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Change to Planning Law for HMOs – City of York Council’s Article 4 Direction

Background

For planning purposes properties are allocated into classes of use. Prior to 6th April 2010, there was a single use class (C3) which consisted of houses or flats lived in by a single person; by a family; or by a group of up to six unrelated sharers who lived as a single household. You could change between these uses without needing planning consent.

Originally planning law used different definitions to those which apply for housing and environmental health purposes. As far as bedsits were concerned, before 6th April 2010 all bedsits (irrespective of the number of occupants) were treated as houses in multiple occupation (HMOs) for planning purposes so, in theory, planning permission would have been required to change the use of a C3 house to bedsits.
However, from 6th April 2010 the Labour government introduced a change in the planning legislation. A new use class was created which now consists of any house or flat rented out in the private rented sector which is not occupied by a family, where the number of occupants is between three and six. For these purposes “family” is defined in the same way as under the Housing Act 2004 for housing and environmental health purposes. Thus the 2004 Act definition of a HMO now applies for planning purposes as well.

What this means therefore is that shared houses and flats lived in by unrelated persons were taken out of class C3 and, together with small bedsits (those with between three and six occupants), now have their own use class (C4). Those properties which were already used in this way as at 6th April 2010 were automatically transferred into this new use class C4. Single family homes and flats remain in the modified class C3.

Basically, under the Labour plans introduced from 6th April 2010, planning permission for change of use was needed for any property being changed from owner occupation to a House in Multiple Occupation (HMO), for occupation by three to six non-related parties if there was a material change of use involved. The C3 class became dwelling houses only and the C4 class all shared properties, ie HMOs under the Housing Act definition.

Following the change in government, in June 2010, Housing Minister Grant Shapps announced a change to these plans and, from 1st October 2010, the blanket need for planning permission was removed. However, recognising that a high concentration of shared homes can sometimes cause problems, instead he introduced the option for councils to control this by giving them freedom to choose areas where landlords must submit a planning application to rent out a property. To specify an area, the council must issue an Article 4 direction, with a year’s notice to avoid compensation claims. In his explanation Grant Shapps said:

“I’m giving councils the power to decide whether to use the planning system to control the spread of shared housing where it is a problem. This will give them the flexibility to make decisions that are right for their communities, rather than stifling the rental market with unnecessary costs and red tape.”

Summarising the changes

It is worth summarising the effects of the changes.

After 6 April 2010, if there was a material change of use involved, if you wanted to change the use of an existing single family dwelling to a use which is now within the new C4 use class, you had to apply for and obtain planning permission. However , if you wanted to change the use the other way around from a class C4 HMO to a single family dwelling house then planning permission was automatically granted by what is known as the General Development Order. These rules were not retrospective so planning permission was not needed for any small HMO (within class C4) which was already in that use as at 6th April 2010. It did not matter how long it had been used in this way.

Under the new system from 1 October 2010, the use classes have not been altered. What has happened is that planning permission is now automatically granted by the General Development Order where an existing single family dwelling house (C3) is used as a small HMO (within class C4) or vice versa. Previously it was only where you went from C4 back to a C3 a single family dwelling that the automatic planning permission was given. Now it is granted where the change of use is either way.

Also, before the adoption of the Housing Act 2004 definitions for planning purposes, an inspection of the property could determine whether it was an HMO. Generally speaking, you would not need to meet the occupants to see if they shared the house or lived in separate bedsits. However, to be certain now, you have to consider any relationships and family connections between the occupants.

City of York Council’s implementation of an Article 4 direction

On 1 November 2011, the Labour controlled City of York Council confirmed the previous Liberal Democrat Council’s decision to implement an Article 4 direction across the whole of the City, with effect from 20 April 2012. Again, these rules are not retrospective so planning permission is not needed for any small HMO (within class C4) which is already in use as at 20 April 2012. It does not matter how long it had been used in this way, the property has established use.

Is an Article 4 direction justified in York?

Several representations against the introduction of this Article 4 direction were made, but any opposition was relatively low key and ineffective. Several factors suggest that a sledgehammer is being used to crack a nut.

The 6 April 2010 changes were made because of parliamentary concern about concentrations of HMOs and “studentification”, leading to parking and amenity pressures and places being deserted out of term time. This seems strange as the Rudd Report said the “studentification” of areas was a very minor problem only affecting 59 out of 8,000 boroughs. This hardly seems to be justification to make such a significant change in the law. There was also genuine concern over a proliferation of ill-kept houses in poor condition with large daily rents being charged to people in housing need, which hardly applies in York.

