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Houses in Multiple Occupancy

1.29 pm

Mr. Mark Lancaster (North-East Milton Keynes) (Con): It is a pleasure to have the opportunity to raise what is a serious problem in Milton Keynes and other constituencies across the country. Indeed, having listened to the earlier debate here in Westminster Hall about sustainable communities, I know that there are real concerns on both sides of the House. I therefore welcome the Minister, who I am sure will demonstrate her reputation for fair-mindedness to us all this afternoon.

Let me make it clear at the start that I accept that houses in multiple occupancy are here to stay, but I do not accept the haphazard manner in which they are dealt with under existing legislation. In the short time available, I want to do two things. First, I want to highlight the considerable impact that HMOs have on social cohesion and infrastructure in Milton Keynes. Secondly, I want to outline some of the fundamental gaps in the legislation, which are causing considerable uncertainty for landlords and local authorities across the country that are desperately trying to do the right thing.

Before I do that, however, let me spend just a few moments outlining some of the specific challenges facing Milton Keynes as one of the new towns that the Government have designated for growth. When I was first elected as the Member of Parliament for North-East Milton Keynes two years ago, I sat down with local authority representatives and asked what they felt the principal challenges facing the city were likely to be, and the one recurring theme was the strain that the forced expansion of Milton Keynes placed on infrastructure in the city and its satellite towns and villages.

As a direct result of those concerns, I started my “I before E”, or infrastructure before expansion, campaign, which was designed not to stop the expansion of Milton Keynes—after all, our young people need affordable housing to live in—but simply as a call for future expansion to be carried out at a sustainable rate. The key to such an approach is to provide associated infrastructure, such as schools, health care and transport, alongside, or preferably before, growth. Perhaps most importantly, there must be a recognition of the fact that growth must have the support of local people if communities are to be truly sustainable. That means returning decisions about whether, how, when and where the city should expand to local people, via the democratically elected local authority, and taking them away from unelected, unaccountable quangos.

The Government have told Milton Keynes to provide the seemingly arbitrary figure of 70,000 extra houses by 2031—far more than is required for organic growth. Unfortunately, although the Government are content to force their will on Milton Keynes residents via unelected, unaccountable quangos such as Milton Keynes Partnerships, they seem reluctant to commit to matching funding to build and improve city infrastructure. Although some funding has been allocated, the funding streams are, crucially, all short
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term and do not match the much longer time frames to which the Government seem prepared to commit for housing.

As a result, it is difficult for the local authority to plan effectively, and the net result is enormous pressure on the city’s infrastructure. Milton Keynes general hospital, for example, was originally designed for a city population of less than half what it is today. Similarly, nearly 70,000 people in Milton Keynes are still unable to register with an NHS dentist. With existing infrastructure already creaking, the large recent increase in HMOs in the city has pushed some services almost to breaking point.

Milton Keynes needs more affordable housing—all political parties in the city agree on that—but that housing must be delivered in a sustainable, planned way. As I hope to explain, the retrospective, unpredictable manner in which dwellings are being converted into HMOs is not the answer. Perhaps one indicator of the nature of the problem is the fact that Milton Keynes has seen the amount of private sector rented housing double in the past seven years, increasing from 6 to 12 per cent. of the housing market. With a rapidly expanding city, the need for cheap, affordable housing close to the economic centre of Milton Keynes is vital. HMOs, many of which are unlicensed and unknown to the authorities, fulfil the needs of transient economic workers.

I will deal with the legislation in a moment. Unfortunately, however, many HMOs in Milton Keynes are not covered by recent legislation because they are two-level, four-bedroomed flats with a garage that has been converted into a fifth bedroom. As such, they are not required to be licensed. The problems with such properties are fourfold.

First, the five bedrooms that are rented out tend to be occupied by five young adults, who might well only recently have started work, who might be immigrant workers and who might have recently graduated from university with a sizeable debt. Whoever they are, however, the one thing that they all have in common is that they are invariably financially unstable and lack security. In non-licensed HMOs, the chances of falling prey to the tiny minority of unscrupulous landlords is greater, either because of inadequate protection by contract or the potential for sudden rises in rent.

