Landlords- Selective Licensing Is Returning to Liverpool April 2022 - Are You Prepared?

Are you a landlord in Liverpool? 

If so, are you aware that in April 2022, selective licensing is returning to the borough? 

Today, we’re going to talk about what this change in legislation means, and the steps you can take to ensure that you remain compliant. Here at Concentric, our goal is to help landlords succeed by providing practical guidance surrounding each legislation update as well as helpful advice regarding overall best practices for landlords.  

What is Selective Licensing?

Selective licensing simply means that the city council has decided that they are going to selectively license a specific area. Thus, selective licensing in Liverpool means that the Liverpool City Council has agreed to selectively license a group of postal codes within the borough. In order to determine if this impacts you, you’ll need to see if you own any properties that fall within the range of postal codes that are covered by this new legislation. If you are a landlord in this area and you have a property from a one-bedroom flat all the way to an HMO, you may need a special license in order to continue letting that property.

What Does This Mean to You as a Landlord?

Now, we’re going to talk about what you need to do when selective licensing comes into place in Liverpool. Practically, this means that any property you rent that falls within the impacted area will need a special license as of April 2022 in order to be compliantly let. So, you’ll have to head to the Liverpool City Council and file applications, when the process is opened, for these licenses. There will be a cost element to this. You’re going to need to pay a fee to the Liverpool City Council in order to make the application for the license. Selective licensing is going to continue within Liverpool for the next 5 years until 2027.

Official guidance around the new law is still evolving, so we don’t yet know what the cost of licensing will actually be when selective licensing is rolled out. However, through experience with past licensing programs, we do know that there are many ways to secure discounts and reduce the licensing fee. This can be done by maintaining a good EPC rating, using accredited agents, and through other strategies. We recommend keeping an eye out for further updates on the Liverpool Government website. This is also the place to be when the application process opens for selective licensing. If you need help, contact us and we can help you with licensing applications.

How Do You Stay Compliant?

As of the time of this writing, the details of what will be specifically required to be compliant with this new legislation are not known, but we do know the general standards that have to be met in order to be compliant. There are a number of ways you can take care of your properties and ensure that you are always remaining compliant with the law. We’ve listed a few of them here:

  1. Have a valid gas certificate

  2. Have a valid electricity certificate
  3. Ensure that your EPC ratings are at ‘E’ or above
  4. Have your smoke alarms and carbon monoxide detectors tested
  5. Ensure that your property is fit for habitation

By following these main steps, you can be confident that your property is already a long way towards full compliance. Previously, when the Liverpool City Council enacted selective licensing, they added some additional requirements. This was in 2015. They required things like changes to the tenancy agreements to incorporate anti-social behavior clauses as well as adequate refuse management at properties. Thus, additional requirements may also be a part of the new selective licensing law.

It’s important to remember that the purpose of selective licensing is to regenerate areas and make the private rented sector the best that it can be. If landlords take good care of their properties and ensure that their tenants use the property responsibly, you’re ahead of the curve.

Licensing in the Private Renting Sector is Serious

Most landlords are probably already aware of the importance of remaining in compliance with all of the relevant laws. The penalties for not doing so can be immense. Failure to comply with selective, additional, or mandatory licensing as a private landlord can result in penalties up to £30,000. If your property falls under the category of selective licensing after April 1st of 2022, and you are not in possession of the correct license, your rights to gain possession of your property could be negatively impacted.

We hope we’ve answered some of your questions about this important new legislation. If you’re a landlord in the Liverpool area and would like some additional information, please contact us and we will be happy to help you in any way we can, also we are running a live webinar on this topic, which you can register for HERE.

What Should You Look For When Buying A HMO?

Given the right area, investing in a HMO can be a great way to increase the yield of a property, and a way to boost your portfolio. But whether you are new to the property game, or are a seasoned landlord looking for a different route, what should you be thinking about when you are looking for a HMO?

About HMO’s

There are many reasons why landlords are attracted to the HMO market – in the right location, they can give a much larger return than a general family property, because they are leased as individual rooms or spaces rather than as a whole. This means that you are in effect renting out several dwellings in a property, rather than just one.

