HMO Legislation & Legal Obligations Checklist

HMO Legislation & Legal Obligations Checklist

Photo by Dragon Property

As a HMO landlord, keeping up with the latest hmo legislation and your legal obligations are areas you have to get right! There are hundreds of different laws in effect across the private rented sector as a whole, and there are even some additional rules that impact HMOs…

For starters, you need to keep and renew lots of different certificates, and there are specific rules and responsibilities for each of these. On top of that, there have been numerous legislative changes in recent years and even more are on the way! 

The process of ticking boxes and gathering documents isn’t fun or easy when you’re trying to build a portfolio, especially if you’re the one pulling everything together, and you likely have SO many other things to do and achieve as well. But we all need to accept that we have to do this and get on with it…

In some cases, penalties for failing to comply with certain legislation could lead to fines, tenant compensation, rent repayment, criminal prosecution or even being banned from letting properties! 

Above all, you need to ensure your properties are safe and liveable. So, here’s a helpful guide of some of the main legal obligations you have as a HMO landlord, including specific HMO legislation and certificates that you must have in place for all of your properties!

The Certificates

There are certain obligations you need to meet before renting out your properties and things to keep on top of throughout your tenancies. There’s a lot to remember, but here are some of the basic certificates you’ll need to have in place for your HMOs!

Electrical Installation and Condition Report

Through Electrical Installation and Condition Reports (EICR), every part of an electrical installation inside your properties needs to be checked against the standards. This must be done by a qualified electrician and has to be renewed every five years. 

When undertaking their checks and tests, the electrician will be looking for things like damage and deterioration to equipment and materials, out of date equipment and adequacy of earthing. If there’s an issue, it’ll be coded based on the risk level. A copy of the electrical safety report will then need to be provided to your tenants within 28 days of the inspection.

If the report shows that further investigative or remedial work is necessary, you must get this work completed within 28 days or less if specified within the report. Written confirmation of completion of the work must also be supplied from the electrician and given to your tenants and the local authority within 28 days of the work being completed.

Gas Safety Certificate

Poorly serviced and badly fitted gas appliances can cause serious issues like gas leaks, explosions, fires and carbon monoxide poisoning! Because of this, landlords need to get a gas safety check done annually on all gas appliances and flues in their properties. This should be done by a professional engineer.

Landlords are also required to provide a record of this to their tenants within 28 days of the check being undertaken, and you’ll need to provide this to new tenants at the start of their tenancy. Additionally, you need to have a carbon monoxide detector in place in every room where this is a fixed combustion appliance (excluding gas cookers).

Energy Performance Certificate

When letting properties, landlords are required to have an up-to-date Energy Performance Certificate (EPC). If your EPC has expired or if you’ve changed the building around, you’ll need to get a new one. These certificates are valid for 10 years, and landlords must provide the certificate to their tenants.

All privately rented properties also must meet a minimum energy efficiency standard. Currently, rental properties in England and Wales must have at least an E rating. The government is proposing to raise the minimum standard of privately rented properties to C by 2030, so this is something you need to keep in mind for the coming years!

Fire Detection System Certificate & Emergency Lighting Certificate

Whether you need to get these certificates will vary depending on your property and licensing authority. As a general rule, fire safety maintenance should be undertaken every six months and emergency lighting serviced annually. You’ll also need to carry out routine tests yourself when it comes to fire detection and emergency lighting.

Fire Risk Assessment

Landlords must have a fire risk assessment written down for their HMOs. This should be completed by a competent person and reviewed periodically and will identify any fire safety issues that could be causing you to breach the Regulatory Reform (Fire Safety) Order.

Legionella Risk Assessment

There is often a lot of confusion around Legionella Risk Assessments, but landlords need to assess and control the risk of exposure to Legionella. So, you will need to do a risk assessment for this or employ a specialist to do this.

Portable Appliance Tests

Doing Portable Appliance Tests (PAT) will vary as a requirement depending on your local authority. It usually involves a visual inspection, but it can also include the use of a specialist device to test polarity and insulation of a device. It’s recommended to outsource this testing to a qualified electrician. 

HMO license

Dealing with HMO licensing can be difficult and confusing. One of the main reasons for this is because it’s enforced differently across the country and there are grey areas throughout the guidance! On top of that, even though the national minimum standards are set centrally by the government, local authorities can insist on their own individual standards. 

First you need to find out if your property needs a license as not all HMOs will require one. If your HMO has between three and four tenants, your HMO is considered a small HMO, and you may not need a licence. However, certain standards will still need to be met. 

All large HMOs, which have five or more tenants, need a HMO licence from the local council. And there are additional and selective licensing schemes in place across the country that would mean even ‘small HMOs’ would need a license.

On top of that, there are a number of standards you have to adhere to when owning a HMO. This includes fire, amenity, space and general standards. If you have any questions about this, reach out to your local housing authority.

Legislation

There are a range of other important legislation to be aware of. This includes the Housing Act 2004, Homes (Fitness for Human Habitation) Act 2018 and Housing health and safety rating systems (HHSRS), and there are other key legislation to consider as well.

Article 4 Directions

Some categories of property development can be carried out without the need for planning permission through permitted development, but Local Planning Authorities (LPAs) can remove these rights through Article 4 directions.

