At Alex & Matteo Estate Agents, we pride ourselves on staying ahead of the curve when it comes to the property market. As part of our commitment to providing the most up-to-date information, we’re delving deep into the HMO (House in Multiple Occupation) licensing changes set to take effect from November 2023. We sympathise with a number of our landlords who are not happy with these changes; however understanding these shifts is crucial for both landlords and tenants, ensuring compliance and the smooth operation of HMOs.

The Background of HMO Licensing in the UK

For many stepping into the world of property and housing, the term HMO might seem unfamiliar or even daunting. Let’s demystify it. HMO stands for House in Multiple Occupation, and as the name suggests, it’s all about properties where there’s more than just one household living under the same roof. Unlike the typical family home where one family shares all spaces, in an HMO, residents might have their own individual bedrooms but come together in shared spaces like kitchens, bathrooms, and sometimes living areas.

Over the past few decades, these HMO properties have seen a meteoric rise in popularity across the UK. There’s a mix of reasons driving this trend. Rapid urbanisation has seen more people flocking to cities and urban centres, leading to increased housing demands. Simultaneously, as university towns expand and student populations boom, there’s a pressing need for accommodation that’s both affordable and conducive to student lifestyles. Moreover, in an economic climate where property prices and individual rents have surged, HMOs present a more budget-friendly housing option for many, especially younger professionals and those just starting on their career paths.

But, as with any housing trend, there are challenges. As HMOs became more prevalent, concerns grew about the conditions of these shared living spaces. Stories began to emerge of overcrowded homes, substandard facilities, and even potential safety hazards. Recognising the urgency of the situation, the UK government stepped in, introducing licensing specifically tailored for HMOs. This wasn’t just a bureaucratic step. It was a move grounded in a commitment to ensure that even as housing dynamics shifted, the quality of living didn’t take a backseat. The licensing system was meticulously crafted to ensure HMO properties met stringent safety, welfare, and space standards. At the heart of this initiative was a singular, vital objective: to protect tenants. By implementing these standards, the government aimed to offer a robust safeguard against the risks of subpar living conditions and any looming hazards that might compromise tenant safety.

What’s Changing in November 2023?

Changes to legislation are often a response to the evolving nature of the property landscape. The updates coming in November 2023 reflect this adaptability. Key shifts include:

• Scope Expansion: The new regulations will expand the definition of HMOs that require licensing. This means that more properties might come under the HMO umbrella, necessitating landlords to get the appropriate licences.
• Stricter Safety Regulations: A greater emphasis will be placed on safety. Landlords will need to prove that regular safety checks, particularly regarding fire and electrical safety, have been conducted.
• Amenity Standards: The space and amenity standards will be revised, ensuring that all occupants have adequate access to necessary facilities. This might impact the maximum number of people allowed in specific HMO properties.
• Welfare Considerations: There will be a heightened focus on the general well-being of tenants. This includes provisions around mental health and ensuring that tenants have necessary support mechanisms in place.
• Renewal Timelines: Licenses will have a set expiry date, necessitating renewals at more regular intervals.

Implications for Landlords

For landlords, it’s crucial to grasp these changes fully:

• Preparation is Key: Landlords must assess their properties now to determine if they’ll be categorised as HMOs under the new rules. If they fall into this category, it’s time to start the licensing process.
• Financial Considerations: With the increased regulations, there might be costs involved in bringing properties up to the required standards. It’s wise to set aside a budget for potential modifications.
• Avoiding Penalties: Non-compliance can result in hefty fines. Being proactive ensures landlords remain on the right side of the law.

Zooming in: The Impact on London’s SE1 and SE16

London’s SE1 and SE16 postcodes, encompassing vibrant areas such as Bermondsey, Southwark, Rotherhithe, Surrey Quays and Canada Water, have always been in the spotlight for their unique property dynamics. These areas, known for their eclectic mix of residential spaces, rich history, and proximity to central London, have seen a surge in rental demand over recent years. With the introduction of the new HMO licensing changes, there’s an anticipation of specific ripple effects in these postcodes:

Higher Demand for Licensing: Given the dense residential nature of SE1 and SE16, many properties might newly qualify as HMOs under the expanded definition. Landlords in these areas need to be especially vigilant about understanding the nuances of the changes.

Property Value Implications: Historically, regions that implement stringent property regulations often witness a stabilisation or even an increase in property values, as living standards and safety measures improve. For SE1 and SE16, this could mean an enhancement in the overall desirability of properties for potential renters and buyers.

• Potential Rent Adjustments: As landlords might need to invest more in bringing properties up to the required standards, there could be a consequential adjustment in rent prices. This may mean a slight uptick in rental rates, though this will be balanced by the assurance of higher living standards for tenants.
• Urban Regeneration: Parts of SE1 and SE16 have been earmarked for regeneration projects. With the new HMO regulations in play, there’s potential for these areas to develop as models of high-quality, shared living spaces, setting a benchmark for other London postcodes.

For residents and property owners in SE1 and SE16, these changes aren’t just about regulations – they signify a transformative phase in the area’s property narrative.

What Tenants Should Know

For tenants, while these changes are largely beneficial, there will be some cases where tenants will then have a higher rent to pay.

• Enhanced Living Standards: The revisions aim to uplift the quality of HMO properties, making for a more comfortable living experience.
• Safety: With more stringent safety checks, tenants can have peace of mind that their homes are secure.
• Know Your Rights: Tenants should be aware of the new regulations, ensuring that their landlords are compliant and that their rights are protected.

Conclusion

The upcoming HMO licensing changes are significant. At Alex & Matteo Estate Agents, we’re here to guide both landlords and tenants through this transition. Our experts are on hand to offer advice, ensuring that the property journey, whether you’re renting out or residing, is smooth and compliant.

Alex & Matteo have been awarded by Southwark Council as Gold Members, so all landlords working with us could be entitled to up to a 50% discount on their licences.

Stay informed, be prepared, and as always, don’t hesitate to reach out to us for any property-related queries. Your peace of mind in the ever-evolving property landscape is our utmost priority.