Updating post from Reddit.
I'm a landlord of a 3 bed, 3 bath apartment, in London
For years I've managed the property directly, with no issues despite living abroad (I'm retired so I have lots of time to quickly solve any issues that arise).
My council´s new HMO rules mean that 1) I need a licence now and 2) I cannot be the licence holder as I am not UK resident.
If I want to continue with 3 tenants I'll need to use a letting agent who is willing to put their name down as licence holder.
This, in my opinion, means the following:
- Significant new costs due to letting agency fee of ~20%
- Significant new costs due to licence regulations (e.g. 6 new fire doors are likely to be requested / annual payment to a professional to come in and confirm all electric appliances are working etc etc). I´m already complying with regulations for HMOs that don't require a license (smoke & CO alarms, EICR, gas safety certs etc), but the licence carries with it additional regulations.
- Potential additional costs from agent arranging unneeded works without getting my permission (but sending me the bill of course) because he can always say its what the council would want, and he has the liability so has be conservative in those decisions. And he'll be further incentivised to do this because of commissions from the contractor. Some assumptions made here obviously...whether you agree or not likely depends on your experience/opinion of letting agents....
- Additional hassle and cost from council communications (where they was none before for me), new demands and ad hoc changes to regulations etc.
- Potential complications in making changes in future. e.g. If agent turns out to be dishonest or adding unjustified costs and I change agent, then I'll need to pay for a new licence application just to change the name (~GBP1,000 more). Or it may be difficult to end a tenancy, since the agent in the role of licence holder may have the power to stop me from doing this, or the council may be more likely to prevent it. Also it may be more difficult to sell the property because of the two new parties involved (agent and council) and the HMO status that the property has may put off potential buyers. I feel like once I apply for the licence I will have crossed the Rubicon...
So, I'm going to ask my tenants to leave (I have a break clause so it's not a problem contractually. Obviously I don't feel great about it. Also, they´ve been great tenants.
Then I'll advertise it with reduced rent for max occupancy 2, or a family (though unlikely), make sure the contract clearly states max occupancy 2, and have documented inspections every 6 months for which I'll request comments from the inventory company of any signs for occupancy breach, and continue to manage it directly.
Reduced return of course, but on a net basis result will be similar to proceeding with the licence (but with none of the hassle).
I will eventually sell it anyway, but cannot do that for the next 3 years (for reasons I don't need to go into here).
The council has been useless in responding to any requests for information, and their documentation online doesn't cover everything adequately (e.g. the timeline is unclear). I contacted them in March with 5 simple questions and despite chasing them multiple times it was only last week that I received a response, which was to answer 1 of the 5 questions, specifically that I could not be the licence holder due to living abroad.
Thoughts on my plan?
Has anyone done something similar?
Thanks in advance for any helpful advice or comments.
What you say will work but just let it to a single family. Less hassle ,less bills
I would like to, but whenever I'd advertised it before I've only had interest from groups of 3 friends.
Been dealing with the same for years, 3 bed 3 bath in Camden. Recently divorced dads like it so they can have the kids over. Got a couple in there at the moment who work at home, that works too. Anytime you’re letting a property to fewer people than it can physically accommodate the risk of subletting is very high and once a tenancy has begun there isn’t much you can do if it happens. Which it has.
Thanks for this. I was thinking the same regarding the sublet risk..... The 6 monthly inspections and the contract wording specifying a maximum of 2 are mainly to cover me legally, in the event that there is a sublet or something similar and a council inspection finds 3 people and they try to fine me for running an unlicenced HMO.....I don't actually care that much if a 3rd person ends up in the 3rd bedroom, and I can't physically prevent it either, all I can really do is cover myself legally...
Not 100% sure about this, but can’t you create a UK registered company and list it as the “Managing agent” or even make it the license holder
The answer I got from my council, while poorly written and vague, suggested that an actual person has to be named as licence holder. Also, I believe they need serve as a point of contact for the council, turn up to inspections potentially, etc.
That’s strange, I do hmo applications for the managing agent I work for, and I’m able to put them as the license holder
You might be right - I could possibly do that and it would work, but it would be a gamble. The email I received (3 months late) was written by someone who seems to have limited powers of comprehension, and possibly limited intelligence. And that's at the core of the issue here - confirming any solution or workaround involves receiving articulate, sensible communication from the council in a reasonable timeframe. That seems to not be possible.
Yes, this sums up what HMO licensing does for 95% of the private sector. Regulate everything to death, add loads of costs etc.
Had a discussion with 3 tenants that wanted a high end 2bed (couple plus 1) and I had to admit that they would find it tricky due to licensing. Most 2bed owners will not voluntarily add licensing into the mix, adding fire doors in place of beautiful Victorian ones and turning the place into a hostel rather than a home.
Well done generation rent, you voted for this, landlords are evil and all that 👏
I don't think anyone voted for HMO fire door regulations.