Renting your property out for short term use could turn it into a House in Multiple Occupation (HMO), for which a local authority licence may be required.
The Deregulation Act 2015 has brought short-term lets in London in line with the rest of the country, by permitting short-term use up to 90 days a year. However, owners/ landlords and managing agents should be aware of certain provisions in the Housing Act 2004 whereby a building could be classified as an HMO.
There are two types of HMO:
- A section 254 HMO is a building or part of a building occupied as a main residence by three or more people that form two or more households. Properties let on a short term basis will be unlikely to fall within this definition as they will not be the main residence of the people staying;
- A section 257 HMO relates to a building which has been converted into, and consists of, self-contained flats. Buildings will be classed as Section 257 HMOs if the conversion work was not done in accordance with "appropriate building standards" (which usually means the 1991 Building Regulations or whichever later building regulations applied at the time the work was done and completed), and less than two-thirds of the self-contained flats are "owner-occupied"
This was clearly intended to protect tenants in badly converted buildings, but it has the effect of transforming a building converted into flats, without complying with the relevant Building Regulations, into an HMO. It is possible to rectify the position by seeking Building Regulation approval from the local authority.
A s257 HMO may require a licence from the local authority if they have stipulated that one is required (it is not mandatory for the local authority to license this type of HMO). If you manage, or control, an HMO which should be licensed, and for which no application has been made, you will be committing a criminal offence for which the local authority may prosecute.