The government guidance issued in respect of the introduction of an Article 4 direction requires strong justification in the form of evidence of compelling reasons. For example, the relevant authority should have evidence that without withdrawing the permitted developments rights, local amenities or the visual impact of the area would be harmed.

Even if there are small pockets in York where such action is justified (and this is questionable), it is difficult to believe the whole of York needs such a policy. It could be argued that City of York Council has acted against the spirit and intention of the relevant legislation. In fact, the Council’s own report dated 10 January 2011 found no evidence or justification for an Article 4 direction and recommended further consultation. This was ignored, and on 20 April 2011 the required twelve months notice was given.

What are the likely effects of the Article 4 direction in York?

Without being political, it is possible to make one general, or perhaps cynical, observation. Wherever local or national government seek to influence outcomes via policy or legislation, often there appears to be unexpected or unwelcome results. For example, the policy in York requiring any significant development to include an element of “affordable housing” is blamed by many for stifling new house building.

There is no doubt that the number of HMOs has increased, but this has all operated on the back of the normal free market forces of supply and demand. The adoption of the Article 4 direction will influence supply and demand in many ways. The following are examples of possible effects.

With a doubt as to whether required planning permission will be granted, an investor is unlikely to make an offer on a house unless it is an established HMO, or a property with permission already granted.

There is a real possibility that house values will diversify. A house with established HMO use could become worth more, whilst the value of a similar owner-occupied house in the same street may reduce significantly. Ironically, those who have campaigned for these controls could suffer financially when selling their homes.

Those houses with established HMO status in the areas popular with sharers are likely to attract higher rents. In contrast those on a smaller budget are more likely to have to travel further.

HMOs are a vital part of the private rented sector offering affordable accommodation for those on low incomes, the unemployed people, migrant workers etc, especially in York where there is a shortage of housing and average earnings are relatively low. In fact there is a shortage of reasonably priced accommodation for working sharers and this new policy is unlikely to help.

Interestingly, an application for change of use to an HMO does not currently require a fee. However, it is understood that discretionary powers to charge a fee may follow soon. It is unlikely that City of York Council will ignore such powers.

City of York Council ‘s criteria for considering a planning application

On 10 January 2012 City of York Council met to discuss details of how they will assess applications for change of use once the Article 4 direction comes into force. To summarise a long policy document briefly, three options were considered; a neighbourhood area approach, a street level approach or a combination neighbourhood and street level approach. It was decided that a neighbourhood approach with a 20% trigger factor would be recommended. If confirmed, this means that when a planning application is received the surrounding neighbourhood (comprising, say, 600 to 900 properties) will be reviewed. A threshold of 20% will apply. The implication is that if more than 20% of houses in the neighbourhood are already HMOs the application is unlikely to succeed, this preferred policy being:
“In assessing planning applications for HMOs that fall within a neighbourhood area with less than 20% of properties being HMOs and particularly in marginal cases where a neighbourhood area is approaching the 20% threshold the Council will seek to ensure that the change of use will not be detrimental to the overall residential amenity of the area. In considering the impact on residential amenity attention will be given as to whether the applicant has demonstrated the following:

the dwelling is large enough to accommodate an increased number of residents; there is sufficient space for potential additional cars to park; there is sufficient space for appropriate provision for secure cycle parking; the condition of the property is of a high standard that contributes positively to the character of the area and that the condition of the property will be maintained following the change of use to HMO; the increase in number of residents will not have an adverse impact on noise levels and the level of amenity neighbouring residents can reasonably expect to enjoy; there is sufficient space for storage provision for waste/recycling containers in a suitable enclosed area within the curtilage of the property; the change of use and increase in number of residents will not result in the loss of front garden for hard standing for parking and refuse areas which would detract from the existing street scene.”

The recommended approach was confirmed in a Council meeting at 5.30pm on 3 April 2012.

Landlord expanding his portfolio

Consider the position of a landlord seeking to expand his portfolio or a new investor seeking his first investment property in York. If he is a cash buyer he can make an offer on a property subject to planning permission being granted. However, few owner occupiers would be willing to wait several months whilst a planning application was processed.

