The Department for Communities and Local Government launched a consultation on Houses in Multiple Occupation (“HMO”) called Houses in multiple occupation and residential property licensing reforms.

The consultation sets out proposals to increase the number of properties that will require a mandatory HMO licence and therefore bring more properties into the HMO licensing regime.  The following changes are proposed and are the subject of the consultation:

1. Regardless of the number of storeys, all properties with 5 or more people living as 2 or more households are licensable properties that will fall within the mandatory licensing regime
2. Extend mandatory licensing to flats above and below business premises
3. Set a minimum room size of 6.52sqm

Although this is just a consultation, it would appear the Government is keen to increase the number of properties that fall within the HMO licensing regime.  This could lead to more expense for landlords, and possibly higher rents for tenants, as landlords look to recover their expenditure by increasing the rent.

Simon Tennant

Partner

We are now 18 months away from the next phase of the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 which will see the implementation of the Minimum Energy Efficiency Standards (“MEES”).

Landlords should be preparing for this now if they have not already started to.

• From and including the 1st April 2018 a landlord cannot grant a new residential or commercial lease or extend or renew an existing lease if the property does not meet the MEES.

• From and including 1st April 2020 a landlord will not be permitted to continue to let residential properties that do not meet the MEES.

• Finally, by 1st April 2023 a landlord will not be permitted to continue to let commercial properties that do not meet MEES.

The lettings caught by the legislation include assured tenancies, regulated tenancies and commercial leases unless you can fall into one of the exemptions, but excludes properties sold on leases of more than 99 years and owner occupied properties.

The current MEES is band E on an EPC. Therefore initially any property with a band F or band G rating that is not exempt will be caught. However, it is expected for this to be reviewed in the future and the threshold increased.

Buyers of investment properties should be paying attention to the EPC rating to ensure any future lettings of the property are not prevented without additional expenditure of trying to make the property more energy efficient.

Sellers may come under pressure to reduce prices to factor in the cost for making the property MEES compliant.  Energy efficiency standards of certain properties are likely to have an impact on marketability, valuations and price negotiations.

Owners will need to consider whether their properties will need works undertaken to them to continue to be lettable in the future.

Failure to comply could lead to fines of between £2,000.00 to £150,000.00.

If you wish to discuss this article in more detail or you have any property related questions please contact Simon Tennant.

Simon Tennant

Partner

In the autumn 2015 statement the Government announced its intention to consult on the introduction of higher rates of Stamp Duty Land Tax (SDLT) to apply to the purchase of additional residential properties.

The intention was to introduce a new SDLT rate of 3% above the current SDLT rates for residential property.

It is proposed that the increased rates will not apply to owners who make “significant investments” in residential property. The consultation will amongst other points, consider whether the ownership of more than 15 residential properties is appropriate as a “significant investment” for these purposes.

The Law Society amongst other professional bodies have responded to the consultation in fairly robust fashion.

The proposed introduction of the legislation is now less than a month away but no draft legislation has been published.

More details are expected to be announced in the Budget on 16th  March. It is anticipated that draft legislation and the response to the consultation on these matters will be issued immediately after the Chancellor’s statement.

Given that we will not know what the legislation will say until 16 March there is some uncertainty, although it remains to be seen how much interest the Government pays to the consultation responses.

If a transaction could potentially be caught by the legislation, the only recommendation can be to get the transaction exchanged and completed before the changes are implemented.

Simon Tennant

Partner