HMO landlords - get licensed, or risk getting hit for thousands!
15th June 2009
By Tony Booth
As the credit-crunch continues, being a landlord has probably never been more challenging. Despite this, the buy-to-let market remains relatively stable. Even so, it's reasonable to assume that worries about finance and recession might cause some landlords to take their eye off the ball - and fall foul of the law as a direct result. Take the case of HMO (house in multiple occupation) licensing and the repercussions of failing to comply with this onerous slice of bureaucratic legislation.
Mr Bahi owned two properties in Warwick and let them to students attending the nearby university. The dwellings were deemed to be HMOs by the local authority, which meant the landlord was required to apply for and acquire a license before letting them. Mr Bahi failed to undertake this task when he first let the properties in April 2006, but then later applied for the licenses in May 2007. The courts prosecuted the landlord a month later, stating that he had been guilty of operating without the necessary licenses for a period of time.
The courts fined Mr Bahi £2,000 plus £1,057 costs. The sum had been reduced to reflect the fact that licenses had been applied for by the time of the hearing. However, part of the HMO enforcement legislation contained within the Housing Act 2004 allows tenants to apply for a Rent Repayment Order (RRO) when their landlord has been found to be operating without a license. The RRO can be claimed for up to 12 months backdated rent. The student tenants duly applied to the Residential Property Tribunal and won a compensation award against the landlord of 50 per cent of the rent they had paid - a grand total of £18,000 for the two properties.
It is not known whether Mr Bahi had purposely ignored the fact that a license was required or was simply ignorant of the obligation, but either way, it proved to be a very expensive error. Student tenants are particularly savvy when it comes to private sector renting regulations and any landlord that fails to operate their business to the required standard are risking both enforcement action and litigation by their tenants.
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