In our previous update on houses in multiple occupation (“HMO”) licensing in the student accommodation sector we reflected on proposed reforms contained in a consultation paper issued in October 2016. The Government has now published its response to that consultation and it does not bode well for providers of purpose built student accommodation (“PBSA”).

Key points to note are:

  • No PBSA discount: The Government will not require local authorities to offer discounted HMO licences to providers of PBSA. The October 2016 consultation paper had proposed “significant” discounts for PBSA providers that complied with an approved code of practice. However, despite the vast majority of respondents saying that local authority intervention in PBSA is minimal and that existing codes of practice are effective, this proposal has not been taken forward. The Government has reached this decision in light of the Grenfell Tower tragedy which it believes may make local authorities more proactive about enforcing licence conditions for all purpose built HMOs. A discount for PBSA was seen as a potential barrier to such enforcement. This decision is likely to be met with disappointment by providers of well-managed PBSA who may feel that their licence fees subsidise local authority intervention in relation to less well-managed types of HMOs.
  • Extension of mandatory licensing: Mandatory HMO licensing will be extended to cover most HMOs occupied by five or more people who do not form a single household, regardless of the number of storeys. Mandatory licensing currently only applies to HMOs that comprise three or more storeys. This change is expected to bring another 160,000 properties into the mandatory licensing regime – a significant increase on the 60,000 or so properties that currently hold a mandatory licence. We anticipate that the majority of these additional properties will be in developments other than PBSA as most purpose-built self-contained flats will remain exempt from mandatory licensing. However, it is worth remembering that exempt PBSA may still be subject to additional or selective licensing.
  • Minimum bedroom sizes: The Government will prescribe minimum room sizes of 10.22m2 of useable floor area for sleeping areas occupied by two adults and 6.51m2 for sleeping areas occupied by one adult. These room sizes are intended to align with the existing overcrowding standards in the Housing Act 1985 and will be secured through HMO licence conditions. Local authorities will retain the discretion to impose larger minimum room sizes if they wish to do so. New mandatory licence conditions to address the storage and disposal of refuse will also be introduced.
  • Improved guidance: In what might be more welcome news for PBSA providers, the Government has said that it will publish a tool kit to help landlords identify whether a property requires an HMO licence as well as guidance for local authorities on licensing procedures. In our experience, there is a lack of consistency about if and how local authorities currently licence PBSA so we will look forward to the publication of this guidance with interest.

The Government plans to bring the proposed changes into force through secondary legislation during the course of 2018.