Management of HMOs – do we have the correct focus?

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 “don’ts” 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 <100) (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 informationHansard 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