Landlords may be unaware of a new trap created for us in the Housing Act 2004, that of unknowingly becoming a HMO landlord through the tenants deliberate actions. Once a property is let the landlord has very little control over the tenant. Should the tenant(s) change their relationship with the person they live with or bring in lodgers, even if the tenancy agreement prohibits sub letting, the property will still become an HMO. The legislation is quite clear on this. It states a property occupied by three or more unrelated persons is a HMO. It does not say that the landlord must have known this or let the property as such. If the property is three or more storey and has five or more occupiers in two or more households i.e. they are unrelated and not all living as one family and they share facilities, then it falls under mandatory licensing. For example an unmarried couple with three children move in to a house as a family. The couple then split up and start to live separate lives but still share a kitchen or bathroom, then the property would become an HMO and if three storey licensable.
In a Local Authority area which has introduced additional licensing it may only need to be an HMO it does not have to be three or more storeys. Failure to licence is a criminal offence punishable by a fine up to £20k. This is what the lawyers call an absolute offence. There is no need to prove knowledge, intent or carelessness on the part of the landlord.
The way the legislation is drafted makes it very difficult to determinate when a property is licensable. It is not only the number of occupiers but also if there is more than one ‘household’ which is relevant in deciding whether a property is licensable. ‘A household’ is to define it simply, a family. It is the relationship of the occupiers to each other that can be important. To give an example: twelve people live in a property, providing they were all related or having a ‘relationship’ with one of the related occupiers, then the property does not have to be licensed. If the daughter in the above example has a boyfriend to live with her and so making thirteen occupiers a licence is still not required. But if a lodger moved in, the property would have to be licensed. If the daughter ended the relationship with the boyfriend but he continued to occupy the property then the property would have to be licensed. In other words the legislation can easily be circumvented or invoked by the occupiers saying they are having a relationship with each other or not. How could Local Authority disprove a relationship and it is up to them to prove the case not the landlord to disprove I do not know.
I am not trying to scaremonger and emphasise that, I do not believe even the most anti landlord Local Authority would prosecute where the tenant has wilfully created a licensing situation. But the tenant would still not be liable to pay the rent and Housing Benefit will no doubt refuse to pay assuming the tenant was claiming Housing Benefit. However, all the Local Authorities would have a duty in law to insist you become licensed or evict. Herein comes the rub. You cannot evict a tenant using the section 21 procedure (2 months notice after 6 months occupancy or the fixed term of the agreement whichever is longer) while property which should have been licensed is unlicensed. It does not matter that the property is being illegally occupied; it is still an unlicensed property.
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