Nowhere for HMO landlords to hide as Councils turn to Artificial Intelligence

How long does it take for your Council to work out you’re running an unlicensed HMO? Less than one day! This was confirmed this week when a worried landlord got in touch with our landlords defence consultancy team.

Here’s the situation: Landlord completes an HMO purchase on the 30th of June. On the 1st July, one of the London Borough Councils sends the new owner a letter “We believe you are operating unlicensed HMO”.

So, the Council licensing enforcement team must have been alerted about the HMO on the very same day that the landlord completed the purchase.

But how? Nobody told them. Well, not explicitly.

You see, Councils, and particularly those in the London Boroughs, have been working on applying Artificial Intelligence (AI) to searching out unlicensed HMOs since 2016.

So that whatever happens regarding a property – be it to do with council tax, electoral roll, bins and waste, noise nuisance, antisocial behaviour, planning, EPC date and many, many more their giant AI computers know.

AI connects all of these together and then when a trigger event happens, the AI spots a ‘pattern’ in all this data and goes ‘Kerching!’ we’ve found another golden egg. Every unlicensed HMO is a massive revenue opportunity for your council.

And in this case – because it’s London Borough whose proud boast is that they enforce (revenue collect) against 500% more landlords than any other Council in the UK, here’s what they’ll be planning to do:

Send HMO warning letter (which arrived one day after purchase) telling landlord they are suspected of running an unlicensed HMO.
They will wait maybe 14 days and then there is likely to be a dawn raid, drugs-raid style, with five or six housing enforcement officers arriving at the property at 5am to ‘catch’ all the sleeping occupants.
They will demand the tenants’ details and contracts often by intimidation.
They will inspect every inch of the property looking for the slightest non-compliance with HMO Management Regulations.
A few days later, there will be multiple Notices of Civil Financial Penalty fines just dropping through the landlord’s door just like parking tickets. Except the amounts will be eye-watering. For example:

£12,000 for not having an HMO licence
£500-£1,000 for not having manager’s details on display (HMO Management Regulation. 3)
£10,000-28,000 for inadequate fire precautions, plus mould and damp if present (HMO Management Regulation. 4)
£5,000-20,000 for poor maintenance of common parts e.g. stairs and gardens (HMO Management Regulation. 7)
£5,000-£11,000 for inadequate maintenance of living rooms (HMO Management Regulation. 8)
£1,000 for inadequate rubbish and recycling systems (HMO Management Regulation. 9)
The total could be up to £70,000 or more.

It depends, of course, how far below standard the HMO was when purchased and whether the previous owner had it licensed or not. Often if a landlord is selling, it is because they know the property is sub-standard and they don’t want the hassle and cost of bringing it up to par and licensing it.

Of course, it may be that not all the above will apply in this case. But these are the sort of figures we generally see for Civil Penalties dished out by Councils following an HMO unannounced inspection. There are also Regulations 5 and 6, which can be used to add even more to the fines.

It is a very quick and easy £40,000 to £70,000 or more ‘revenue win’ for the Council as it asset strips the private rental sector by stealth.

And people wonder why they are advised “Don’t talk to the Council!”.

If you own or manage an HMO (and that means three sharers and above), you’re at risk of a Management Regulations fine at any time if you’re not fully compliant. Even worse, if your property isn’t licensed but should be.

Don’t talk to the Council – take advice from professionals who are landlords themselves and whose motivation is to protect landlords, not to asset strip their investment.

Landlords who realise, on reading this, that they are at risk can book a consultation with one of our specialist consultants for advice on how to make their HMO fully compliant and how to go about obtaining a licence without suffering all of these swinging fines by calling 0208 788 0788 or via https://landlordsdefence.co.uk/contact

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