For buddying property developers and investors, there are going to be new rules for those dealing with HMOs, which is houses in multiple occupation - such as student homes, rented and shared accommodation.

The new rules will be covered by ‘The Licensing of Houses in Multiple Occupation Order' which will be coming into effect later on this year on the 1st October 2018. But what exactly are these new rules, and what are the implications?

What will the Order change?

The definition of what is considered a HMO is two or more people sharing facilities like bathrooms and kitchens. The building must have at least 3 or more storeys and this relates to student accommodation, lodging, rented accommodation for professionals and more.

Now, under the Housing Act 2004, the change will see a HMO (for licensing purposes) become any property that is occupied by five or more people and forming two or more households.

The property is also considered to be HMO if it is not considered to be a self-contained flat, and the people who are residents considered it their main residence (as well as two or more occupying houses share basic amenities) then it also comes under this classification.

This means that owners will need to make sure that they have the right licenses when the new order comes into effect. It is thought that an additional 177,000 HMOS will fall under the new standards in England.

Will I need to get a HMO license?

Providing that you have your license under the current HMO license, which is the  ‘Licensing of Houses in Multiple Occupation Order 2006', then this will be still valid when the new Order is implemented in October and will be until the expiration date on the license (usually 5 years from when it was issued). Then you will need to apply for a new license afterwards.

However, it will be the case that you will need to apply for a license via your local council if you rent a HMO that didn't previously need a licence under the old regulation. This may also mean you need to make sure the property is compliant with HMO licensing standards, which may mean making alterations to the building.

This may take the form of changing the size of rooms, as well as the number of bathrooms or the kitchen facilities that are available in a property.

The Ministry of Housing, Communities and Local Government has stated that it is a legal obligation for landlords to submit their application for mandatory HMO licensing by the deadline, which is 1st October 2018.

If this is something that needs to be completed within a short deadline, landlords and developers can look at raising investment or using sources like development or bridging finance in order to finance the necessary changes to the property.

Will there be other new HMO rules?

There has been some speculation that we will see the enforcement of other HMO changes, such as seeing an increase in the minimum room sizes. At this moment in time, there has not been any other changes made to HMO, however, that does not mean that they won't be implemented at a later. As it stands, the only main change relates to removing the number of stories from the HMO licensing definition.