A house in multiple occupation ("an HMO") is a property occupied by three or more people who do not form a single household and which meets certain statutory criteria; primarily, but not exclusively, that facilities are shared by the occupants. HMOs occupied by five or more people forming two or more households must be licenced by the local authority; a failure to do so is an offence on the part of the landlord who can be fined by the local authority and made subject to a rent repayment order ("a RRO").
The case of Taylor v Mina An Limited  UKUT 249 (LC) concerned such a RRO. In that case, the landlord had bought an HMO but failed to get it licensed in the belief that the former owner's licence ran with the land; after some time the tenant applied for a RRO. The landlord's view was somewhat unorthodox as section 68(6) of the Housing Act 2004 provides that an HMO licence may not be transferred to another person.
However, in a surprising decision, the First Tier Tribunal found that although a licence may not be transferred, this does not mean that it automatically ends when that person transfers his interest in the property, "Essentially, the licence continues unless and until the authority decide otherwise… The circumstance of a change of ownership may provide grounds for revocation but do not themselves cause the licence to be revoked". The FTT therefore found that the property was licensed throughout and that it had no power to make a RRO.
The FTT's decision was reversed by the Upper Tribunal, which pointed out that section 68(7) of the Housing Act 2004 provides that where a licence holder dies the HMO licence ends and, therefore, grants a temporary exemption, "the exemption that proves the rule". In any event, Upper Tribunal Judge Elizabeth Cooke's decision provides confirmation of the orthodox position and provides clarity to the situation.
This case also serves as a timely reminder that on the day an HMO is acquired, a new licence needs to either have been obtained or be pending. As an application for an HMO licence may be made in advance of completion, it is advisable to do this beforehand.
Please contact Hollie Wright (firstname.lastname@example.org | +44 (0)20 3755 5780) or Edward Ng-Cordell (email@example.com | +44 (0)20 3755 5749) if you own or are considering purchasing a House in Multiple Occupation and are affected by this decision or have any other concerns.