Landlords in the house sharing market need to make doubly sure they are following the right rules because of confusing planning laws.
Small houses in multiple occupation or small HMOs for three to five unrelated tenants require planning permission in some local council areas – but not in others.
Typical rental properties caught in the planning trap are family homes converted to student lets or bedsits for professional singles.
The tax rules are simple – HMOs are treated the same as any other property in a UK property business [Opens in new window].
Planning rules can vary between towns and even from street-to-street.
An HMO owner must apply for planning permission before letting a small HMO if the local council has taken on extra powers to control development under an article 4 direction [Opens in new window]
Councils without article 4 directions may have selective or additional licensing rules under the Housing Act that requires HMO property registration – although few councils have taken on these powers.
Some councils have complicated formulas for deciding whether permission can be granted – in Oxford, planning will be rejected if more than one in five properties in any 100 yard stretch of road are already HMOs.
Many councils have a blanket article 4 rule for HMOs covering the whole area – like Southampton – while others only apply to certain wards or postcodes.
An article 4 direction is also likely to lead to an HMO licence application and rigorous checks of fire and safety precautions at the property before letting is allowed.
A small HMO licence lasts five years and costs an average £500 with an annual renewal fee of around £175.
Small HMOs that are already trading prior to a council taking on article 4 powers do not need planning permission, but are likely to need a licence.
Landlords need to watch out for a planning pitfall – if the property is already let as a small HMO, but the tenants leave and the home is rented to a single tenant or family, planning permission will be needed if it’s switched back to a small HMO in an area covered by an article 4 direction.
Landlords should always check whether an article 4 direction or other restriction is in place before agreeing a price on a property and definitely before signing and exchanging contracts.
Click here for a list of councils imposing article 4 directions on HMOs [Opens in new window]
