There is a serious problem in the United Kingdom which is not being addressed by governments either current or past.
Housing is at an all-time high due to inward pressure from a burgeoning population and external market forces from overseas demand.
In short: the housing market is at a tipping point.
It is the intent of the author through this white paper to illustrate trends that he has seen over the last decade and by using current statistics and predictions from industry bodies; paint a picture of what the future may be for our housing stock.
It will be focused on a niche sector of the private rental sector commonly known as a HMO being the sector within which Matthew Moodyl the author has been operating multiple businesses over the last 14 years.
Furthermore the author will make several recommendations as to how we could solve these issues going forward.
The rise in the private rental sector of HMO’s has come in part from several sources including restrictions to bank funding, the removal of sale and rent back, restrictions upon house class, growing student population, increasing transient working class and a booming training market.
2027 The HMO Sector
What we now need to consider is what the future of this sector looks like 10 years from now and create appropriate but actionable solutions to move forward.
With the future of the private rental sector in sheer jeopardy with the folly of recent and past government actions, one has to wonder; what does the future of the HMO sector look like for us?
In this blog post, we will review the following areas:
Housing Act 2004
Let us begin by reviewing this Act.
Despite the Stature being 13 years old; the foundations of the current approach to Housing is the same as it was back in the early part of the millennia.
Successive governments have tampered with the Act by introducing additional legislature and amendments, but no one Housing Minister has been brave enough to introduce a brand new act to cater for the growth in the private rental sector.
We now found ourselves with yet another ‘White Paper‘ and pseudo-fake consultation on the future of the sector.
What we need to review and contemplate is the very Act itself; what it is designed to do and where it needs to end up.
Given the recent Government concessions that the private rental sector will continue to grow and that we may be moving more towards the continental model; we do need to concede that the current Housing Act is obsolete and needs replacing quickly with a more modern and forward looking approach to the challenges we face.
As to the very nature of this and its contents, this is something that author will consider within the various elements that make up the Housing industry and what could or should be considered moving forward.
Our housing market has changed dramatically but unless the government takes on the task of reviewing and revising this Housing Act; we will end up in a situation where more and more people become homeless, regulations become over-burdensome and the supply of housing will become choked.
Long the bone of many a home-owner and also a landlord, the very notion of council tax based on bandings from the 1990’s seems at first preposterous and at second, wildly out of tune with the times.
Needless be it for me to kick myself or my fellow landlords firmly in the foot but surely it would be better for the government to consider a legal-of-age ‘per person’ taxation rather than the rather quaint system currently enjoyed where it is entirely possible for a landlord to take a normal terrace property paying Band A or B council tax and transform this into a 5-7 bedroom property BUT still remain paying the same council tax.
Indeed it would almost be fairer if a person just paid a ‘housing or living’ tax as this is what it is no matter where they abode – and certainly for those transient tenants, this would actually raise MORE revenue for the government rather than less.
At the same time, we must also address the current ludicrous decision made by failing councils due to inept financial controls and out-of-control spending to tax a property investor who is refurbishing a home to improve the standard of rental stock or who is looking for a new tenant because the previous tenant left.
It seems unfair to me that a single person qualifies for a 25% reduction in council tax yet an empty property qualifies for no discount at all.
Yet again, landlords are being used as a scape-goat for an ever increasing and desperate government who have sold the family silver, gold and still wish to eat their cake whilst the cupboards are bare.
By moving to a per person ‘housing’ or ‘living’ tax, this would ensure that services are being paid for by the people using the services and move the responsibility from the property owner to the occupant to pay this tax.
The focus on licensing since 2004 has been nothing short of incredible.
Despite what the government would want you to believe; licensing has done little apart from tax the good landlords and allow the rogue landlords to carry on operating.
Whether the licensing scheme be mandatory or selective or additional, the rogue landlords will continue to proliferate and bring down the private rental sector because there are still too many of them, there are far too few council staff and most tellingly, the good landlords effectively continue to subsidise these bad landlords.
We are seeing councils implement ‘Selective‘ or ‘Additional‘ licensing schemes across the country in a desperate attempt to shore up bank balances and create a revenue stream despite the Government’s insistence that a licence fee should be a cost-neutral exercise. We have seen departments of 8-12 people spring up overnight from new licensing schemes created leading us to ask the question; if this is cost neutral why are so many new employees needed to run the scheme and secondly if there is a serious attempt to crack down on rogue landlords; why is there not a Rogue Landlord squad on each council – similar to a Fraud Squad or similar who investigate financial crimes.
We are also seeing no consistency in approach led by councils on the licensing of properties which leads to uncertainty in the market and certainly will inconvenience the institutional investors the government are so fond of.
It is necessary to have a licensing regime but at the same time, I believe that the scheme should be national in nature; centralised training should be provided at government level on ‘interpretation’ of the licensing scheme and that more help and assistance be given to the good landlords who are trying to comply in order to improve the housing stock.
So let us know what your opinion is regarding the future of HMOs!
Leave a comment below and share your thoughts with us!
A new minimum bedroom size and the extension of licensing to thousands more properties are to form part of a government crackdown on rogue landlords who cram tenants into overcrowded homes. As rents have risen in recent years some landlords have attempted to maximise profits by squeezing tenants into rabbit-hutch properties. Family homes have been divided into bedsits, with some landlords letting spaces that are just three metres squared, or advertising rooms that are shared with other tenants.
