Regulation

A Drop In The Ocean

David Rutland
Written by David Rutland

News that HMO licensing will net £79 million is making headlines, but most HMO landlords will barely notice it.

When it comes to getting a great return on your investment, there are few better options available than Houses of Multiple Occupation.

Rental incomes can be three (or more) times higher than renting out a property as a single unit, and because you’re not letting to a single family, you’re unlikely to ever have a void period. It’s even better than splitting a property into flats, as there’s no need to provide separate, self contained kitchens, toilets, or bathrooms. It’s a no brainer, and landlords have been dividing large properties this way since, well, forever.

But regulation is spreading. Overhead costs are growing, and research commissioned by Curry’s PC World (although God only knows why they’re interested) shows that the government will rake in a huge £79 million from 77,000 landlords when new licensing rules come into effect this month.

Except they won’t. It’s easy to confuse The Government with local authorities – the bodies to which you already pay council tax. There are are roughly 400 of them in England and Wales, meaning they’ll collect approximately £200,000 each. It’s not huge. It’s a drop in the ocean of their annual budgets. It won’t even cover emptying the bins in a medium sized town centre.

It’s unlikely to even cover the cost of the scheme itself.

According to the (central) Government’s guidelines, the license ensures that both the landlord and the agent are suitable people. That the property isn’t stuffed to the rafters with people. That you have valid gas and other safety certificates, smoke alarms, and that you upgrade the facilities if they tell you to.

Surely this is a good thing. Landlords have an awful reputation. And some of it is deserved, thanks to a sizeable minority of the industry who regard their properties as free ATMs and nothing more.

Licensing allows local authorities to shut those rogue landlords down – thereby improving not only tenants’ living conditions, but the reputation of the profession as a whole.

Granted, the scheme relies mostly on self reporting, but rogue landlords can’t fake a gas certificate without severe criminal consequences. And few landlords would want to risk overstuffing their properties if a snap inspection means that they can be refused a license in future. It will bring a profession which most people trust about as much as politicians in an election year, back into the light as a respectable calling.

Everyone has tales of bad landlords. HMO licensing is on course to make that a thing of the past.

And, of course, the license only needs to be paid for every five years. The actual cost is set by local authorities, but most seem to be settling on around the £500 mark. That’s £100 per year for a property which is probably bringing in around £30,000 for the same period.

Big numbers are scary. £79 million is terrifying. But the effect it will have on small landlords is negligible.

There’s literally nothing to complain about here.

 

 

About the author

David Rutland

David Rutland

With a decades long career as a professional writer, David Rutland has worked as a journalist on local, national, and international newspapers, before embarking as a career as a freelancer.

He has ghostwritten several books, as well as producing travel guides, manuals, humour articles, and more internet blogs than you can shake a stick at.

David maintains offices in East London, but spends most of his time in a shed near Liverpool, where he writes, as well as developing apps for Android.

What people say about him:

Arrogant and abrasive - Alan Davis, Editor in Chief North Wales News Group

An absolute liability - Matt Simms, Editor, Vale advertiser

Are you sure this won't get us all arrested? - Mohana Prabhakar, Editor in Chief, Apex News Group

Go and have a shave. You're all prickly - Mrs Donna Rutland.

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