16. HMO licence application process and licence fees
As is currently the case for mandatory HMO licenses, all applications for HMO licences under the proposed scheme will need to be made through the council’s online application form which is accessed via the council’s website. All applications for a licence for newly created HMOs falling within the regime should be made prior to the property being occupied. Those properties that are already occupied and that will fall into the new additional licensing scheme should make their application as soon as possible after the scheme comes into operation, and certainly within three months of the scheme commencing. Penalties for late application or no application being made will be applicable.
A fully submitted and accepted HMO application, including all required documents and initial fee, will mean that the proposed licence holder is covered and considered as compliant in terms of the application only, whether an inspection has taken place or not. Where all the required documents and/or initial fee hasn’t been supplied, the application is considered as unsubmitted and would leave the property unlicensed and subject to potential enforcement action by the council.
Where an application has been accepted as valid the property will be inspected prior to a draft licence being issued. A 28-day consultation period then takes place before the full licence is issued. The draft licence will be provided to the proposed licence holder, and anyone included as being bound by the conditions of the licence, as detailed by the proposed licence holder’s application, as well as all “relevant persons” with an interest in the property, and in some circumstances, the local fire and rescue service. “Relevant persons” is defined in the Act and includes other people having an estate or interest in the property such as leaseholders, mortgage companies and management companies. This will provide the opportunity for representations to be made on the occupation limits and any proposed licensing conditions. There are only a small number of certain specified matters included within the Act that are considered as legitimate reasons not to issue a licence. If no representations are made in respect of legitimate reasons by relevant persons to the issue of the licence within this time period, the full licence is subsequently issued.
The full HMO licence will not be issued until all documentation has been received and all fees have been paid.
- Licence holders are required to renew the licence every five years. Any issues that are identified or are non-compliant with the council’s HMO standards or other housing legislation, is included within the licence as “conditions”. There are mandatory and council-specific general imposed conditions which apply to all licences issued. Further additional conditions which are property specific, and which are required to be suitably addressed within a specified timescale, may also be included within a licence.
Failure to comply with a HMO licence condition can result in formal action being taken against the licence holder. If matters arise at a HMO that were not included in the licence conditions or disrepair occurs during the lifetime of the licence, the matter is dealt with through a combination of licence conditions, HMO management regulations, and the Housing Health and Safety Rating System (HHSRS).
Section 87 of the Housing Act 2004 details the application process for obtaining a licence. It states that an application must be made in accordance with such requirements as specified by the local housing authority. In addition, it states that the authority may require the application to be accompanied by a fee of which the level is fixed by the authority.
Part 2 of the Housing Act specifies the requirements for HMO licensing and what is to be included in the process - granting and refusing of licences; tests as to suitability for occupation; tests for fitness, that is “fit and proper” persons; and satisfactory management arrangements.
In deciding what fees are to be made under this section of the Act, the authority must take into account:
- All costs incurred by the authority in carrying out its functions under this part of the legislation. This includes staffing costs, legal support and administration
- All costs incurred in carrying out its functions under Chapter 1 Part 4 of the Act which relates to Management Orders
Licence fees are reviewed and set annually in April at the start of the new financial year. The licence fee is payable in two parts.
- Part one – the initial application fee payable on submission of the application
- Part two – the licence issue fee is payable upon the completion of the consultation period and prior to the full HMO licence being granted
The current (2023-2024) mandatory HMO licence fees in Arun District are as follows:
| Part one - initial application fee | Amount payable |
|---|---|
| Five-person base fee | £1511 |
| plus £50 for each additional occupant | £50 per person |
| Part two - licence issue fee | Amount payable |
|---|---|
| Licence issue fee | £323 |
So, for example a six-person HMO total fee would be £1884. This would in most cases be for a five-year duration, that being the maximum period that a licence can be issued for, although in some circumstances a licence might be issued for a shorter period.