Secondly, HMOs bring with them a major increase in the risk of fire, particularly where five individuals all cook separately and overload electric sockets in a house that was originally designed for a single family. Milton Keynes council has confirmed that a large proportion of the recent increase in the number of fires in Milton Keynes has been in HMOs. Of course, the threat is not confined to Milton Keynes, and a recent article in Inside Housing magazine states:

Thirdly, residents living in areas of Milton Keynes where HMOs are on the rise complain that the quality of life in their neighbourhoods is deteriorating rapidly and that they feel powerless to do anything about that. Typical of the issues that long-standing residents complain about is the increase in litter and noise pollution. One resident recently complained to me that
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the character of the street where they lived had changed dramatically and that they no longer felt that it was a safe environment for their 10-year-old daughter to play in. They identified the source of the problem as three former family homes that had recently been converted into HMOs. Some of the properties were former four-bedroomed houses, but they had as many as eight residents, and all of the properties had transient tenants. Those tenants tended to be young—normally in their mid-20s—and to stay on average between four and 16 weeks. In the main, they failed to make any effort to integrate with the local community. Car parking had also become a nightmare, with up to 14 vehicles trying to occupy just six parking spaces. Litter had increased dramatically, as had noise from late-night parties. All those problems had dramatically changed the nature of what was once a quiet urban street.

Finally, probably the greatest impact that HMOs have had has been on local infrastructure. Current infrastructure planning is done on the basis of recommendations regarding planning applications for ground space. For example, schools are built in response to a set of family dwellings, each with a clearly defined number of bedrooms, built in a certain location. It used to be relatively straightforward to estimate how many residents, both adults and children, there would be and even the likely number of car parking spaces that would be required. Unfortunately, the advent of HMOs has changed all that.

HMOs that sometimes have many more than five or six residents throw previously reliable planning assumptions to the wind. Like many other parts of the UK in recent years, Milton Keynes has seen a rise in its immigrant population, whose members have struggled to get on the council waiting list. Understandably, HMOs have been a logical step for many immigrant families, but I have heard reports of up to four families living in a house that was originally designed for a single family of three of four.

The rise of HMOs is not just a Milton Keynes phenomenon, and they are prevalent in most towns and cities, particularly where there is a university. Milton Keynes is fortunate to have the world-renowned Open university, and although we do not yet have a dedicated undergraduate university, we may well have one soon if local business gets its way. Although I am supportive of the idea of the city having a dedicated undergraduate university, I am concerned that its arrival will only add to the pressure for HMOs.

I have highlighted the problems that a rise in the number of HMOs brings for the accurate planning of infrastructure and I now want to discuss the problems with the legislation. As I understand it, there are two principal issues. The first is determining what is and what is not an HMO; the second is the lack of joined-up thinking between the licensing and the planning legislation.

The definition of an HMO is contained in sections 254 to 259 of the Housing Act 2004, but to be frank, it is less than clear to me as a layman or, indeed, to a potential landlord. As I understand it, however, a building or part of a building is an HMO if it satisfies any, all or some of the following tests: the standard
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test, the self-contained flat test or the converted building test. It is also an HMO if an HMO declaration is enforced under section 255 of the Act or if it is a converted block of flats to which section 257 of the Act applies. Of course, that was probably crystal clear to you, Sir John, and to the Minister, but unfortunately I and many landlords struggle to understand it.

It can be quite difficult for a landlord to find out whether they are required to obtain a licence or whether they are exempt from current licensing legislation. I stress that the vast majority of landlords want to play by the rules and do the right thing, but as in any industry, a minority does not, and the legislation provides sufficient uncertainty to allow unscrupulous landlords to abuse it.