If the buyer needs a loan can he realistically consider a house without existing C4 status? Investment property mortgage offers are not easily obtained in the current economic and financial climate. No lender would consider a property without the relevant planning permission. Furthermore, in reality, an offer for a loan may well expire before a planning application is processed.

Even if a purchaser is attracted to a property and willing to make an offer subject to planning permission being granted, who pays for and processes the application? If permission is granted there is the risk the vendor will then ask for a higher price or another party will make a higher offer. If it is City of York Council’s intention to virtually stop the expansion of the private rental sector then it is quite likely they have achieved their aims. It is only to be hoped that they have fully understood the likely impact of their policy.

What about students?

So far in this article, apart from one reference to parliamentary concern about “studentification”, we have not used the “S” word. It has to be remembered that the new legislation is aimed at all HMOs and not just student houses. However, you only have to attend a planning meeting of City of York Council to realise that a small minority of committee members struggle to hide an obvious prejudice against students. Fortunately for them, or unfortunately depending on your point of view, there is no specific legislation preventing such prejudice. Furthermore, it seems there are sufficient members on the committee who appear to have a more balanced outlook to prevent this prejudice affecting the decisions.

Having said that, it seems an inescapable fact that it is the growth in student occupied HMOs that has caused City of York Council to adopt an Article 4 direction. There is clearly a vocal minority that wish to control where students can live and apparently the council believes that the city wide Article 4 direction is an essential way forward, rather than consultation or more targeted policy.

It has to be remembered that the Universities and other educational establishments contribute significantly to the economy of York and the students are an essential part of that contribution. It has been claimed that the two main universities and their students generate over £400 million for the local economy and employ more than 4,000 people directly. We happily accept the jobs, status and reputation associated with these organisations but it seems some would prefer it if we could have these without the inconvenience of having to house the students. There seem to be many opinions of where students should not live, but little consensus on how or where we should house the student population.

To illustrate this point, ironically, one City of York councillor who campaigned for the introduction of an Article 4 direction has spoken out against the 20% threshold claiming such a threshold would be counterproductive by pushing HMOs from areas already heavily populated by students into areas which currently have much lower percentages, such as his own parish of Osbaldwick. It would seem this councillor may have expected the Article 4 direction would stop virtually any further HMOs. Instead, he may well have scored a home goal.

One way only!

If you accept that planning permission is required, care needs to be taken not to lose existing C4 status. This is because a change of use back to C3 status is granted automatically. Therefore, if a landlord fails to find a group of unrelated sharers one year and rents to a family then the C4 status will be lost and council tax records can prove it. For council tax purposes it is established that if you have an exempt student let followed by another exempt student let, any void in between is itself exempt. By implication this is for short periods only. Similarly, if a gap was for most of the summer for major renovation work there should be no problem. However, if the landlord allowed a relative use of the house for a short holiday between lets arguably the C4 status would be lost. It would be hoped that common sense would prevail and the overall pattern of use would be what mattered, but from experience with planning matters this cannot necessarily be taken for granted.

Keep your records

One thing that seems certain is that if you have a house already in use as a C4 property on 20 April 2012, then it makes sense to keep your records in case you later need to prove the status at this date. To be absolutely certain you may wish to retain original tenancy agreements and bank statements etc from 20 April 2012 onwards to prove continuous C4 use. If your HMO requires a licence you may think further proof is not required, but it is the use of the property that matters, which is not demonstrated by having a licence.

If ever you sell a C4 property the solicitor acting for the buyer is likely to require a Certificate of Lawful Use. These can be obtained from City of York Council’s Planning Department.

Meeting the deadline

Some final points about the 20 April 2012 cut off date need to be appreciated and have not necessarily been clearly or correctly spelt out by other commentators. As far as City of York Council is concerned, it is the use of the property of that day that matters. If a landlord has recently bought a house which is being worked on and entered into a tenancy agreement before 20 April 2012 but which starts after this date, they have not met the deadline and planning permission is still needed. Furthermore, for the 20 April 2012 deadline, a property containing the owner and up to two lodgers does not constitute an HMO.

Summary

It is doubtful that the Article 4 direction will be the panacea some are expecting. The number of students to be housed will not alter as a result. In reality, all that may change is where those students live and how much they have to pay. Some unexpected or unwelcome results seem almost certain.

