UK legislation whereby certain councils now require planning permission for a property investor to change use of a property from residential status to a House in Multiple Occupancy
www.rohanproperties.co.uk Article 4 Direction - Background • Rugg Review 2008 Changing planning legislation was not appropriate • April 2010 Creation of the ‘C4’ or HMO Use Class All new HMOs needed planning permission • October 2010 Incorporation of ‘C4’ within the General Permitted Development Rights Properties could move from a ‘Dwelling House’ to an ‘HMO’ without planning permission KEY: Local Authorities could still insist on planning permission through Article 4 Directions • House in Multiple Occupation (HMO): Three or more unrelated sharers Comprising two or more households Shared Facilities
Transcript
www.rohanproperties.co.uk
Article 4 Direction - Background
• Rugg Review 2008 Changing planning legislation was not appropriate
• April 2010 Creation of the ‘C4’ or HMO Use Class All new HMOs needed planning permission
• October 2010 Incorporation of ‘C4’ within the General Permitted Development Rights Properties could move from a ‘Dwelling House’ to an ‘HMO’ without
planning permission KEY: Local Authorities could still insist on planning permission
through Article 4 Directions
• House in Multiple Occupation (HMO): Three or more unrelated sharers Comprising two or more households Shared Facilities
www.rohanproperties.co.uk
What is an Article 4 Direction
• Removes General Permitted Development Rights Used to be for conservation purposes Can now be used for restricting the number of new HMOs In a given geographical area
• What is it designed to do To stop noise, anti-social behaviour, rubbish accumulation,
• Cost Implications Planning applications are free (take 8-12 weeks) 12-months notice or compensation New planning application each time you change from a family to
sharers
www.rohanproperties.co.uk
Article 4 Direction (A4D) – summary
• A landlord has the right to convert a family dwelling (C3) to an HMO (C4) within their General Permitted Development Rights• An article 4 direction removes this Permitted Development Right
Planning permission required from local council
• A4D come into force Notts on 11th March 2012 Strong opposition from NLA, RLA, EMPO, LLs, Students Planning permission required to convert a family dwelling
(or standard rental unit) to an HMO (3-6 unrelated people) Planning permission has always been required for >6 occupants
www.rohanproperties.co.uk
Article 4 Direction in Nottingham
• Covers the whole of the Nottingham City Council area• NCC wants to maintain balanced communities & preserve
diverse communities to create better neighbourhoods
Manage and control HMO growth – high concentrations of HMOs can lead to imbalanced communities
Backlash against (student) HMOs is due to complaints from residents groups that students are causing problems and driving house prices down!!
Residents believe “A4D would put the interest of existing residents ahead of commercial interests of landlords”
www.rohanproperties.co.uk
Article 4 Direction in Nottingham – Boundary
map
www.rohanproperties.co.uk
Article 4 Direction in Practice
3-6 students- HMO- Investor can buy/rent- No A4D impact- HMO value increases
Student Street
Residential dwelling- won’t be able to sell- family or investor!!- prices plummet??
www.rohanproperties.co.uk
A4D – “more balanced” communities
• LAs are using A4Ds to “shape” its view on society to create more balanced communities & prevent freedom of choice• More/less welsh, scottish, migrants, students, gay, older,
younger, rich??• Form of social engineering (why restrict to students??)
www.rohanproperties.co.uk
Shared housing – only option ?
• Shared housing is a viable option for FTBs to get on the housing ladder
3 householdsSingle, 2 couples1 couple moved from expensive flat1 couple decided to share to save money Both couples saving for deposit!!
• Local housing allowance (LHA)• Under 35’s get single room rate
• Effective January 2012• Options for under 35’s: parental home, HMOs
www.rohanproperties.co.uk
A4 Direction Scenarios
Buy an existing HMO Rent out as HMO NO
Planning Permission required ?
Buy an existing HMO Re-Let as HMO NO
Buy a family home orstandard rental property
Rent out as HMO YES
Buy or have an HMO Re-Let as HMO YESRent to2 people
Buy or have an HMO No longer ?an HMO
1 personleaves
Leaveempty
Evaluate the planning regulations carefully!!
www.rohanproperties.co.uk
Opposition to Article 4 Directions
• Opposition to Article 4 Directions: Limits landlord’s legitimate rights over their properties Overly bureaucratic Wrong decision at a time when we need more shared housing,
not less.
• The planning system is never going to: Improve standards Root out rogue landlords Increase professionalism in the sector
• Resource implications Local authorities are cash-strapped Article 4 Directions waste resources Money should be spent targeting rogue landlords
www.rohanproperties.co.uk
Spread of Article 4 Direction
Approved/coming into forceAshford, Barking and Dagenham, Basingstoke and Deane, Bexhill–on–
Recently Consulted/consulting/consideringLondon Borough of Hillingdon, Brighton & Hove, Chichester, HullLondon Borough of Redbridge, London Borough of Newham
www.rohanproperties.co.uk
A4D impact on landlords: what next?
• Limiting your ability to increase your portfolio? Only buy pre-existing HMOs Buy on condition that planning permission is 1st
obtained Buy in a non-A4D affected areas eg different city
Difficult if you are self-managing Research the demand carefully!!
• What will be next hurdles for the HMO/All landlords?Future licencing Mandatory licence for 5 sharers/3-storey property Additional licencing may be next (ie all HMOs) Selective licencing for all rental properties?