Let us take, for example, the problems that are caused by the disparities between the planning and licensing of HMOs. Currently, the planning legislation that is used to turn family dwellings into an HMO and the HMO licensing legislation that was brought in last year fail to work effectively together. Under the Government’s housing planning policy guidance note 3, of 2000, a landlord has the ability to purchase a house and make renovations to turn it into an HMO. As long as the renovations do not turn the dwelling into a house with more than five occupants with no family bonds and the building has fewer than three floors, the HMO is likely to slip into the gap between planning legislation and HMO licensing legislation.

There is a gap, which current HMO licensing legislation fails to fill. The current legislation suggests that only those HMOs with five or more tenants, with no binding household links, spread over three or more floors in a single dwelling, need to be licensed. That provision is clearly designed to protect Georgian and Victorian terraced houses, and while it is of course important that the quality of life is maintained in leafy Islington streets, it is also vital to recognise that in new towns such as Milton Keynes, where traditional Georgian or Victorian housing over three or more floors tends to be the exception rather than the rule, the current legislation is inadequate.

The licensing provisions under the Housing Act 2004 in essence penalise honest landlords who are willing to sign up to pay registration fees and incur the cost of bringing their property up to the standard expected of a licensed HMO, while those who might be less inclined to follow the rules all the time get away without incurring those costs. I understand the benefits of the licensing scheme, but I am concerned that the legislation is too complicated and leaves many grey areas where less law-abiding landlords can hide from their local authorities. When licensing registration fees can cost anything from £100 per property in Wigan to £1,500 in Dartford, I am not surprised that some rogue landlords will avoid those costs if they feel that they can get away with it. Evidence suggests that, so far, they can. I have also had letters suggesting that some landlords—and I am talking about a minority—have been passing the licence fee directly on to tenants with little or no warning. As I have already explained, many of the tenants in Milton Keynes have little financial security, and have no other local place to move to, should they refuse to pay the sudden increase in rent.

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There are, of course, also ways of legally avoiding the legislation. Landlords who own a three-storey property that contains five or more rentable rooms can simply choose not to rent one of the bedrooms, so that they fall outside the mandatory licensing arrangements. That enables them to step outside the cost that they would incur if they stayed within the rules and regulations set up in the 2004 and 2006 housing legislation, although in practice there is little difference in a property’s potential risk to a community, or impact on it, after the removal of a single bedroom. If the Minister needs proof of such active avoidance of licensing, she need look no further than Milton Keynes, where only about 20 such licences have been issued since October 2006, although conservative predictions place the number of HMOs across the city at between 5,000 and 6,000.

What should be done? Is it not logical that a landlord should need planning permission to alter a house to turn it into an HMO dwelling, before being given a licence to provide an HMO? Currently that is not the case. The irony is that, even if a licence is granted, planning permission still might be refused by the local authority, and vice versa. What is more, although new legislative guidelines suggest that the licensing and planning offices of a local authority should work closely together, and pass information about HMOs to each other, that is not mandatory. More alarming is the fact that if an unlicensed HMO remains in place undetected for some years, it can automatically be granted planning permission. When that happens, the landlord might face a minor fine, but that is not much of a disincentive, especially when planning permission is granted automatically. Surely if we are to find a solution to the problem of providing good quality HMOs, we need to give local authorities the powers that they need to ensure that landlords are licensed.

I do not pretend to have all the answers to this problem, but I know that much more work needs to be done to straighten out some of the legislation. To give the Minister credit, the current planning and licensing legislation on HMOs is an admirable attempt to provide safe and high quality living accommodation for a key segment of the population. However, it remains incomplete, and at the very least it needs to be recognised that not all buildings suitable for use as HMOs have more than three floors. It appears that HMOs are here to stay, but by their very nature they are having a major impact on the quality of life and social cohesion in towns and cities such as Milton Keynes. The time has come to deal with the issue before it gets even further out of hand.

