Appendix 5 - Fees and charges
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.
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
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 any penalty schedule.
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.
No reductions or discounts are available on the fees payable to the council, for example, for multiple applications or previous licences obtained. 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.