C4 Planning and HMO Licences – What’s the difference?

When purchasing a HMO buy-to-let property it’s important to know what C4 and a HMO Licence is and the difference between the two. Commonly investors get the two mixed up, thinking that they are one and the same, whilst others don’t realise their importance/necessity with certain buy-to-let properties. Understanding what they both mean and their purpose is a vital part to any investment purchase, saving you time and money.

So what really is the difference between C4 and a HMO Licence?

HOP Investments offers years of experience and knowledge of C4 Planning and HMO Licensing. In this blog we are going to explain what both C4 and a HMO Licence is and why they are a vital part to an Investment purchase.

 

Article 4 Direction (C4 Planning)

A class C4 (house of multiple occupation) relates to a small shared house occupied by between 3 and 6 unrelated individuals, as their main residence and sharing basic amenities such as kitchen/bathroom. Note: Larger HMO’s (7 or more unrelated individuals) does not fall into the C4 class, instead sits within the Sui Generis category.

In February 2012 Leeds introduced an Article 4 Direction covering C4 use of dwellings in large parts of Leeds. This essentially  removes permitted development involving a change of use from C3 (single household) to C4, to control where HMO’s are located and the standards of such permitted properties. Many authorities have made Article 4 Directions in their area in order to restrict and manage the movement of properties from the C3 class (single household) to C4 use. This is particularly common in areas that are heavily saturated with HMO properties already, such as Headingley, Hyde Park, Woodhouse and Burley and other student areas of Leeds.

Therefore, if you are purchasing a C4 property in an area with an Article 4 Direction,  then it’s really important to check the property has C4 Planning permission!

 

What are my options if the property I want to purchase doesn’t already have C4 Planning?

If the property you are looking to purchase doesn’t have C4 Planning permission, buyers need to look for Lawful Use of the property. Lawful Use is where the property has been rented as a HMO consistently for 10 years or more, or since the planning restriction was introduced..

You would need relevant history to prove it’s use (tenancies, rental income, council tax records amongst other evidence). If the current owner has sufficient records of use, they can apply for a Certificate of Lawful Use, or alternatively provide the evidence for you to apply for this once you have purchased the property. It is crucial the evidence is comprehensive to ensure it can be obtained (always check with a planning consultant).

It’s worth noting that Article 4 Direction does not always mean that it is not possible to obtain permission to convert a property to a HMO (unless there is already a high concentration of HMO’s within a certain distance amongst other planning considerations). As such, the number of HMO’s is declining in areas of Leeds as some are now being converted to flats or reverting  back to C3 use (single household). In other areas, permission can be granted, such as Beeston and Armley for instance, but it is advised to consult an experienced planning consultant before committing to a purchase.

 

HMO Licensing

HMO Licensing is not planning. C4 use covers HMO’s from 3 households up to 6  (C4) and beyond (Sui Generis). “Licensing” applies to HMO properties from 5 individuals and upwards. License conditions are legally enforceable and none compliance can result in criminal prosecution and fines.

HMO Licensing covers all of the UK, but councils will have their own specific regulations/conditions that they apply or enforce. Leeds has its own Licensing Advisory Notes. Click here to head to the Leeds Gov website.

Licensing focuses on the fire safety, amenity, heating as well as general Health and Safety and wellbeing of the tenants. These standards will vary, and in recent years minimum room sizes for bedrooms and communal spaces has been introduced.  As long as a property meets the licensing standards then there is a very good chance  a license will be granted. We would always advise to seek your local HMO Licensing department as early as possible if you have any queries or concerns.

Licenses are issued for a 4 year period and there is a fee payable for this which varies depending on the size of the property and also membership of professional bodies. The application fee covers the issuing of the license, which should also require an inspection by a HMO Officer. It also requires that the license holder attends a HMO licensing course within 6 months of issuing the license.

Its important to note that there are rental standards for HMO properties of 3 to 4 bed spaces, these standards are higher than for standard BTL’s.

 

There are two type of Licenses: Category A and Category B

Category A HMO is where individuals rent separately (room by room). Generally these will have increased facilities such  increased oven/cooker requirements, food storage, amongst others.

Category B HMO is where a group rent a property as one, such as 6 students on a joint contract. These are generally more like a single household.

Note: When purchasing an existing licensed HMO, you will be required to apply for a new license within a set timeframe from completion. Its important to check the property against current standards, it may be that the room sizes could be below the current standards (bedroom and communal space), which could limit the rental potential in the future.

 

HOP can draw up the floor plan and complete the HMO license application for our landlords at a cost of £250 + VAT. It can be quite a complex process and there is a big backlog on the HMO license team processing applications, our team can manage this process through for you.

It is vital for any investor looking to buy in Leeds, to understand what the difference is between C4 Planning and HMO Licencing. A property with a HMO Licence doesn’t necessarily have C4 Planning (visa versa).

HOP Investments is made up of years of experience investing in Leeds property. If you are an investor looking to purchase in Leeds, get in touch with our team today.

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