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Rogue landlord fined over £7k after council uncovers llegal HMO in Luton town centre

A rogue landlord has been fined over £7,000 after Luton Borough Council uncovered an illegal house of multiple occupation (HMO) in the town centre

On Wednesday, March 20, Prestige Luton Ltd, of Britannia House, Leagrave Road, pleaded guilty at Luton Magistrates Court to charges of managing an HMO at 135 Wellington Street and breaching regulations which ensure properties are safe and suitable to be used as HMOs.

As well as operating without a licence, the property lacked adequate fire precautions.

There were ill-fitting fire doors, missing smoke strips and seals around the doors and frames, no thumb-turn mechanism to the rear exit door and the landlord’s details were not displayed in the property.

The company was fined a total of £3,400 with a victim surcharge of £120, and Luton Council was awarded costs of £4,220, altogether totalling £7,740.

Nicola Monk, LBC’s corporate director for infrastructure, said: “This is a great result for the Rogue Landlord Project and an excellent example of how we are working together to ensure that private housing in Luton is of a good standard.

“If an HMO is poorly managed, the tenant’s safety could be at risk. We are committed to identifying rogue landlords and making sure they improve the properties they manage, or face prosecution. I would strongly encourage tenants or neighbours who suspect a landlord is not adhering to the rules to get in touch with us.”

The purpose of HMO regulation is to ensure that the properties meet safety standards and that there are enough toilets and washing facilities for the number of people living there. Every landlord housing different individuals or families that share the same facilities under one roof must comply with these standards.

Failure to do so can lead to a criminal conviction and/or financial penalties.

There is a full list of licensed HMOs on the council’s HMO page at www.luton.gov.uk/hmo.

By STEWART CARR

Source: Luton Today

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Tighter regulation makes HMO investment an area for specialists

The Licensing of Houses in Multiple Occupation Order 2018 came into effect on 1 October, changing which residential properties will be categorised as houses in multiple occupation (HMO) for mandatory licensing purposes. From now on, properties occupied by five or more people, forming two or more separate households, will be classified as HMOs. The Residential Landlords Association estimates that this will affect 160,000 properties that didn’t require a licence before.

Many houses and some flats will now be required to have mains-powered fire alarms, fire check doors and fire escape areas that could result in considerable expenditure. Also, the penalty for not obtaining a licence can be a criminal conviction, a £30,000 fine as well as being required to refund rent received.

This long-awaited extension will offer greater clarity of minimum standards, including specified minimum room sizes deemed suitable in HMOs for occupation. Prior to this, many councils interpreted the definition for licencing differently.

The new rules allow a valuer, investor or lender to accurately establish if accommodation meets minimum standards. It should enhance the stock in this sector, which until now has included HMOs with substandard living accommodation.

Many in this sector have welcomed the minimum standards, including valuers and lenders, with the legislation further professionalising the market. With many councils unable to police HMOs due to limited resources, the roll of chartered surveyors and lenders inspecting and deeming properties fit for purpose and suitable security can’t be underestimated.

However, the cost burden for investors and property owners may increase, and where rooms are excluded from letting when minimum room requirements are not met, landlords’ rental income will fall. This could affect capital values and loan-to-value covenants of properties held as security for bank lending.

Some investors may withdraw from the market. This new order is likely to result in a reduction in the supply of HMO accommodation, creating upward pressure on rents at a time when there is a need to increase affordable accommodation.

The legislation is likely to further increase the specialist nature of HMO ownership, requiring a much more professional approach from landlords. The times of amateur investors buying HMO properties for possible high returns has passed. The need to understand and comply with the licensing requirements, as well planning legislation, means HMO ownership is now best suited to those with specialist knowledge of this sector.

Source: Property Week

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Small landlords will dwindle away

The private rental sector of the future will be dominated by larger institutional landlords as the number of hobbyist landlords decreases.

This prediction is from Roma Finance, the specialist bridging finance and development lender, who reports that more and more landlords are using limited companies to maximise tax efficiencies on their investments – and this is set to continue.

Those landlords with fewer than five properties will disappear as the cost of managing their properties and keeping up with ever-changing legislation will prove to be prohibitive.

However, with the number of landlords reducing this won’t affect the number of buy-to-let properties available for rent, but extra administration costs could ultimately increase the rents charged to tenants.

Roma says that landlords are evolving in many different ways, from the legal structure of their holdings, the make-up of their portfolios, the quality requirements they will have to adhere to and the way they will finance properties going forward.

New HMO rules

An area of concern is the impact of the new Houses in Multiple Occupation (HMO) regulations coming into force on 1 October. The number of storeys will be removed from the definition of HMO and minimum room sizes will be set.

Those landlords with one or two storey HMOs will be subject to mandatory licencing requirements by their local council. The Residential Landlords Association estimates that in the UK this will affect an extra 177,000 properties.

EPC ratings

The new EPC ratings which came into force on 1 April mean that rental properties need to be rated as E or above, those rated F and G can’t be let to new tenants or have tenancies extended.

Roma says this provides bridging lenders with a new opportunity to back professional landlords to acquire ‘un-rentable’ properties with a view to improving their EPC rating, which in turn will make them eligible for longer term buy-to-let mortgages.

Opportunities for lenders

From a lending perspective, Roma predicts that more lenders will opt for unique or tailored rates and criteria for each transaction. There are big opportunities for innovative lenders willing to look at how they can provide funding for more complex cases and update their underwriting requirements to take the new legislation requirements into account.

Scott Marshall, managing director of Roma Finance, commented: “Clearly a barrage of regulation and legislation is moulding a new breed of landlords. The days of the hobbyist landlord are numbered as the upkeep and management of rental properties becomes more onerous.

“The private rental sector is due for another shake up in 2018, and beyond, and only the larger players will be able to cope, as they can benefit from their scale of operation.  With the HMO rules coming into force in October, maybe more affordable housing is needed more than ever as an alternative.

“However, as a lender we’re still experiencing a high level of finance demand for rental property, and in the wider market there are many product updates being introduced as lenders seek to adjust criteria to keep pace with a changing market. But it seems clear that the future will be driven by professional landlords rather than the armchair investors of the past.”

Source: Mortgage Finance Gazette