I see more and more people get confused between HMO licensing and HMO planning and there is a huge difference especially when you are buying a house in an area that has an Article 4 Direction in place.

So here I explain the difference between the 2 and how important it is to understand both HMO licensing and HMO planning.

HMO Licensing

So licensing I guess is very similar to requiring Building Regulations when you build an extension for example. You may have needed planning permission to get the local authority’s agreement to build the extension, but even with planning permission in place, you still need the local authority’s permission/sign off when It comes to making sure the extension is safe, built correctly and energy efficient etc.

HMO licensing is very similar to this!

Licensing covers many areas, but some of them include fire safety – so ensuring you have the right number of smoke alarms and fire doors in place for example, waste management– making sure there are enough bins for tenants to dispose of waste properly etc.

A license typically lasts 5 years and if you purchase an HMO, then you will need to apply for your own license, even if the current owner still has some years left on theirs, as they are none transferrable!

HMO planning

As the title suggests, HMO planning is more concerned with having the right permissions in place to use a house as an HMO in the first place. Most of the time, converting a residential property (C3 use in planning terms) to an HMO (C4 use) is classed as ‘permitted development’ and so doesn’t usually require planning permission, however, you will still need an HMO license!

So you may be wondering why is knowing the distinction between licensing and planning important? Well it is extremely important if you are purchasing a property in an area that is under an Article 4 Direction.

As already mentioned, changing from a C3 residential property to a C4 HMO normally falls under permitted development and so doesn’t require planning permission. However, local authorities have the power to change permitted development rights by introducing what is called an Article 4 Direction, which takes away certain permitted development rights. A council will normally introduce an Article 4 in areas where they feel too many residential properties have been converted to an HMO meaning there is now a large concentration of HMO properties in a particular area, which means there is less residential properties available for families to use. Although not restricted to these areas, Article 4 Directions tend to be placed in large University cities due to the large number of students they attract, so for example Nottingham, Leeds, Liverpool etc. all have Article 4 Directions in place in these areas where there is a large number of HMO properties.

Now if you are buying a property that falls within an Article 4 area, it is extremely important to make sure the current owner has the permission to use it as a C4 HMO. The best way to know for sure that they have this permission, is if they have obtained from the council a ‘Certificate of Lawful use’. This is essentially the local council saying yes, this is legally an HMO.

However, current owner of HMO’s don’t have to apply for one, so the next best way to establish they have the required permission is to obtain historic tenancy agreements. The reason for this is, as long as the property was already used as an HMO prior to the introduction of the Article 4 Direction, then it can continue to be used as an HMO after the introduction as long as it is always used as an HMO from there. If at any point, it was used as a single let or the owner moved in to the property in question for example, then they lose the right to use it as an HMO.

Example:

Nottingham City council introduced an Article 4 Direction in April 2012, so as long as it was used as an HMO prior to this date, then it can remain an HMO.

So if I was buying a property in the Nottingham City area for example, I would ask for tenancy agreements from April 2011 (I would go back at least 1 year from the introduction of the Article 4 to be safe, but the further back the better!) through to present day to make sure that a) the property was used as an HMO prior to the introduction and b) has been continually used as an HMO during that time.

I’ve noticed that whenever I see an advert for an HMO for sale on Rightmove or Zoopla etc. the advert almost always makes reference to the property having an HMO license, but never about whether it has the relevant permissions to be used as an HMO, which is actually more important than having the license in place (as the license isn’t transferrable and would need a new one applying for anyway!).

This is where local estate agents are worth their weight in gold, as they tend to really understand the local market and the rules in place in their area and can advise you if the relevant permissions are in place on any HMO property they are selling. Whereas, I’ve found from my own experience, that national estate agents seem to not always understand the rules around Article 4 requirements, which is probably due to them not selling HMO’s all too often compared to residential or normal BTL properties for example.

The reason you need to make sure you are 100% confident a property has all of the relevant permissions to use as a C4 HMO is because it is very, very, very unlikely the council will give you planning permission to change from a C3 Dwelling house to a C4 use HMO if it isn’t already used as an HMO and has been since Article 4 was put in place, because quite frankly, they don’t want any more HMO’s in that area!

So in conclusion, HMO Licensing and HMO planning are totally separate issues, but both very important and it is especially important to make sure that if purchasing an HMO in an Article 4 area, the vendor provides you with as much proof as possible to prove they have permission to use the property as an HMO – if they can’t then walk away!