As with mandatory licenses, in cases where a person submits an application for a certain number of occupants but upon inspection by an officer it is found that the property cannot suitably accommodate the proposed number of persons, no refund on the amount paid for the additional persons is provided. It is the proposed licence holder’s responsibility to ensure that the number of proposed occupants is appropriate and adheres to any standards that are in place, both nationally and Arun-specific. The total £1834 five-person fee equates to a weekly amount of £7.05p for the license over a five-year period.
Although the proposed additional licensing scheme will cover those smaller HMO properties with three and four occupants, the amount of time that an application will take to initially process, inspect and to issue the licence will be similar to those with five persons and therefore the proposed fee is the same.
Additionally, those buildings that fall into the additional licensing scheme under the section 257 category will often involve additional investigation into the freehold-leasehold-tenancy-occupancy status and in some cases will require a coordinated approach, with communication needed with several different parties. This can result in additional time spent pre and post inspection, even if the inspection is slightly shorter. This is entirely dependent on what is found during the inspection and the level of existing compliance. Buildings where there are several joint owners or responsible persons may require multiple visits; whereas single-ownership buildings can often be quicker and easier to coordinate inspections and subsequent remedial/compliance works notifications and checks.
Based on costs incurred by the authority in carrying out its functions under this part of the legislation including officer, administration and associated costs, the proposed additional HMO licence fees are:
| Part one - initial application fee | Amount payable |
|---|---|
| Three-person or four-person house base fee | £1511 |
| Part two - licence issue fee | Amount payable |
|---|---|
| Licence issue fee | £323 |
| Part one - initial application fee | Amount payable |
|---|---|
| Three-person or four-person flat/apartment base fee | £1361 |
| Part two - licence issue fee | Amount payable |
|---|---|
| Licence issue fee | £323 |
| Part one - initial application fee | Amount payable |
|---|---|
| Section 257 HMO base fee per building up to two storeys – only external parts and common parts, such as hallways and landings, under the control of the freeholder | £1211 |
| Section 257 HMO base fee per building more than two storeys – only external parts and common parts, such as hallways and landings, under the control of the freeholder | £1260 |
| Part two - licence issue fee | Amount payable |
|---|---|
| Licence issue fee | £323 |
These fees would in general be for a five-year period, the maximum permitted by law for a HMO licence. However, as with mandatory HMO licences, in some circumstances a licence might be issued for a shorter period, including in regard to the penalty schedule (see section 17 of this document). In cases where a person submits an application for a certain number of occupants but upon inspection by an officer it is found that the property cannot suitably accommodate the proposed number of persons, no refund on the amount paid will be provided. It is the proposed licence holder’s responsibility to ensure that the number of proposed occupants is appropriate and adheres to any standards that are in place, both national and Arun-specific.
If the licence is issued for a shorter period than the full five-year term, no reduction in the fee payable is applicable and any new application made in respect of the same property after the shortened licence period will incur the full cost of a new licence/licence renewal.
HMO licences cannot be transferred to another person as per the Housing Act 2004 sections 68 and 69, therefore, upon sale or transfer of a property to another party, or in the event of the death of the licence holder, a new application would need to be submitted and a new fee payable, regardless of the amount of time still left on the initial licence. A Temporary Exemption Notice (TEN) may be applicable in the event of the death of the original licence holder, which would last for a period of three months.
No reductions or discounts are available on the fees payable to the council, for example, for multiple applications or previous licences obtained. This makes the fee structure much easier to understand and for landlords to complete an application and make their payment online. Also, where a licence is surrendered or revoked within the licence period no refund or compensation will be paid for the unused period of the licence. Variations to a licence will not incur an administration fee, apart from the additional person charge.
All HMO fees, for both mandatory and discretionary licences, are calculated to ensure they cover the costs of the licensing process; however, they are not designed to produce a profit from the scheme and should be cost-neutral. In reality however, it is acknowledged that the costs incurred in running the scheme will be higher than the income generated from it and that there will be budgetary considerations and decisions to be taken. Although there is potentially a financial impact for the council, this should not detract from the advantages and benefits in terms of improved housing and accommodation provision, better living conditions for tenants and improved housing community cohesion. These, it is hoped, will outweigh any monetary deficit that could occur.
