What are the repercussions of cancelling signed AST?

Reply to the comment left by "David Atkins" at "20/08/2016 - 09:29":

If all of the original people move in, Gary MIGHT (subject to how many floors the building has and whether it's subject to mandatory or additional licensing) only avoid the HMO definition if these people comprised couples and/or members of the same family - sets of siblings or possibly cousins.

In other words, whether a rental property is a HMO or not is determined by the number of households (families) and not just the number of separate individuals. Mandatory licensing is triggered when 5 or more individuals form at least two households and additional is when there are at least two households sharing.

However, additional licensing will not apply to two households where one of those is an owner occupier live in landlord and his/her family - the households must pay rent.

Reply to the comment left by "Mandy Thomson" at "20/08/2016 - 10:23":

It would help if Gary would tell us how many prospective tenants there are, whether any of these people are related or form couples, and whether the property is subject to additional or mandatory licensing.

Reply to the comment left by "David Atkins" at "20/08/2016 - 09:29":

Although each HMO is unique in the safety adaptations that will be necessary, I believe it could be argued that Gary, or perhaps more accurately, his agent, should have been aware of the HHSRS, decent homes, and general HMO requirements set by the local authority. According to the RLA, the minimum room size is normally 6.5 square meters; see the page on their site here: http://www.rla.org.uk/landlord/guides/room-sizes-for-houses-in-multiple-occupation.shtml

Hi All, Many thanks for your very helpful replies. Here are a copule of points of clarification:
1) The HMO licence application was rejected by the local authority due to their being too many other HMO properties in the vicinity.
2) There were 6 seperate students on the AST, none from the same family or related in any way.

Reply to the comment left by "Gary Chatfield" at "20/08/2016 - 11:32":

The Local Authority, in its collective wisdom, has decreed that there are too many HMO's in the intermediate vicinity ergo there must be plenty of local accommodation available for the students‽ Start by asking the LA (anonymously) to help you find HMO accommodation in the area, try to put the ball firmly in their court.

Is there any chance that the Local Authority will revise its decision? Presumably you liaised with the LA whilst converting the property, what caused it to change its mind?

Hi Gary,
If the local authority has been consulted throughout the refurbishment process and made aware that the intended purpose for the building was an HMO and they have not flagged up any objection to that, you could inform them that it is your intention to report the matter to the Local Authority Ombudsman on grounds of maladministration. The threat of such action sometimes concentrates the mind and can cause it to change.

Alternatively, and what I am about to suggest may not be possible from a practical and/or time frame perspective, but is there any way that the property could be converted into two flats at reasonable cost? I realise that this would need planning permission (time) and depending on the layout, it might be difficult or costly to achieve, but if it were possible you could perhaps end up with two properties each capable of taking 3 HMO tenants, neither of which would require a licence. This latter solution may seem a bit extreme, but if you are faced with the whole project failing desperate measures sometime need to be considered.

Reply to the comment left by "Gary Chatfield" at "20/08/2016 - 11:32":

Looking into this further, it seems you would not have needed planning permission for the change of use from a family dwelling to a small HMO, but the local authority still has discretionary powers under Article 4 direction to control the number of HMOs within a given area.

However, although you would not have been liaising with the Planning department, why didn't the council department responsible for HMO licensing not warn you about possible problems concerning Article 4 designation?

I don't think you can rely on frustration of contract. You entered into an agreement on the assumption that the licence would be granted. A similar situation would be to exchange a contract to buy a property without a mortgage offer in place. Frustration assumes an event of some type over which you have no control rather than an event which does not happen.

Reply to the comment left by "David Price" at "20/08/2016 - 12:11":

I don't think the LA has any duty to help find alternative accommodation but they ought to produce evidence of the abundance of similar hmos to justify their deciscion. Help your students find another house and they will be happy.

I am based in Reading and the Article 4 area here includes the central conservation areas which are at some remove (1 mile+) from the Universities so student demand is not so strong. However the main concern for the council seems to be parking which is very limited and each HMO increases the strain.

On another point the comments about HMOs above are in essence correct but local councils can adopt more stringent requirements if they choose. In Oxford for instance an HMO licence is required for any property with 3 or more occupiers forming 2 or more separate households.