Generally, there will be two routes to get you there. You can either look at purchasing a property which is already set up as a HMO, in which case the layout is much less, or, you can look for a property where you can convert a property from a single dwelling/single use into a HMO. If you’ve got the money to put down in doing this, you are able to create the space however it works for you, geared towards a specific market, and can potentially make some more money selling it on as a HMO.

Traditionally thought of as student accommodation, HMO’s are also becoming more popular in affluent city centre locations, where rents are higher, and young professionals are looking to keep costs down by house-sharing.

So areas surrounding universities are still very popular, but also consider areas where young people are starting their careers, and perhaps might be searching out house shares while they are still single and forging their own paths. This also has the additional benefit of allowing landlords to seek out more expensive properties, which are more likely to have a higher yield as a HMO than as a family home.

What type of property makes the best HMO?

If you have no experience in the HMO market, you might think that you have to seek out a specific type of property for you HMO – something large, with a minimum number of rooms of bathrooms – but actually, that’s not necessarily the case. In fact, almost any type of property can be converted into a HMO.

Under law, a HMO is defined as being a home rented by three or more tenants who are not part of the same household/family. So in theory, even a small bungalow, for example, could be considered as a HMO, if shared by three people, providing the correct criteria are met.

The main things you’ll need to think about are choosing the correct location, and whether you have the vision and skill to make your property work as a HMO. Location should always be the key factor.

Do I need a HMO licence?

In most cases, yes, you will need to apply for a HMO licence. Currently, the criteria are:

Any of these will require you to hold a HMO licence, although you should always check with your local authority, as some areas have slightly different rules.

Are HMO’s harder to maintain?

HMO’s are usually rented by students or young professionals who typically are looking for short-term accommodation, whether that’s based on the academic year, or the term of a work contract etc. As such, you will normally find that your HMO turnover, in terms of tenants, is higher than it would be for a normal dwelling.

While that might mean that you’re more likely to fill the property quicker, it also means that due to the temporary status of the accommodation, your tenants are less inclined to put their efforts into general maintenance of the property, and this means that you will have to put more time, effort, and money into cleaning up after they vacate.

As well as this, the shared areas, such as kitchens, bathrooms etc. will have a much higher general usage than in a normal house, so there will be much more wear and tear on things like carpets and flooring, furnishings, and appliances.

It’s worth considering, if you’re thinking about taking on a HMO, that they do require more upkeep on a regular basis, and so those expenses need to be taken into consideration.

Converting into a HMO – is it worth it?

If you are in an area where demand for shared accommodation is high, and you’re thinking about converting a property into a HMO, there are some factors to consider.

You will need to ensure that the property has adequate space for your tenants, and is safe, clean and habitable. You will be subject to spot-checks by the local authority, and any failures in standard could lead to your licence being revoked, as well as a hefty fine.

Also consider whether you will want to make use of spaces such as living rooms as additional bedrooms – many landlords do this to maximise the rooms they can rent, but it’s also important to consider the communal areas – is there adequate living space to allow for an area for your tenants to gather and sit? If you have a kitchen diner, you might want to use the dining space for a lounge or seating area for them to relax.

If there is a garage attached to the property, there is possibly scope to add another room/bedroom. But you will have to seek planning permission, so get advice from your local council before doing this.

Planning on investing in HMOS? The 7 Essential Factors You Need to Consider...

Like any investments, HMOs come with risks and rewards. If you want insider knowledge gained from my many years’ experience in the property industry, I’ve got some insights that I’d love to share with you. Read on to discover how you can get ahead of the game when investing in HMOs.

   1. Planning and Building Regulations:

   2. Refurbishment:

   3. Fire Safety:

   4. HMO Compliance Considerations:

   5. Neighbours:

   6. Presentation:

   7. Licensing:

For a FREE 16-page document on HMO investment, detailing how Concentric can help you streamline your experience and maximise your investment funds, click here.