All the above assumes that with the Article 4 direction in force planning permission for a change of use will be needed. However, there is an argument that this is not the case and Article 4 could be just ignored for many properties where a landlord is seeking to rent for the first time after 20 April 2012.

Finally, it should be emphasised that the C4 category only applies for houses occupied by six unrelated sharers. Even before the 2010 changes in planning rules, an HMO occupied by more than six unrelated sharers was deemed to be in a different category. Many believe it is a fact that these have always needed planning permission and even advice from York Residential Landlords’ Association suggest this is so. However, this is also a grey area.

This article was written in April 2012 and certain points may be superseded.

C4 HMOs and Article 4 Direction – Is Planning Permission Actually Needed?

Introduction

Most stumbling across this article have probably done so because they are interested in purchasing an investment property in York and are concerned because they apparently need planning permission for an HMO. With doubt about whether this will be granted, it would be helpful if it could be avoided. For planning purposes, the definition of an HMO (a house in multiple occupancy) used to be different to that in the Housing Act 2004. Where a house was shared by unrelated occupants it would only have been an HMO if the occupants lived an almost separate existence in individual bed-sits, usually sharing some facilities such as bathrooms and toilets. This all changed in 2010 when the Housing Act 2004 definition of an HMO was adopted for planning purposes with the new C4 planning class. This article does not intend to fully cover the definition of an HMO which is assumed is fairly common knowledge by now. To fully understand the current position you should read the article about the City of York Council’s Article 4 direction here: http://www.apyork.com/landlord_info/change-to-planning-law-for-hmos.htm.

So for planning purposes you have two categories of HMOs; those with three to six occupants and those with more than six occupants. In theory, you need planning permission to convert a C3 property to C4 if an Article 4 direction is in force and, again in theory, have always needed permission for the larger houses. But is this really so?

Fundamentals of planning law

The fundamentals of planning are simple but are too often forgotten or misapplied. We need to proceed through a few, step by step. First of all, one basic point is that planning permission is only required for “development”. This definition includes material changes of use, so is not restricted to actual building work (Section 55 Town and Country Planning Act 1990) (TCPA). Under the Town and Country Planning (Use Classes) Order 1987 (SI 764/1987) (UCO) a change of use within each class is deemed not to be development. This is the legislation that landlords relied upon until 6 April 2010 when changing a family house into an HMO. (Remember, that for planning purposes before this date you had to be converting the house into bedsits occupied by six or fewer occupiers, as shared student houses were not HMOs for planning purposes until then.) Furthermore, the Town and Country Planning (General Permitted Development) Order 1995 (SI 418/1995) (GPDO) grants permission for certain specific changes between use classes. A key point is that neither order actually states that permission is required for other changes between classes, although there is a commonly held misapprehension that permission is always required for such changes. It is worth repeating these points again. You do need planning permission for “development”, which includes a material change of use. You do not need permission for change of use within a class of use (UCO). Certain changes between use classes are specifically allowed (GPDO). However, there is no specific legislation that states permission is necessary for other changes between classes, unless of course there is a material change of use. If you re-read the previous article referred to above, we have tried to refer to the need for planning only if there is a material change of use involved.

Changes in 2010

The UCO has been subject to several amendments. For residential landlords the most important of these took effect on 6 April 2010. The Town and Country Planning (Use Classes) (Amendment) (England) Order 2010 (SI 653/2010) effectively split the old C3 residential class into C3 dwellinghouses and C4 houses (small HMOs). It was from this point that the Housing Act 2004 definition of an HMO was adopted for planning purposes. Under the above order, in theory all changes from C3 to C4 needed permission; changing back the other way was permitted development. Whilst retaining the new C4 category and the Housing Act 2004 HMO definition, The Town and Country Planning (Use Classes) (Amendment) (England) (No2) Order 2010 (SI 2134/2010) in effect restored the pre 6 April 2010 position. This later order, effective from 1 October 2010, granted permitted development each way between C3 and C4 status with, in theory, one exception – where an Article 4 direction under the GPDO was adopted. Nothing in the 2010 legislation changes appears to have amended the basic point that planning permission is only required for “development”, so must, it would appear, include physical building work and/or a material change of use. In fact, that is only to be expected as the requirement for “development” is in TCPA which, as an Act, is primary legislation. The 2010 changes are in the form of statutory instruments which, as secondary legislation, cannot amend primary legislation. Now that there is the new C4 planning class, some might argue that movement between classes is indicative of a material change of use. Even if you accept this, it is not conclusive evidence and consideration must be given to whether the actual use has changed.