1.46 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Meg Munn): I congratulate the hon. Member for North-East Milton Keynes (Mr. Lancaster) on securing this debate on such an important topic. The Government also value the contribution of the private rented sector to meeting housing need. Houses in multiple occupation provide affordable housing for a wide sector of the community. As the hon. Gentleman has said, the Housing Act 2004 introduced a system for the mandatory licensing of houses in multiple occupation of three or more storeys,
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occupied by five or more persons not all of the same family. Authorities can introduce discretionary licensing schemes to cover smaller problematic houses in multiple occupation, subject to local consultation and approval by the Secretary of State. That allows them to tackle management and amenity problems in such properties that do not fall within the mandatory scheme. Consideration may need to be given to going down that route in Milton Keynes, given the problems that the hon. Gentleman outlined.

The licensing requirements run parallel to any planning permission that might be required. A local authority must apply the definition of multiple occupation contained in part 7 of the Act when considering its own licensing functions in part 2. It cannot simply refuse to consider whether to grant a licence, on the basis that planning permission for development has been refused, provided that the property remains a house in multiple occupation for the purposes of the Housing Act 2004 and is subject to mandatory licensing or a discretionary scheme. If the authority is unable to grant a licence for any reason, it must make an interim management order under part 4 of the Act. An authority should not confuse its planning functions with its housing duties. Furthermore, if there has been unauthorised development, the local authority should take enforcement action to remedy the breaches.

To grant a licence, the local authority must be satisfied that the proposed licence holder is a fit and proper person, that adequate management arrangements are in place and that the property is reasonably suitable for the number of occupants permitted. The authority may impose conditions in the licence, relating to the use and management of the property, including the management of occupiers’ or visitors’ behaviour. A landlord or manager who operates a house in multiple occupation without a licence is committing a criminal offence and can be fined, on conviction, up to £20,000. Licence holders who permit a licensed property to be occupied by more persons than are permitted also risk a fine of £20,000, and a fine of £5,000 if they breach any of the conditions of the licence.

Mr. Lancaster: In her opening remarks, the Minister is demonstrating how incredibly complicated and confusing the various provisions are. I feel strongly that the Government need to look at the matter again and tie it together. She was not here for the earlier debate, but the problem affects not only Milton Keynes but authorities throughout the country, which are struggling to implement the complicated legislation.

Meg Munn: I beg to differ from the hon. Gentleman. I do not think that it is that complicated. In outlining the legislation, I am showing that it sets standards and establishes mechanisms to ensure that they are complied with, including fines for non-compliance. Whenever any legislation is put into force, it is surely right that appropriate compliance and enforcement mechanisms should be set up.

If an authority is unable to grant a licence or has revoked one for breach of conditions, it must make a management order. That enables it or its partner to take control of the property and step into the landlord’s shoes until a licence can be granted. There is
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no question of a local authority closing down an HMO because the landlord has not obeyed the rules. That would unfairly punish the property’s occupiers for the failings of their landlord. It would also lead to homelessness and place a burden on the local authority to provide housing assistance to occupiers who are dispossessed of their homes. An authority may take necessary enforcement action against unauthorised development, which may lead to the property ceasing to be a licensable HMO, but while it remains licensable because it falls within the definition in the Housing Act, the authority must make an interim management order.

The Act imposes a duty on landlords and managers to apply for licences, and imposes a duty on authorities to promote the scheme. Local authorities should not sit back and wait for applications to come in, but should actively pursue them. Clearly, the hon. Gentleman is aware of the whereabouts of such properties in Milton Keynes, and these issues are being brought to his attention. As those issues are known about, action should be taken on them. Given that it is a year since legislation was introduced, enforcement action can and should be taken against persons who refuse to apply it.

The Act provides a range of other means by which to address problematic HMOs, including the housing, health and safety rating system by which local authorities can assess risks from hazards in the house to the health and safety of occupiers, and require landlords to take appropriate action to eliminate them. In addition, management regulations apply to all HMOs and enable local authorities to ensure that properties are being properly managed and maintained. Failure to comply is a criminal offence that carries fines of up to £5,000.

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