The proposed additional HMO licensing scheme would run for an initial five-year period before a new consultation is undertaken and redesignation considered. If the designation was renewed at the end of the initial five-year term, any licences (whether issued at the commencement of the scheme or during the initial five-year period) that have remaining time on them that extends into a new five-year term would continue until the expiry date shown on the licence. If no further additional HMO licensing designation was implemented, any licences that still had remaining time on them would cease to have effect and would be terminated, as there would be no legal requirement to still have a licence. No refund on any fees paid would be applicable, regardless of when the licence was issued or its expiry date.
|
Other fees and charges |
Amount payable |
|---|---|
|
Pre-application advisory visit or advice (up to two hours then £68.75 per hour thereafter) |
£150 |
|
Online assistance in completing application per hour (or part thereof) |
£68.75 |
|
Fee for submitting application or documents by post |
£68.75 |
HMO licence fees and associated charges are reviewed on an annual basis.
Who should apply for the licence?
Shared houses and flats with three or four occupants
The most appropriate person to apply for a licence will be the “person having control” of the property. This is normally the person who receives the rent. This may be a freeholder (for example in respect of a building) or lessor who receives rent (in respect of an individual flat) from tenants or occupants of the property, whether directly or via an agent. In determining whether the proposed licence holder is the most appropriate party the council will consider whether they have:
- The authority to ensure compliance with the licence conditions
- The authority to let and terminate the tenancies and receive the rental income
- Are able to access all parts of the premises
Buildings converted into self-contained flats
The “person having control” and most appropriate licence holder in regard to section 257 HMOs is:
- Where no person has been granted a long lease of a flat within the HMO building, the person who receives the rent for the HMO, whether on their own account or as an agent or trustee of another person.
Therefore, in most instances, it is likely to be the freehold owner who will need to obtain the licence in respect of common parts and external parts of a building.
In regard to an HMO where a person has been granted a long lease of a flat (more than 21 years) within the HMO, in order of precedence, as below:
- Has acquired the right to manage the HMO under part 2 of the Commonhold and Leasehold Reform Act 2002
- Has been appointed by the Leasehold Valuation Tribunal under section 24 of the Landlord and Tenant Act 1987
- Is the person who is the lessee of the whole of the HMO under a lease between him and a head lessor or the freeholder, or is the freeholder of the HMO; or
- Has been appointed to manage the HMO by the freeholder, by a head lessor of the whole of the HMO, or by a person who has acquired the right to manage the HMO under Part 2 of the Commonhold and Leasehold Reform Act 2002
In basic terms, it will usually be the leasehold owner of the individual flat that will be responsible for obtaining the licence.
Freeholders seeking to recharge all, or some of the cost (or a proportion of the costs) of a licence for the common parts of a building to their leaseholders would be expected to go through the usual route of recovery of expenses via the (annual/bi-annual) maintenance and management invoice process. In scenarios where a freeholder must also obtain a licence for individual flats within the building, leaseholders would not be expected to have to pay the proportion relating to those specific flats; however, that would be a matter between freeholder and leaseholders to address.
Granting and refusing of licences
In order to hold an HMO licence, the council must be satisfied that the proposed licence holder is a fit and proper person. This means, they have not been convicted of housing offences or other offences defined in the Housing Act 2004 that would indicate they are unfit to manage a property and may place tenants at risk. The main reasons we would refuse to issue a licence are:
- The house is not suitable for the number of households, and it would not be possible to make it suitable by imposing conditions
- There are insufficient management arrangements in place
- There is a banning order in place
- The applicant/proposed licence holder is not considered the most suitable person to hold the licence
- The applicant/proposed licence holder is not considered to be “fit and proper”
Proposed licence holders will be required to confirm that they are a fit and proper person through a declaration when making an application. The council will also conduct checks to ensure that there is no history of previous enforcement action.
Regulations require publication of the name and the address of the licence holder and manager, if different. You cannot ask for the information to be withheld. Address means “the place the person is normally to be found” – that means, an individual’s normal residential address or for a business, the usual place of business.