Landlords who falsely assume obtaining a house of multiple occupation (HMO) licence means they have planning permission for the property’s conversion is an “almost daily” occurrence, says a specialist lending conveyancer.
When purchasing a residential property to convert into an HMO, landlords must obtain planning consent from the council if the property is in an Article 4 area or if the HMO will have more than six bedrooms.
If the property is being converted from a commercial premises to an HMO, landlords either need planning permission or consent to use permitted development rights (PDR).
But a misunderstanding of HMO regulations is leading to landlords reaching the conveyancing stage of the purchase without planning consent.
Daily occurrence
Layla Atha, partner at JMW Solicitors, said: “Landlords must be careful that the property they are purchasing can be converted into a HMO.
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“I see cases almost daily where landlords have assumed that obtaining a HMO licence and planning consent are one and the same, but they’re really not. Having the licence is not enough if the property lies within an Article 4 area.”
There are currently 118 Article 4 directions relating to HMOs in the UK, according to Kamma.
An Article 4 direction removes or restricts PDR from a particular area. In this instance, planning consent would be required to convert the property into an HMO. The local authority has control as to whether or not planning consent is granted.
“If the property is within a large HMO area, this may affect their decision,” added Atha.
Landlords tripped up by PDR
Andy Keehner, head of bridging and development finance at brokerage Finanze, said a misunderstanding of how PDR work also catches investors out.
Under PDR, office buildings can be converted into homes without planning permission, unless it is an Article 4 area. But not all conversions will meet the requirements of PDR and therefore consent to proceed without planning permission will not be granted.
“Landlords think they have a right to do it. And they do. But you must tick a lot of boxes. As long as you tick those boxes, then ideally the council cannot refuse and [the conversion] will be given consent,” said Keehner.
Keehner says how the rooms are structured and a lack of parking in the area can impact the council’s decision to allow a conversion to go ahead using PDR.
“People think it’s a foregone conclusion that you have a right to convert. But you still have to get consent, which can trip a lot of people up,” he added
Pre-Article 4 conversions
If Article 4 is evoked in an area after a conversion is done, the landlord is not affected and they do not have to get retrospective planning consent for the works.
A landlord buying a property that has already been converted into HMO, which has no planning permission because the conversion was carried out before an Article 4 direction was registered, can proceed if the seller can show the property has been continually used as an HMO.
This can be proved by showing HMO licences throughout the years alongside historical tenancy agreements dated before and after the Article 4 registration.
Atha said: “Good practice would be to advise the purchaser that it would be prudent to obtain a Certificate of Lawful Use in their own time and their own expense following completion. This would be beneficial if they came to sell the property and had lost the historical licences or tenancy agreements and were unable to show the ‘continued use’ as a HMO.”
Local authorities have also been aggressively enforcing and policing HMO licensing rules, leading to some landlords being handed hefty fines.
