Could the new HMO rules backfire on the government?

Buy-to-let landlords must adhere to the rules, though they may miss their target

Buy-to-let landlords who own an HMO (house in multiple occupation) must be ready for new legislation coming into force in October. It’s designed to ensure that no tenants live in cramped conditions. We believe it could result in worsening the housing crisis and tenant finances. In this article, we’ll explain what the new legislation is, and how it could backfire on a government keen to target buy-to-let landlords.

Let me see your bedrooms…

From October, councils will have new powers to set minimum bedroom sizes for HMOs and dictate how many people can live in them. They are designed to stop rogue landlords renting out cramped spaces.

The new legislation states that:

  • A bedroom used for sleeping by a single person over 10 years of age must be a minimum of 6.51 square metres
  • A bedroom slept in by two people over 10 years of age must be a minimum of 10.22 square metres
  • Bedrooms of children under 10 years of age must be no smaller than 4.64 square metres

Why is the government doing this?

The government is keen to be seen as on the side of tenants, by battling against ‘evil’ landlords. The private rented sector is growing rapidly, and the proportion of the population living in rented accommodation is growing. It’s a vote winner – or so they think. When introducing the legislation in October 2015, the then housing minister Brandon Lewis said:

It is simply unacceptable that people are living in cramped, unsafe accommodation provided by landlords who are more interested in a quick profit than the safety or welfare of their tenants.

The actions of these rogue landlords are helping fuel illegal working, benefit fraud, and illegal immigration by creating a shadow housing market that carries dangers to people’s health as well as communities.

Amazing! New legislation that tackles rogue landlords, benefit fraudsters, illegal workers, and immigration simultaneously! Clearly a massive vote winner… or are we being cynical?

What if you let smaller rooms?

If you break the rules, you could be fined up to £30,000. That’s a whopping incentive for councils to bring in the new rules and ensure that landlords are observing them.

Will these rules work?

In one capacity, the new legislation could work very well. Councils could open a new and very lucrative revenue stream. But will they achieve the aims of:

  • Ensuring landlords don’t let squalid and cramped properties?
  • Reducing illegal immigration and illegal workers?
  • Cutting down on benefit fraud?

We doubt they will. They could backfire on the government and worsen the housing crisis. Like so many of the government’s recent buy-to-let legislations, the measure doesn’t seem to have been thoroughly thought through. Here’s how it could pan out:

  • This could cause many rooms under the minimum size requirements to be withdrawn from the market. Councils have no discretionary powers but must observe the room sizes to the centimetre.
  • As tenants are displaced, there will be more competition for rooms that remain available. This is likely to push rental prices higher.
  • Now owning a property with vacant rooms that cannot be let, landlords will probably seek to increase rent for those remaining on their property.
  • The net result is fewer rooms on the market and higher rents.

In addition, rogue landlords who operate outside the law will continue to do so. They won’t be put off by this legislation, just as current legislation doesn’t deter them from letting out crowded, substandard rooms in substandard properties.

Another noble aim that falls wide of its target. When will this government learn?

To learn how we’re helping buy-to-let landlords stay ahead of the law changes and simultaneously maximise their profits, call one of the Ezytrac team today on+44  01522  503  717.

About the Author:

Brett Alegre-Wood
Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Ezytrac. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids. Brett holds both the Level 3 Property Mark Qualifications for Property Sales and Property Lettings and Management.