HMO advice unclear

The UCO amendment has been portrayed as meaning that planning permission is now required if the use of a family house changes to an HMO, or an existing small-scale HMO use expands so that more than six people are living there. But is this correct? It is accepted that to be classified as an HMO under the Housing Act 2004, a property does not need to be converted or adapted in any way. Indeed, this is acknowledged in paragraph 15 of Circular 08/2010. However, planning permission is required for “development” so, to automatically require planning permission for the occupation by a few non-related sharers, must mean it is deemed that their occupation is materially different to occupation by a family. Can you see where this is heading yet?!

Planning case law

If your head is beginning to spin, it may help to consider the actual application of the law, rather than how a local authority may prefer to interpret it. Courts have held that the first thing to consider in determining whether a material change of use has occurred (or will occur) is the primary use of the land. Each case will always be a matter of fact and degree and requires judgement from the local planning authority in the first instance. This might not be so bad if the local authority officers look at the actual facts only, without being influenced by the political preferences of the ruling councillors or being confused by prejudging when permission is required. We have seen no reference to any suggestion that planning permission may not be required for a change of use from a C3 dwellinghouse to a C4 HMO in York after the local Article 4 direction comes into force. It seems safe to suggest that the opinions of local planning officials could be fixed. A recent planning appeal casts doubt over the automatic assumption that planning permission is now required if the use of a family house changes to an HMO. That case concerned the use of a double fronted end of terrace house. In considering its use as an HMO the main concern was noise disturbance for the occupants of the property next door. Addressing this point the inspector stated: “I consider the issue of noise would be little different to that associated with a typical family, and many bedrooms occupied by children and particularly teenagers contain televisions and audio equipment. Thus, whilst tenants may be inconsiderate on occasion, the same could be said of any type of occupier.” “There is no evidence to substantiate the generalised assertion that occupiers of a HMO are intrinsically more disposed to coming and going in the late evening or early morning hours than occupiers of other property types.” So it seems fair to suggest that whether a dwelling is occupied by a family or a number of unrelated people does not alter the nature of the use. This is obviously correct and will make it difficult to enforce against changes in occupation covered by the new use classes. If a family including adult children with cars occupies a house and then rent it out to a similar number of unrelated individuals, is that really likely to lead to a genuine change in use? The external impacts are likely to be largely the same.

Actual planning law

Now this may come as a surprise to many, but under planning law it is not an offence to use your property as you want without first obtaining planning permission. In fact, planning law prevents your local authority stopping you using the property in line with planning permission once it is granted. The extreme contradiction of the system is that if planning permission will be granted you do not need to apply! The practical side of the legal position is that you can use your property as you wish. If the local authority finds out and decides that there has been a material change of use requiring planning permission, they will ask you to apply. However, before they can take action, the local authority also have to show you are causing harm to the amenity by the change of use, ie the property is causing more harm by its current use than in its previous authorised planning use. So on the whole, enforcement is very difficult. If you fail to apply, the local authority then has to confirm its opinion and serve you with an enforcement order. Only if you fail to comply with the enforcement order are you in breach of the planning law. Given the doubt about the need for planning permission to change from C3 dwellinghouse to a C4 shared HMO (or maybe even a small house converted to bedsits) it is tempting to turn the tables on the local authority. Therefore, rather than apply for planning permission, let your local authority consider the statute, case law, and decided planning appeals. If they then decide you need permission the process in the paragraph above applies.

Current position

So where does this leave York landlords? Well if you approach the City of York Council planning department for advice it is extremely doubtful they will suggest that change of use from C3 to C4 may not need planning permission. Furthermore, they are unlikely to be handing out copies of the ruling in the planning appeal referred to above in the interests of presenting balanced advice. Therefore, you may have to accept there is no free independent advice. This means you need to act on your own, with or without the benefit of independent professional advice.

The way forward

So it seems you have two options:

1 Accept you need planning permission and make a standard application. The advantage of this is there is no cost involved if you do not use a planning specialist to advise you. The disadvantages are the time delay which may affect a purchase and the fact that the matter is highly sensitive. From the experience of applications made shortly after 6 April 2010, early applications after 20 April 2012 are unlikely to go through on delegated powers where they might be decided more objectively by council officers, whatever their merits. Instead, the application is likely to go to a planning meeting for a ruling by what is a subcommittee of the full council who voted for the Article 4 direction in the first place. The implication of making a planning application is that you accept it is required, which it could be argued weakens your case.