When an Article 4 direction is put in place, specific types of permitted development rights will be removed, and this work will then require planning permission. This is done in areas across the country to remove the permitted development for certain developments, such as the right to convert a house into a HMO.

The LPA will then consider applications and decide whether or not to grant permission. Gaining planning permission in an Article 4 direction can be possible, but you’ll need to construct a really robust case for why the development should be allowed and demonstrate that it won’t detriment the area’s local character.

These sorts of applications can be very contentious, so it’s recommended to get the help of a planning consultant and architect. Article 4 directions will likely tighten even further moving forward, so there is something you need to be aware of before investing!

Right to Rent Checks

Before a new tenancy begins, landlords in England are required to check that tenants have the right to rent, ensuring they are legally eligible to live in the UK.

Deposits

There are specific rules for how landlords need to handle tenants’ deposits. For starters, they can’t amount to more than five weeks’ rent. Landlords in England and Wales are also required to place their tenants’ deposits in a government approved deposit protection scheme, which includes Deposit Protection, My Deposits and Tenancy Deposit Scheme.

This must be done within 30 days of receiving the payment, and you also must give your tenants prescribed information about how the deposit is protected and what will happen at the end of the tenancy. 

Landlords are also required to return the deposit within 10 days of agreement of how much the tenant will get back. If there’s a dispute about this, the deposit will be protected in the scheme until it’s settled.

Tenancy Agreements

For any of your property investments, it’s important to have the right tenancy agreements in place. This will set out the legal terms and conditions of the tenancy and what you and your tenants’ rights and responsibilities are.

Paperwork & Document Checklist

There are a number of documents and paperwork you need to provide to your tenants. Because there’s a lot you need to make sure they have on hand, it may be helpful to provide a tenant welcome pack for all new tenants with the following documents and information enclosed:

  • Tenancy agreement
  • Essential contacts
  • Inventory
  • How to rent checklist
  • Gas safety certificate
  • Energy Performance Certificate
  • Electrical Installation and Condition Report
  • Deposit protection certificate
  • Utility information
  • Emergency procedures
  • Instructions for appliances or property manual
  • Advice for preventing mould and condensation
  • Information on fire safety and how to use smoke alarms & carbon monoxide detectors
  • Housekeeping information

Invest in Property Education

Understanding the relevant legislation and your legal obligations isn’t the most fun part of HMO investment, but you have to get these things in place! If you don’t, there can be huge consequences… 

So, if you’re not confident about this area of managing your HMOs and best practice, look at investing in property education to help you gain the right knowledge and confidence to manage your HMOs properly!

Across the industry, there are a range of services and products that can boost your knowledge. A good place to start is with taking advantage of free resources like our blog and The HMO Podcast. 

You can also look at paid-for services, such as our e-learning platform The HMO Roadmap where we provide lessons, resources and step-by-step plans specifically for HMO investors starting and scaling their portfolios.

Additionally, working with an experienced mentor in the industry can also be incredibly helpful as the right professional can provide expert guidance and support every step of your investment journey!

Keep Up with Upcoming Changes

Some major legislative reforms are set to impact landlords’ regulatory obligations across the private rented sector, so you need to stay on top of what’s happening with any changes that will affect you and your properties!

A big one on the way is the Renters Rights Bill, which is expected to be passed into law before MPs begin the summer recess on 22nd July, but there are still question marks around when exactly the laws would take effect.

Some of the key proposals within the Renters Rights Bill include:

  • Abolishing Section 21 evictions
  • Creating safeguards for rent increases
  • Introducing the Decent Homes Standard and Awaab’s Law
  • Abolishing fixed-term tenancies
  • Setting up of private renters’ ombudsman and portal

Additional regulatory changes could also be on the horizon, so you always need to stay-up-to-date with the latest regulations and changes to best practice! Be sure to put measures in place to help you keep on top of this moving forward.

Need Support?

There are numerous ways you can get the support you need when it comes to abiding by all of your legal obligations and HMO legislation. The current regulations and upcoming challenges will make it even more difficult to do everything by yourself!

However, there are still plenty of opportunities as long as you have the right support… There are professionals and services that can help you manage your HMO portfolio, such as an experienced managing agent, landlord law specialist or property management software.

Building a power team with the right professionals and services will help you remain compliant and can even allow you to boost your management services. You’ll also be better placed to adapt and deal with upcoming changes, allowing you to create a more future proofed HMO business!

At The HMO Roadmap, we have highly recommended partners to help support you at every stage of your HMO investment journey. Additionally, to gain access to all of the resources, training and advice you need to start, scale and systemise your HMO business, sign up for The HMO Roadmap, which includes a whole course on legislation and legal obligations!

And if you want access to useful documents, templates and spreadsheets to really level up your portfolio, such as our tenant welcome pack and tenancy agreements, sign up for our premium subscription today.

Lastly, if you have any questions about investing in HMOs or are looking for advice or encouragement as a HMO landlord, join us over in our free Facebook Group The HMO Community!

About the Author:

Andy Graham is the founder and the lead trainer at The HMO Roadmap! He is also the co-founder of The HMO Mastermind, writes as a regular columnist in different magazines about a variety of HMO topics and is the host of The HMO Podcast! Follow Andy on Instagram!