence to ensure that your properties are safe and in good repair, regardless of when notice was given to you by tenants. Without a solid inspection regime, it is likely that you will be caught out eventually, particularly if there is a safety issue that neither tenant nor landlord has picked up on. This commonly includes fire safety hazards which are of particular concern to Councils in the wake of the Grenfell disaster.

Keeping an eye on your properties also allows you to make sure that you are keeping track of the nature and occupation of your property to ensure it is not being misused or unlawfully sublet by a tenant. No landlord wants to face the embarrassment of being told by Local Authority Housing Officer that their property has mysterious sub-tenants (not subject to the relevant checks), lodgers and unauthorised animals. If you wait for a tip-off from a neighbour or another tenant, it may already be too late – your property may have been pushed over the occupancy threshold to make it an unlicensed HMO, for example, or you may have become the unwitting victim of property fraud. Ignorance of the occupation of your properties is unlikely to provide you with a defence.

 

Keeping records

A well-managed property should have an equally well-organised set of records and notes covering issues raised by the tenants and known areas of risk and improvement. Local Authority enforcement officers frequently carry out surprise inspections on properties, particularly if they believe they are unlicensed HMOs or in areas with many such properties where they have reports of disrepair. If you are able to show that you have also been checking up on the property and evidence this with written notes of your observations, you are likely to be able to head off any concerns they have before any allegations can stick.

Detail is key. Whilst you are not expected to have an encyclopaedic knowledge of every facet of your properties, having records showing that you are keeping tabs on problems as they arise is the only reliable way to prove that you are actively and effectively managing your property. To an enforcement officer who will only see the inside of your property, there is little to distinguish you from the insidious minority of rogue landlords. Being able to produce records of your inspections and actions is what can set you apart and show the complete picture of your effective management of the property.

Inspection notes should clearly set out different areas of the property and highlight factors such as their cleanliness, state of repair and issues to raise with the tenants or areas for action.

 

Avoid an unecessary trip to court

Prosecutions against Landlords of HMO and other licensable property are becoming ever more frequent, and the majority of these involve charges brought in respect of the HMO management regulations relating to disrepair and fire safety.

These offences are ‘strict liability’ offences, which often makes them very difficult to defend without a very strong ‘reasonable excuse’ defence. The maximum penalty is an unlimited fine for each offence and will result in you having a criminal conviction against your name which could lead to real problems in your career. You may also see your name listed on the Rogue Landlord checker.

With a regular, well-recorded inspection regime, you are potentially providing yourself with a strong defence to any such charges and at the very least solid mitigation which may reduce any civil penalty you face. It can also save you the expense of legal advice and representation required if you are prosecuted.

Landlords and agents should always ensure that the relevant notice is given to occupiers and tenants before visiting the property to avoid any unnecessary issues. If a tenant consistently refuses you access to complete works and carry out inspections, this is all the more reason to keep good records showing when you attempted to inspect and evidencing what action was taken.

If you do find yourself in need of legal advice, it is best to consult a specialist in this increasingly complex field. HMO licensing and management prosecutions are potentially a very serious matter and you should seek high quality advice and representation as soon as possible.

Changes to Mandatory HMO Licensing Expected October 2018

In December 2017 the government announced that it would proceed with extending mandatory property licensing of houses in multiple occupations (HMOs). On 23 January 2018, Housing Minister, Dominic Raab, responded to a written question from Wera Hobhouse MP stating that, subject to Parliamentary approval, the necessary regulations would be brought into force in October 2018.

What is mandatory licensing?

Since the Housing Act 2004 came into force it has been a requirement that large HMOs are licensed under mandatory licensing. Currently mandatory licensing applies nationwide to HMOs that:

  1. Comprise 3 or more storeys;
  2. Are occupied by 5 or more people living in two or more single households; and
  3. The occupiers share basic amenities such as washing and cooking facilities.

As these large HMOs are deemed high risk they are all required to be licensed regardless of where the HMO is located. Recent years have seen local authorities implement additional licensing schemes to cover smaller HMOs in an attempt to tackle poor housing conditions in the private rented sector. For example, in some areas, HMOs comprising one or two storeys need to be licensed.