2 The second option is to carry on as you wish. In effect this runs the risk of the council contacting you and deciding you need planning permission, but what is the downside? By adopting an Article 4 direction and requiring landlords to make planning applications the council takes little risk and forces compliance with planning laws that may not apply.

It may be that a local Landlords’ Association could decide to help fund any appeal that appears to have some merit. Grounds for appeal could include that:

• Planning permission is not needed;

• City of York Council has not proved the need for an Article 4 direction at all (ignoring its own report dated 10 January 2011 that found no evidence or justification for an Article 4 direction);

• City of York Council has applied an Article 4 direction too generally by specifying virtually the whole city rather than specific areas (compare with Newcastle council);

• City of York Council has not consulted sufficiently by ignoring other options suggested by Landlords.

Summary

It will all depend on whether or not there is an Article 4 direction in place in future as to whether or not planning permission is needed. Even then there must be a material change of use which will depend on the circumstances. Where an Article 4 direction is in place, if there is a material change of use, then planning permission will be needed. However, for enforcement action, the impact (if any) on the neighbourhood of any change of use must be considered to see if the property is causing more harm by its current use than in its previous established use.

This article was written in March 2012 and certain points may be superseded.

References:

Circular 08/2010Communities and Local Government Circular 08/2010 – Changes to planning regulations for dwellinghouses and houses in multiple occupation
GPDOTown and Country Planning (General Permitted Development) Order 1995 (SI 418/1995
TCPATown and Country Planning Act 1990
UCOTown and Country Planning (Use Classes) Order 1987 (SI 764/1987)

Large Sui Generis HMOs – Is Planning Permission Actually Needed?

Introduction

This is the third of three articles about planning. Rather than repeat all the points made previously, it is assumed you have read and understood the previous article about smaller C4 HMOs:

C4 HMOs and Article 4 Direction – Is Planning Permission Actually Needed? – http://www.apyork.com/landlord_info/c4-hmos-and-article-4-direction.htm

A point often missed by landlords in the past is that for planning purposes shared properties were split into two categories, those with up to six occupants and those with seven or more. These larger shared houses are unclassified by the Town and Country Planning (Use Classes) Order 1987 (SI 764/1987) (UCO). In planning terms they are described as being sui generis (of their own kind).

Even if the point was missed in the past, the introduction of the new C4 class has clearly highlighted the different category. Now that the Housing Act 2004 definition of HMO applies for planning purposes, we will refer to a shared property with seven or more occupants as a large shared HMO. (A house split into flats or bedsits was an HMO for planning purposes even before the 2010 changes. The conversion is a material change of use that required planning permission. These are not shared properties and, for the purpose of this article do not fall into our definition of a large shared HMO.)

There is a common assumption that a planning application will be required for a change of use from a C3 dwellinghouse to a large shared HMO or from a class C4 HMO to a large shared HMO. However, the fundamentals of planning law still apply and it remains a basic point that planning permission is only required if there is a material change of use.

Contrast with C4 HMOs

This article could end now – just go back to the previous article, read the arguments about material change of use and in many cases the problem is solved. However, there are more subtle points to appreciate.

Historical background

Remember, prior to 6th April 2010, there was a single use class (C3) which consisted of houses or flats lived in by a single person; by a family; or by a group of up to six unrelated sharers who lived as a single household. You could change between these uses without needing planning consent. Therefore, before this date, for planning purposes, the larger shared houses (more often than not student houses) were not HMOs. However, for some reason not clearly identified in the relevant planning law, it has been suggested they needed planning permission.

Practice

Frankly, as planning was not needed for smaller shared houses occupying up to six sharers and as larger shared houses are relatively few in number and not specifically classified in the UCO, it is fair to say that the need or lack of need for planning permission has depended upon the local authority and usually been widely ignored.

Typically, if asked, a local planning authority might claim that, strictly speaking, a large shared HMO needs planning permission but not actively seek out those for which an application had not been made. In practice local planning authorities rarely take action unless they receive a complaint about an HMO. Even then most have taken the view that as long as there are no more than “about” six people sharing most facilities with no question of overcrowding, then no action is necessary.

