Investors: Do You Know Your Local HMO Rules?
If You’re a HMO Investor or Deal Packager, Make Sure You Understand Local Rules
Why Staying Compliant with HMO Regulations is Critical
The story of Tope Osazee, a Westminster landlord recently fined £28,000, serves as a warning for all HMO investors, deal packagers or sourcing agents currently operating or planning to in the near future - as reported on The Negotiator recently.
Mr Osazee failed to obtain a HMO licence due to changes in local rules in previous years, a mistake that led to a hefty fine and repayments to tenants.
In court, Mr Osazee argued that it was the council's responsibility to inform landlords of changes to requirements, however, the tribunal's response was clear—“ignorance is not an excuse.”
For those venturing into property investing, particularly HMOs, it is vital to understand that compliance with local regulations is a non-negotiable aspect of your business.
Key Points of Interest
- Councils may not always notify landlords of regulation changes.
- Landlords hold the responsibility of staying updated on local property rules.
- Failure to comply can result in significant financial penalties and rent repayment orders.
Staying on Top of Local HMO Rules
Research Local Property Regulations
HMO rules differ across councils in the UK, so one size does not fit all. For instance, Westminster Council's extension of HMO licences to three-person properties might not apply in other districts:
- Visit your local council’s website regularly for updates on regulations.
- Network with local property investors to stay informed about changes.
Regularly Audit Your Properties
Proactively review your property portfolio to ensure compliance with HMO standards. Consider aspects like licence requirements, fire safety measures, and living conditions.
Build Relationships with Local Councils
Establishing open communication with your local council can be invaluable. Many councils offer landlord forums and newsletters with legislative updates. This could help you in the long-run if you already have a good working relationship with them.
Seek Expert Guidance - Such as a Deal Packager or Sourcing Agent
Any professional sourcing agent or deal packager will follow closely all rules and regulations for their strategies, on their local 'patch'. They can be on hand to carry out any checks and provide information in deal presentations before you purchase a property.
You can find professional and compliant sourcing agents via The National Association of Professional Sourcing Agents (NAPSA) search platform: https://napsa.org.uk/
What Happens When You Don’t Comply?
The Westminster case shows how costly non-compliance can be. Beyond the staggering £28,000 in fines, Mr Osazee's reputation as a landlord was likely tarnished, not to mention the penalties to pay:
- Rent repayment orders totalling nearly £21,000 to former tenants.
- Additional fines and hearing fees over £7,000.
The tribunal made it clear that landlords, particularly “professional landlords,” are expected to take responsibility for understanding local rules.
Lesson Learned: Compliance isn’t optional, and ignorance will never be a sufficient defence.