There have been rumblings since the original measures of the act came into force in 2007 that the HMO definition needed to be revised to make it all encompassing and not just the three storey, five people, two household rules for mandatory licensing. The strict definition of an HMO has been the point of conjecture amongst both enforcement agents and the landlord fraternity, and in some cases the legal definition has been challenged to the full extent of the law.
Even now, I have to correct, albeit as diplomatically as I can, some beliefs around the definition of an HMO and in some cases, these are people who should know the difference between an HMO and a property that needs a mandatory license. Too often HMO is a term used to describe ‘a licensable property’ and the confusion to a certain extent can be firmly laid at the door of the councils of England and Wales. In some cases I have dealt with on behalf of landlords in the East Midlands, I have needed to re-educate Council Officials on the difference between an HMO requiring a mandatory license, and a property that is an HMO but only requires planning permission to comply.
On top of that, bedroom sizes, have become a sticking point. Again in some cases, it could be argued that the ‘size’ of a bedroom has been used to restrict the occupancy of a property under a license as a way of the council controlling the proliferation of multi-let properties under their jurisdiction. A guideline or directive from central Government does not have to be followed by a local council as it is not a legal requirement,. Hence councils have been allowed to implement their own guidelines on room size. Legislating will remove this ambiguity and create a level playing field for all property owners.
I do, however, have one niggling and recurring thought to all of this; Will additional or refining existing legislation really curb the appetite of the ‘Rogue’ landlord? or, as is the case to date, will it just push up the costs associated with renting a property. whether that be landlord or tenant costs?
Does the Private Rented Sector (PRS) need any more regulation?
What are your thoughts? Have you seen the impact, good or bad, of the current legislative regime on your housing stock?
Yes, more and more migrant workers are coming into the UK – and unfortunately, many of them take low paid jobs which mean that a lot of them have to live in HMO’s (houses of multiple occupation).
Now whilst this is fine when they are living in a licenced and regulated HMO, what happens when they live in an unlicenced potentially overcrowded HMO?
Two things spring to my mind – potential issues with language barrier/culture together with lack of understanding of their RIGHTS and thus potentially taking a tenancy up in an unsafe house.
This has particular issues for health and fire safety in HMO’s. A recent article I read went into detail on the typical issues faced and what the local councils and fire services are doing to try and combat it.
So what can we as HMO landlords do about this?
Firstly, we should educate any of our migrant worker tenants as to the correct workings of any fire safety systems
Secondly, we should provide guidance or access to native speakers/written materials so that they can understand the issues in more detail.
Thirdly, we should provide excellence in accomodation which by its very nature should alleviate many of the issues that migrant workers face in finding accomodation in the UK.
If you've been struggling to find a reliable letting agent who can let our your property for you, then help may be at hand.
My main portfolio company, Stanford Knights Letting has been managing properties for years and due to recent staff hires, we are now expanding our services further in:
I asked our Portfolio Director to put together a few words on why you should consider us for your letting needs and you can read what she has to say below.
If you are interested in our management services, then please contact me for a quick no obligation quote on what we can do for you.
Why not let us manage your property and give yourself a break!
Do you find your rental properties time consuming to manage?
Do you find dealing with tenant issues a large weight on your shoulders?
Won’t it be great just to be paid from your property with none of the hassle?
Well help is at hand, we can do all this for you!
Stanford Knights Letting has years of experience renting property and is an expert in the HMO field and have a lot of experience with single lets.
We will offer a service second to none for you and your tenants.
We offer a full property management or lead generation service.
The full property management service covers everything from dressing rooms ready for new tenants to taking action when there are rent arrears or other discrepancies.
Why not hand all the hassle over to us and just take the profit?
Alternatively why not use our lead generation service.
Our skilled and very experienced team will advertise you property and daily search our numerous advertisers for leads matching your specifications.
Our managers will qualify these leads to ensure they match the specification provided by you.
You cannot go wrong with this amazing offer; why not contact us today?
Matthew and his team from Stanford Knights Letting has been managing my properties for a couple of years now. Before Matthew came on board my property business had become a second job, and I had little time for my family or myself. Now I have more time at my disposal as Matthew and his team provide a brilliant service, always ready to go the extra mile in taking care of my business. My rental voids have gone down, and the rent is paid on time ! I would highly recommend Stanford Knights Letting if you are looking for a team that will look after your property and your tenants giving you peace of mind and freedom !
I was pleasantly surprised recently to come across a great article written by a guy who’s actually lived in a HMO, perhaps still does and was extolling the virtues of responsible HMO development and planning.
Normally most of the mail I get about HMO’s is negative and so I thought that I would share this piece with you and let the Badger make his point.
Coming out next week, the next vLOG – can’t wait to share with you all the news.
If you haven’t signed up for my 10-part ecourse, then go across to the top right and sign up right now. Its a no-nonsense 10-part course to get you started with building your own HMO business – and I get loads of positive comments about it.
Disturbing reports today of a council in Scotland housing the homeless in “illegal” HMO’s.
Well, actually hang on a minute. They aren’t illegal – they are just NOT licenced yet…
So, what happens to your HMO once you’ve put in for your licence?
Well according to UK HMO regulations (which may differ from Scottish law), as long as you are following the guidelines set down by the licencing authority and they haven’t condemned you (which can happen!), then you are fine to carry on operating.
So, whilst its a good story for the press; in reality, what choice does a council have in terms of meeting their obligations to house homeless people.
Read the shocking HMO story for more details but just ensure that you have your licence in – and I think that the onus is then on the council to process it. I’ve been waiting nearly 2 years for one council to process my application 🙂