How would you feel if the rent you’d been steadily collecting from your tenants for a year or more was ordered to be paid back to them?
A story related by the BBC on the 18th of April showed how just that might happen if you fall foul of some of the extended provisions of the Housing and Planning Act 2016. These give tenants the right to seek a rent repayment order from the courts if a landlord has been successfully prosecuted by the local authority for running a House in Multiple Occupation (HMO) without the necessary licence (England and Wales, for Scotland click here for more information).
Those were the circumstances recounted by the BBC and which resulted in five co-tenants of an HMO in Leeds winning a total of £15,000 in repaid rent.
Rent repayment orders – why they are made and who may apply for them – are described in greater detail by the Residential Landlords Association (RLA).
Attempting to operate an HMO without the necessary licence, therefore, could result in a substantial loss of rent. But that is not the only pitfall into which landlords of HMOs might trip.
As we explained in an article in our Knowledge Base, landlords must also beware of complying with the terms and conditions of any HMO licence they are issued. A landlord in Scarborough, for instance, was fined £42,000 – plus a further £18,000 in costs – for a string of breaches which left the HMO he owned with an unsafe electrical installation, fire safety hazards, and health risks from pervading mould and damp.