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What are Property Licences?

A handy guide for estate agents and landlords from
C-HIPS, always here to help!

When selling buy-to-let properties, estate agents need to be aware of the obligations now placed on landlords who may require a property licence.

Estate agents should be guiding all landlords and prospective landlords as to whether the property in question requires a property licence.

The Government has introduced the property licence to improve the control of multi-tenanted properties and to ensure minimum standards are met to protect tenants from potentially exploitative landlords. Previously unregulated landlords will now have to comply with the legislation so as to avoid committing a criminal act.

The Housing Act introduced mandatory licensing, additional licensing and selective licensing for rented properties. The most important aspect of the Act is mandatory licensing. The legal framework imposed minimum obligations on landlords to comply with. The primary obligation is to apply for a property licence from their local authority if they wish to continue renting out their properties to tenants.

Only certain properties fall within the ambit of the Housing Act and the need for a property licence. These properties are called "Houses in Multiple Occupation" (HMOs).

Three criteria set out by the Housing Act must be met for the property to be classified as an HMO and thus require a property licence. Landlords have to ask themselves, in the first instance, the following questions:

1. Does my property have 3 or more storeys (including habitat attics and basements)?; and
2. Is my property occupied by 5 or more people?; and
3. Is my property occupied by people from two or more single households?

If the answer to all three questions is yes, the landlord has to make an application for a licence. Determining the correct answer to the questions may prove more complicated than it appears on paper and advice should be sought to determine whether an application should be made.

For the licence to be granted, the proposed licence holder and any manager of the property has to be a "fit and proper person" to hold the licence. The local authority has to be satisfied the licence holder is the most appropriate person to hold the licence and that proper management standards are applied at the property along with minimum standards of facilities and amenities being provided.
It is a criminal offence to rent an HMO without having the appropriate licence. The severest penalty is a fine of up to a maximum of £20,000. In addition to a fine, the local housing authority can also clawback any rent received by the landlord for the period where rent was obtained without a licence. The landlord may also be prohibited from renting properties indefinitely. Finally, if the landlord is operating without a licence, his right to serve a notice on the tenants for eviction for non-payment of rent is extinguished.

For further information about HMOs or our Conveyancing and Home Information Pack Service please contact us on freephone 0800 970 6630 or by email info@c-hips.co.uk