The HMO Legal Basics series is a collaboration between Tessa Shepperson and David Smith of Anthony Gold Solicitors. An HMO is a House in Multiple Occupation.
In this fourth part of our section on licensing we take a look at TENs and then consider the penalties for non compliance with the rules.
House in Multiple Occupation Temporary exemption notices (TENs)
What if you buy a property which is currently being used as a House in Multiple Occupation but you want to stop this – perhaps to convert it to a single family dwelling.
You won’t want to go through all the bother of applying for a licensee if you are actively serving notice on the tenants requiring them to vacate.
The answer is to apply for a TEN.
If a Temporary Exemption Notice (TEN) is granted, the HMO is exempt from licensing. Accordingly the manager/ owner does not commit the offence of operating an HMO without a licence.
A Local Authority may only grant a TEN if it is satisfied that the applicant is, or will shortly be, taking steps to ensure the HMO ceases to be subject to licensing.
- For example, if planning permission has been obtained for the conversion of a House in Multiple Occupation to single family occupation.
A TEN can only be granted for a maximum period of three months, but in exceptional circumstances the Local Authority may issue a second TEN to last a further three months following the expiry of the original.
You should note that the second TEN requires an exceptional set of circumstances. You cannot simply assume you will get one. However, many local authorities will grant a second TEN without asking too many questions provided there is some evidence of action by the landlord.
No more than two consecutive TENs may be granted in succession for a given property. So if your tenants are proving difficult to evict, you may still have to apply for a license.
The problem most landlords run into is that they apply for a TEN without having taken advice or considered how or whether they can evict the tenants. They therefore waste a large amount of the time on the TEN before really commencing action to remove the tenants. They then find themselves running out of time and having to licence anyway.
Time is limited and it is important to act swiftly on the assumption that no extension will be granted.
House in Multiple Occupation Licensing – Penalties for non compliance
Finally, what happens if you don’t comply with the HMO licensing regulations? Here are the penalties:
- Failure to apply for a licence (where the property is a licensable House in Multiple Occupation) is a criminal offence and can result in a fine of up to £20,000. Prosecutions will normally be brought by the Local Authority against defaulting landlords. In practice, the fine is usually in the region of £4,000-8,000 and can be as low as £1,000 where the landlord can show that they are the victim of circumstance. For example, they trusted a relation or agent to apply for them.
- In certain cases, rent from housing benefit or paid by tenants themselves can be reclaimed if a landlord is found to be operating a licensable HMO without a licence.
- If a landlord has been convicted of the offence (or the local housing authority is satisfied that the offence has been committed even though the landlord has not been prosecuted), a local housing authority can reclaim any benefits paid when the landlord was operating without a licence by applying for a Rent Repayment Order.
- Similarly, tenants (including former tenants) are also allowed to make an application for a Rent Repayment Order where the landlord has been convicted of the offence or where a Rent Repayment Order has already been granted to a local housing authority on the same property.
This last item is strictly limited and tenants can only seek their rent back from the period beginning twelve months before their application.
They are theoretically able to recover all of their rent but, in practice, the RPT tends to consider that they have had some value from their use of the property and is reluctant to award that much.
Finally, no section 21 notice may be given in relation to a shorthold tenancy of a part of an unlicensed HMO so long as it remains such an HMO.
This means that unlicensed HMO landlords will be unable to evict their tenants by the notice only section 21 procedure.
There is a flaw in this penalty though. That is because a landlord is deemed as having a licence once he has made an application and not yet had it rejected.
Therefore a landlord can make an application, even knowing it has no chance of success, quickly issue a section 21, and then rely on this in court even after the HMO licence has been refused.
Next time we will be looking at prosecutions.
Further HMO resources:
Advice: If you need some legal advice, for example if you are considering challenging conditions imposed on your HMO license by your Local Authority, you can use our ‘HMO Hotline‘ telephone advice service.
Training: Easy Law Training has regular workshops on House in Multiple Occupation Law & Practice. You can read about these >> here (you will need to scroll down to find out the dates).