Management of HMOs

1
Management of HMOs do we have the correct focus?

• Stephen Battersby
• President CIEH

2

• Many people try to set themselves up as landlords
  without having a clue about their legal
  obligations to their tenants, and how they should
  manage their property which can leave them
  exposed
• RICS spokesperson

3
What is management?

• Can be defined as
• comprising planning, organizing, resourcing,
  leading or directing, and controlling an
  organisation
• which implies some level of positive action

4
What is HMO management?

• This takes account of the building including
  facilities, fixtures and fittings and the
  occupiers and involves
• Organisation
• Resourcing
• Control
• Maintenance
• Meeting legal obligations to occupiers
• Managing financial, physical and other risks

5
What is HMO management? (2)

• Procedures reflecting the size and layout of
  building and churn of residents - greater the
  number of residents and turnover the more
  intensive the management needs
• Reflects characteristics of residents e.g.
  whether vulnerable groups accommodated or where
  language/communication issues
• Are residents also fully aware of their
  responsibilities?

6
What makes a good HMO Manager?

• Can identify management targets/objectives
• Understands the possible consequences of not
  achieving the targets/objectives
• Has in place procedures to ensure objectives
  achieved or to minimise impacts if not achieved
• Keeps written records
• Reviews management and reassesses when relevant
  changes to circumstances

7
Examples of good management

• Residents aware of rights and responsibilities
  e.g. by clear and fair agreement to occupy and by
  Information Pack
• Co-operation with Crime and Disorder Reduction
  Partnerships on ASB
• Adequate Insurance cover
• Clear complaints procedure known to occupiers
• Clear procedure for reporting disrepair etc
  emergency repairs provision clear timescales
  for dealing with different repairs

8
Landlords

• Sideline landlords with small portfolios to
  dominate the sector 74 are individuals and
  couples (71 of these sideline activity)
• 62 of these have no qualifications or experience
• One third of individual landlords had been
  letting for less than five years
• 58 of all landlords have five or fewer
  properties (35 let only one property)

Source EHCS 2006 Private Landlords Survey
9
Landlords

• Landlords and agents have more optimistic view of
  conditions than EHCS surveyor (40 aware of
  HHSRS)
• 60 of all respondents not members of trade or
  professional body
• 77 of landlords aware of HMO licensing

Source EHCS 2006 Private Landlords Survey
10
Hampton Principles and good regulation

• Regulators, regulatory system as a whole,
  should use comprehensive risk assessment to
  concentrate resources in the areas that need them
  most.
• Regulators to provide authoritative, accessible
  advice easily and cheaply
• No inspection without a reason
• Businesses should not have to give unnecessary
  information or give the same piece of information
  twice

11
Hampton Principles and good regulation

• Regulatory activities to be carried out in a way
  which is transparent, accountable, proportionate
  and consistent, and targeted at cases in which
  action is needed
• Help and encourage regulated entities to
  understand and meet regulatory requirements more
  easily and
• Respond proportionately to regulatory breaches
• Regulators Compliance Code

12
HMO Licensing

• Is it Smart Regulation?
• Instruments chosen by the 2004 Act (particularly
  in respect of licensing) are themselves rather
  old-fashioned and inflexible Law Commission
  Encouraging Responsible Letting
• National mandatory licensing - limited criteria
  is it to address management issues or property
  condition?
• Prescribed standards relationship with Part 1
  and HHSRS

13
HMO Management Regulations

• Obligations on person managing and occupiers
• Failure to comply (without reasonable excuse) is
  an offence (no works notice provisions)
• Prescriptive as to dos and donts does
  compliance imply wholly good management?
  nothing about tenancy relations matters
• Overlap with Part 1 HHSRS e.g. guarding of low
  window sills and safety of balconies and roof

14
How does HMO manager give you confidence?

• Active management has identified risks
  liabilities (and reduced them) implies
  knowledge
• Business plan
• Management plan (for tenancies and building)
  clear procedures?
• Record keeping including of tenants contacts
• Tenant satisfaction and lawful approach to
  securing possession
• Void losses minimised
• Co-operative with LHA provides information
  promptly on request

15
How do you recognise a well managed HMO?

• Property in good order
• Property including fire precautions etc in repair
  and good/clean state of decoration
• Furniture furnishings clean and safe
• Property and lettings secure
• Cleanliness of common parts and grounds
• Common parts free from obstruction
• Good refuse storage in outside property
• No problems for neighbours or between occupiers

16
So does the legislation help or hinder?

• Does the legal framework encourage good
  management without LHA intervention?
• Unrealistic demands on the regulator?
• Is there too much focus on ends? e.g. why have
  the name and address posted in dwelling? -
  important that occupiers know who to contact but
  that can be achieved other ways
• Should assessment and regulation be aimed at how
  the manager manages (process/means rather than
  end)

17
So does the legislation help or hinder?

• Licensing does not in itself identify poorly
  managed HMOs
• 60 of LHAs have 500 or fewer licensable HMOs
  (almost 75 have lt100) (LACORS, 2007)
• As at 4 February 2008, 265 LHAs had provided
  information to CLG with 24,926 application.
• 239 LHAs had issued 14,193 licences and refused
  93 respectively (10,640 no outcome notified)
• 51 LHAs confirmed no applications (38 LHAs
  provided no information Hansard 4 March 08

18
So does the legislation help or hinder?

• The legislation could help support training
  more professional managers(s.67(2)) - can it only
  be used where there is a CoP none yet?
• Management Regulations as cast can lead to
  confrontation dilemma for EHP prosecution,
  formal caution or nothing?
• Whether help or hindrance ultimately may depend
  on how LHA use provisions?
• Is accreditation as advocated by Law Commission
  the approach?

19
Concluding comments

• Good management is reflected in more than
  physical condition
• The legal framework does not reflect that
  sufficiently
• Requiring managers/landlords to assess and manage
  all the risks associated with running an HMO
  would encourage active management
• Why no Approved Code of Practice that looks to
  that approach?
• Good management will be reflected in reduced
  risks to the health and safety of occupiers

20
Concluding comments

• Will the Law Commissions proposals really lead to
  more active management and address the problem
  that too much rented property is poorly managed
  allow LHAs to concentrate on the wilful or
  criminal landlords
• What of the Rugg Report? -
• poor management practice considered to be endemic
  ....but few data available to assess the
  incidence.
• Proposes light touch licensing and effective
  redress