What are the proposed changes?

The Housing Act 2004 allows the Secretary of State to prescribe the type of HMO that falls within the definition of mandatory licensing. The prescribed description has not been updated since 2006 when licensing under the Housing Act 2004 came into force.

The government has now decided to extend the scope of mandatory licensing to bring smaller HMOs within the scheme. Mandatory licensing will include:

  • All HMOs with 5 or more occupiers living in 2 or more households regardless of the number of storeys. Effectively this means the storey requirement will be removed from the current definition.
  • Purpose built flats where there are up to two flats in the block and one or both of the flats are occupied by 5 or more persons in 2 or more separate households. This will apply regardless of whether the block is above or below commercial premises. This will bring certain flats above shops on high streets within mandatory licensing as well as small blocks of flats which are not connected to commercial premises.

As is the case now, it is the individual HMO that is required to be licensed and not the building within which the HMO is situated. This means that where a building has two flats and each is occupied by 5 persons living in 2 or more households, each flat will require a separate HMO licence.

What are the proposals for implementing the changes?

The government proposes to implement the extension of mandatory licensing in two phases.

Phase one will last for 6 months. During this time local authorities will publicise the new licensing regime, process applications and issue licences. Landlords that did not require a HMO licence before the change in the rules will not be prosecuted during phase one for failure to license a licensable HMO and will not be exposed to rent repayment orders (RROs).

However, landlords will be expected to apply for a licence during the 6 month grace period and they are encouraged to do so because they will not be able to serve valid section 21 notices seeking possession until an application for a licence has been duly made (unless the landlord has instead applied for a temporary exemption in order to remove their property from licensing).

The government’s response is clear that the 6 month grace period does not mean that applying for a licence is optional. It just means that the criminal sanctions for not having a licence will be put on hold. Once the 6 month period is over and phase two begins any landlord without a licence will be subject to the full range of penalties for failing to comply.

It is also important to point out that landlords who currently require a licence under a local authority additional or selective licensing scheme and who are not licensed will not be able to benefit from the 6 month grace period just because their property has fallen within the new mandatory licensing category. These landlords could face enforcement action at any time.

What happens if I already have a licence under the local authority’s additional or selective licensing schemes?

The response paper confirms that properties already licensed under local authority additional licensing schemes will be passported into the mandatory licensing scheme without any cost to the landlord or alterations to the licence conditions for the remaining period of the licence. The distinction between mandatory HMO licences and additional HMO licences is largely artificial as both licences are granted pursuant to Part 2 of the Housing Act 2004. Passporting these existing licences into mandatory licensing should not be too problematic because they both fall within the HMO licensing scheme.

Some local authorities also have selective licensing schemes requiring all privately rented properties to be licensed whether they are HMOs or not. Selective licensing is governed by Part 3 of the Housing Act 2004. Some HMOs are only caught by selective licensing schemes, for example, where they do not fall within the current definition of mandatory licensing or the local authority has no additional licensing designation. In these circumstances, the government proposes to issue converted licences at no additional charge to the landlord. Converting Part 3 licences to Part 2 licences will require more consideration as there are differences between the two licensing schemes. Part 2 of the Housing Act, for example, requires the local authority to be satisfied that the property is suitable for multiple occupation and this includes assessing whether the property meets prescribed HMO standards.

What happens if I don’t get a licence?

There are serious consequences for landlords and letting agents who do not obtain licences for licensable properties. The local authority can bring a prosecution against the landlord in the magistrates’ court and fines for Housing Act 2004 offences have been unlimited since March 2015. Local authorities are also able to issue landlords with civil penalty notices of up to £30,000 per offence as an alternative to prosecution. Tenants and local authorities have additional remedies in the form of RROs where rent or housing benefit can be claimed back from the landlord by order of the First-Tier Tribunal.

Repeat offenders may also be subject to a banning order prohibiting them from letting property once these are brought into force. This is expected to happen in April 2018.

The new rules extending mandatory licensing are expected to come into force in October 2018. Landlords should start reviewing their properties now in preparation for the changes.

If you would like to read a related blog on government proposals regarding minimum room size, click here.