On 31 August 2011, new rules on the licensing of Houses in Multiple Occupation came into force under the Housing (Scotland) Act 2006. The new legislation is designed to simplify and clarify the process for a Landlord to apply for an HMO Licence for shared accommodation.

When do you need a licence?

An HMO Licence is required where a Landlord lets residential accommodation to three or more people belonging to two or more families as their main residence. For this purpose residential accommodation includes a house or flat, or part of residential premises where the occupiers share basic amenities (i.e. toilet, washing and cooking facilities).

A family includes a ‘couple’ (either married, in a civil partnership or living together as husband and wife), blood relations and otherwise unrelated relatives of the two members of the ‘couple’.

Penalties for failure to comply with HMO Legislation:

The sanctions for failure to comply with the HMO Legislation are now severe. The maximum penalty on conviction for letting an HMO without a Licence after 31 August 2011 will be a fine of £50,000. A convicted Landlord may also be disqualified from holding any HMO Licence for a period of up to 5 years.

The Local Authority may, if satisfied that there is no valid HMO Licence in respect of a property or a licence condition has been breached, order that no rent or other sums are to be payable under the tenancy.

It is therefore very important for a Landlord to ensure that he holds valid HMO Licences for any let properties.

The Application Process:

An Application is made by the Owner of the property or their Agent by completing the prescribed Application form and submitting to the Local Authority.

The Applicant must display a ‘Notice of HMO Application’ ‘on or near’ the Property for a period of 21 days from the date of application, informing the public of how to submit objections to the proposed HMO Licence.

The Local Authority may also conduct any Investigations into any aspect of the Application. The Applicant may respond to any matters raised and, if necessary, a Hearing will be called for the Applicant and objectors to make further representations.

Refusal of HMO Licence:

The Local Authority must refuse the application if either the Applicant, or the Applicant’s agent, is not a “fit and proper person” to permit persons to occupy any living accommodation as an HMO and, in doing so, will have regard to whether the Applicant has:

• Committed certain types of offence, including fraud or other acts of dishonesty, violence or drugs;
• Practiced unlawful discrimination;
• Contravened Housing Law or Landlord or Tenant Law;
• Carried out actions or failures to act in relation to anti-social behaviour affecting a house let by the Applicant.

Suitability of Living Accommodation:

To grant an HMO Licence, the Local Authority must be satisfied that the Living Accommodation is suitable to be let as an HMO or can be made so by including conditions in the HMO. In considering the suitability of the Accommodation, the Local Authority will have regard to: 

• its location;
• its condition;
• any amenities it contains;
• the type and number of persons likely to occupy it;
• the safety and security of any persons likely to occupy it; and
• the possibility of undue public nuisance.

Technical standards for HMOs are contained in the Statutory Guidance for Local Authorities (http://www.scotland.gov.uk/Resource/Doc/49296/0120384.pdf)

Grant of Licence:

A Licence may be granted or granted subject to Conditions including work required to meet the technical standard and setting out a timescale for that work.

The Local Authority may also refuse to grant an HMO Licence if it would lead to an over provision of HMO licenced properties in the area or use of the property as an HMO would be a breach of Planning Control, regardless of the technical standards.
An Applicant has the right to appeal against the refusal to grant an HMO Licence to the Sheriff within 28 days of the decision.

HMO Licences will be granted for a period of 3 years, although, Local Authorities will have the power to specify a shorter period to a minimum of 6 months.

The HMO Register:

The Local Authority must maintain a register of all HMO Licences including details of the property, applicant and agent and must note the decision on the Application. The Local Authority must make its HMO register available for public inspection.

Transitional Provisions and Existing HMO Licences:

The new rules will only apply to applications made after 31 August 2011. Any existing HMO Licences will remain valid, and any applications for HMO licences pending as at 31 August 2011 will continue to be dealt with under the existing law.

Whilst the new legislation is designed to simplify the existing legislation, the devil is in the detail. It is streamlined, but the application process remains complex. The sanctions for letting an unlicenced HMO are now severe and so it is essential to ensure your HMOs are properly licenced.

Further information

For further information or if you have any concerns about how the new legislation affects you then please contact Edward Gratwick or your usual contact at Anderson Strathern LLP for further advice.

This bulletin is for general information only and does not constitute legal, investment or other professional advice. Please contact us should you require advice on any particular legal issue. Anderson Strathern LLP accepts no responsibility for any loss that may arise if reliance is placed on any information or opinions expressed in this bulletin.