Planning for HMOs

• A HMO is a house or flat rented by three or more sharers, rather than by a single family.
• As it became more difficult to earn decent returns from BTL, landlords expanded into HMOs. Rapid growth in HMOs has attracted greater scrutiny and regulation.
• HMO licensing was extended to more properties and regulations were tightened. HMO landlords have become experts on HMO licensing and know exactly how to make sure their HMOs comply. Now they need to become experts on planning.
• The current definition of a HMO comes from the 2004 Housing Act. It says that a HMO is a dwelling occupied by three or more people in two or more households.
• In planning there are two types of HMOs. A smaller HMO (Use Class C4) is occupied by three to six people; a larger HMO (sui generis) is occupied by seven or more people.

When Does a HMO Need Planning Permission?

• Larger HMOs always need planning permission.
• Smaller HMOs only need planning permission if the council has introduced an Article 4 direction (or if you are in Wales). Otherwise, they are PD.

What Is an Article 4 Direction?

• An Article 4 direction is introduced by a council to remove PD rights for certain types of development. It can apply to part of an area, or to the whole district.
• Article 4 directions removing PD rights for smaller HMOs are spreading around the country and catching lots of landlords unawares.
• Monitor the situation in your local council area, ensure your properties are let as HMOs when an Article 4 comes in and apply for certificates of lawfulness for your HMOs so that they are protected from enforcement action.

How Do I Apply for Planning Permission?

• If you need planning permission, you should familiarise yourself with the relevant local planning policies. Contact the duty planning officer or read the officers’ reports for similar HMO applications.
• You should never apply for planning permission without having a good idea in advance about how it will be assessed and what the likely outcome is. Make a robust proposal and take care to choose a good architect/agent.
• If your council has strong policies ruling out HMOs in principle, you are unlikely to get permission. If the council has specific criteria that it applies, make sure it does so correctly. Submit a HMO Management Plan to show the council that your HMO will be well managed. Make sure your HMO has large, bright rooms and communal areas.

What Do I Do if My Planning Application Is Refused?

• If permission is refused, read the officer’s report carefully to work out why it was refused and whether you should revise and resubmit, or appeal. A refusal is not the end of the road and the appeal success rate for HMOs is around 40%. Employ the services of a good planning consultant with HMO experience.

What Is a Certificate of Lawfulness?

• A Certificate of Lawfulness confirms that a development is lawful – apply for one to show that your HMO was created before an Article 4 direction came into effect or because it has been in continuous use for at least 10 years (the 10-year rule).
• Even if you know your HMO to be lawful, it is a good idea to get a certificate to confirm that fact. It is common for councils to demand one before issuing a new HMO licence or for lenders to request one when you are remortgaging. Obtain your certificate at a time of your choosing, not theirs.
• To apply for a Certificate of Lawfulness, you need strong, persuasive, consistent evidence. It must cover the whole time period, be precise and relate specifically to your HMO; various pieces of evidence should corroborate each other. Do not underestimate the volume and quality of evidence required, and use an experienced planning consultant.

Planning Enforcement

• It is easy to fall foul of the council’s planning enforcement team. Renting a flat to three sharers in an Article 4 area, without first obtaining planning permission, is a breach of planning control. Increasing the number of tenants in your smaller HMO from six to seven means you have changed the use of the property to a larger HMO, and planning permission is required.
• In the past, councils did not really pursue HMOs that did not have planning permission. Now they are more proactive. Enforcement investigations are launched following neighbour complaints or when councils work through to their HMO licensing records to see which properties do not have planning permission.
• Apply for retrospective planning permission if your research suggests you have a good chance of success. Apply for a Certificate of Lawfulness if your HMO has been in continuous use for more than 10 years or it is a smaller HMO and it predates an Article 4 direction.
• Enforcement officers are not the enemy – work with them to try and find an acceptable solution.
• Never ignore an Enforcement Notice. Take professional advice and (usually) appeal.

What Should I Do Now If I Already Own Some HMOs?

• If you have HMOs that you believe to be lawful because they have been running for more than 10 years or were created before the arrival of an Article 4 direction (and you don’t have planning permission for them), apply for certificates of lawfulness.
• If you have HMOs that need planning permission and are not lawful, you should research whether it is likely that planning permission will be granted and, if so, apply.
• If it is not likely that permission would be granted, you can keep running your HMO until and unless the council investigates. After 10 years of continuous use, and in the absence of enforcement action, your HMO will become lawful.

What should I do if I want to buy (or create) a HMO?

• If you are buying or creating a smaller HMO (no more than six people) and you are not in an Article 4 area (and not in Wales), then you do not need planning permission. If the council later decides to introduce an Article 4 direction, ensure you have evidence that your HMO predates the direction and get a Certificate of Lawfulness to confirm that fact (it is much harder to provide persuasive evidence as time passes).
• If you are buying or creating a larger HMO (more than six people), you need planning permission. Check if it is likely to be granted. Consider buying the HMO subject to planning permission. If the HMO has already been in use for 10 years, apply for a Certificate of Lawfulness.

Miscellaneous Pieces of Advice

• Always remember that planning and licensing are very different, and having a HMO license does not mean you do not need planning permission. The fact a HMO has been given a HMO license by the council is almost entirely irrelevant from a planning point of view.
• The fact a HMO has been running for years without problems does not mean that it does not need planning permission and you won’t run into enforcement problems in the future.
• Don’t take HMO planning advice from people who are not experts. Estate agents, for example, are not qualified to understand the complexities surrounding property and planning: if you see a HMO advertised for sale on Rightmove, do not assume it is a lawful HMO.
• Remember that increasing the size of an existing HMO is a potential minefield. Once a HMO has more than six occupiers, it graduates from a smaller to a larger HMO. This is a material change of use for which planning permission is required and for which planning permission is increasingly difficult to obtain.
• Be especially careful when buying at auction. Every year I help clients who have bought a property blind and then discovered that it is subject to an Enforcement Notice requiring them to demolish part of the building or discontinue its current use. A common tactic of panicked property owners when faced with expensive enforcement action is to offload the property at auction, hoping to catch an inexperienced investor who hasn’t read the legal pack.
• It is sometimes easier to convert a HMO from some other use – offices, pubs, retail, hotels etc. This is an especially useful way to go if your council has strong policies protecting traditional family houses from conversion. Check that there are no policies protecting the original use (the office, pub etc.) and consider the usual planning issues set out in chapter 3 – parking, noise and disturbance, refuse and recycling, quality of accommodation etc. And take professional advice!
• The theme of this book is that the planning system is taking a much more aggressive approach to HMOs and the terrain is constantly shifting. It is important to keep up to date with what is happening in your area and in the HMO sector in general. Join a HMO members club (I recommend thehmoroadmap.co.uk) and follow me on social media or sign up for my newsletter to receive regular updates.