… I’m back because I hear you guys’
liked my first Rant and want to hear some more! Firstly,
I want to say that I am not prone to ranting normally,
but someone has to stick up for the much-maligned professional
property investor, and it may as well be me.
my last Rant I touched on the ever-increasing stream
of regulations regarding Landlords, and some of their
effects. Little, did I know that there were already
more regulations in the pipeline to be enforced on 6
23 March 2010, I was invited along to a Landlords’
Forum at my local councils’ offices. I should
have been suspicious when I saw there was a high attendance
of local Landlords, which is in itself unusual. During
the meeting the implications of the latest regulations
to be introduced were so shocking that I actually forgot
to breathe for a little while! Others in the room reacted
angrily. What had upset everyone? Well, I guess most
of you will have heard by now, that from 6 April 2010
all new HMOs will require Planning Permission (only
one good point this legislation is not retrospective).
I think that was the point I remembered to breathe again.
of the changes to the Planning Use Classes Order for
definition of a HMO has been redefined as any property
occupied by 3 or more persons that do not form a single
household. So basically, any property you let to 3 unrelated
or unpaired (married or living as a couple) will be
classed as a HMO and you would be required to apply
for Planning Permission. There are lots of problems
Firstly, cost – it will expensive and time-consuming.
They are obviously trying to create some work for their
Think about the scenario; you are about to purchase
a property where the figures do not ‘stack-up’
for a single let, but are good for a multi-let. You
apply for Planning Permission. Not only does this take
so long you may/or may not lose the property, but when
a Notice is posted outside the property the neighbours
get a petition together because they imagine all sorts
of problems ahead. Chances are then the Planning Permission
will be refused and you have lost money. However, if
you opt to go ahead and purchase the property first
(because you do not want to risk losing the property)
you run the risk, again, of Planning Permission being
refused. You would then be stuck with a property that
you could not multi-let and does not ‘stack-up’
as a single let.
The picture is not ‘rosy’ if Planning Permission
is granted either, because chances are the planners
will demand sound-proofing and a raft of other expensive/disruptive
believe this is a deliberate policy by the Labour Government
to force Landlords out of the HMO market, and unfortunately
I think it will work in the long-term. These things
take time to work through the system and it is not retrospective,
so will have little impact on current HMOs.
what do I think will happen in practice?
unscrupulous Landlords will ignore the legislation when
setting up a new HMO and just hope the planners do not
find out about them until they have obtained ‘established
use’. They would, of course, need to provide proof
that the property had been operating as an HMO before
6 April 2010. If they are determined to ‘bend’
the law, I am sure they will find a way to do this.
I definitely do not condone this sort of behaviour,
but am merely pointing out that this legislation will
not target the unscrupulous Landlords, just the law-abiding
ones. Ignoring legislation does seem to work very well
for unscrupulous Landlords as the Councils/Planners
etc., tend to prefer ‘soft targets’. It
is just such a pity that the Government does not realise
I think the way forward for Landlords is to either;
only buy properties that ‘stack-up’ as single
lets or to purchase houses that lend themselves to conversion
into Apartments. After all, if you have to apply for
planning permission and all that entails, you may as
well convert to Apartments that can be sold or rented
there any plus points to this legislation?
The law is not retrospective, therefore all existing
HMOs as at 6 April 2010 will be deemed to have planning
permission, no need to wait 10 years for established
use. However, if the property is not a Licensed HMO,
you will need to provide some proof that you have been
operating as an HMO, copies of separate AST Agreements,
etc. The Council have not detailed exactly what proof
As was pointed out in the Landlords’ Forum, existing
HMOs are likely to become more valuable in the future,
as there will be fewer competitors!
Planning permission will not be required to return the
property back to a single let. This gives Landlords
more flexibility. However, I think there may be more
money to be made by selling on as an ‘Established
HMO’, after all the profit margins are much higher
than for a single let.
are you going to vote for?
was thinking the other day about the story of the frogs
in a bucket (I know my mind does tend to ‘flit’
around a bit!). One is desperately trying to climb out,
but the other frogs instead of trying to help him climb
out and then climbing out themselves, decide to pull
him back in. It reminded me of the Labour Government,
I believe they will bring everyone down to the lowest
level. Capitalists think more along the lines of bringing
everyone into prosperity and lifting them up. Would
you like a few examples?
Labour party (if elected) would tax earnings over £150,000
at a new rate of 50p and would increase National Insurance
contributions by 1% in 2011.
Liberal Democrats would align capital gains tax to income
tax rates. That means whenever you sell one of your
properties you would have to pay an additional 2% in
Capital Gains Tax. They would also introduce a ‘mansion
tax’ of 1% on the value of properties over £2m.
these policies to lift us up or drag us down?
implore you not to be despondent and waste your vote.
If you do not vote you have no right to complain if
Labour or Labour/Lib Democrats Rule. Yes, I did mean
to use the word “Rule” as there is nothing
democratic about having a leader that no-body voted
for (e.g. Gordon Brown). Of course, you may totally
disagree with my views and that is your prerogative.
Conservative Government will, of course, have to make
cuts as well, and we may not like those cuts, but at
least they will not be that frog pulling us back into
a bucket we are trying to climb out of. And that is
quite enough about frogs!!
my next ‘Rant’, I wish you all prosperity.
Good Find Properties
The views and opinions expressed in this article are
the Authors own and do not necessarily reflect those
of Geogleam Ltd T/A mypropertypowerteam.co.uk