Current position

So now we have the Housing Act 2004 definition of HMO brought into planning permission. Those houses split into flats or bedsits always were HMOs, so are not affected by any change in legislation. The small shared houses are now identified as a new class but given deemed permitted development under the GPDO unless an Article 4 direction is in force. Where such a direction is introduced, any existing small shared house HMOs have established use and do not require any planning permission. If anything, the 2010 change in planning law has highlighted the separate status of large shared HMOs, but not provided any new guidance of how they should be treated for planning purposes.

Enforcement

For some reason, all of a sudden City of York Council has developed an interest in large shared HMOs. Leaving aside the question of why, letters have been issued to letting agents and/or owners stating that permitted development rights only apply for properties with up to six persons sharing, and alleging “it is highly likely” that the large shared HMOs will require planning permission. Frankly, this is very soft language for planning enforcement and, if you look at the evidence, it is highly likely they do not.

In reality the local planning authority has a significant hurdle to jump before it can do anything about the use that is being made of a property. It is not a criminal offence to breach the use class orders without formal permission. It only becomes a criminal offence if enforcement action is taken to stop the property owner using the property in its current use and the owner does not appeal against the enforcement action or, if they do, they are unsuccessful. The owner can appeal against enforcement action and one of the grounds is that enforcement is not justified as the current use is not causing any greater harm than the permitted use. The arguments mentioned in the previous article may be used.

Also, beware of treating changes between use classes as meaning that planning permission is needed where it was not before. Just because uses are in different classes, or one use is sui generis, does not necessarily mean that permission is required to change the use. Remember the comments of the planning inspector in the appeal referred to in the last article. There is no limit on the number of members of the single household under C3 dwellinghouse. It seems fair to say that whether a dwelling is occupied by a family or a number of unrelated people does not alter the nature of the use. This is obviously correct and will make it difficult to enforce against changes in occupation. If a large family including adult children with cars occupy a house and then rent it out to a similar number of unrelated individuals, is that really likely to lead to a genuine change in use where the external impacts are likely to be largely the same?

In addition, paragraph 17 of PPG18 clearly states that an enforcement notice should not normally be issued solely to “regularise” development which is acceptable on its planning merits, but for which permission has not been sought. Instead local planning authority should persuade the owner to seek planning permission if it is required. It is worth noting that even this provision only applies where there has been “development”, ie a material change of use.

Summary

In most cases, the chances are that a large shared HMO without planning can operate without problems. Frankly, in normal circumstances it is unlikely the local planning authority will take any action. In reality, with large shared HMOs, it has been suggested there is little they can do apart from bluff and intimidation, unless there has been unauthorised building work.

The approach the local planning authority is supposed to take when they discover unauthorised use is contradictory. The rules in PPG18 first state that the property owner should be encouraged to apply for planning permission. They then go on to say that if planning permission is likely to be granted then the local planning authority should not take enforcement action.

As stated in paragraph 17, annex A of circular 08/2010, although the control limit of six persons defines the scope of some planning classes, this does not imply that any excess of that number must constitute a breach of planning control. A material change of use will occur only where the total number of residents has increased to the point where it can be said that the use has intensified so as to become of a different character.

There are possibly about 100 student houses with more than six occupants. Some will have planning permission, but others have more than seven occupants. Therefore, assume that if City of York Council were to require these to be rented out to no more than six occupants this could create demand for (say) another 20 to 25 smaller student houses. In a time where the apparent intention is to control the number of student houses and given the doubt about the powers the council has, you have to wonder why this policy is being pursued.

York could do with objective planning policy rather than subjective politics.

This article was written in April 2012 and certain points may be superseded.

References:

Circular 08/2010Communities and Local Government Circular 08/2010 – Changes to planning regulations for dwellinghouses and houses in multiple occupation
UCOTown and Country Planning (Use Classes) Order 1987 (SI 764/1987)

Rent paid in advance is not a deposit – Johnson v Old – Court of Appeal April 2013

Introduction

In April 2013 the Court of Appeal ruled in favour of the landlord in the case of Johnson v Old, concerning the question of rent paid in advance and whether it counts as a deposit requiring protection.

The case concerned a tenant, Ms Old, who, as a result of her inability to meet the landlord’s credit and income referencing requirements, was asked to pay six months rent in advance for a six month tenancy. The tenancy continued for three terms, and then became a periodic tenancy. Shortly afterwards the landlord served a section 21 notice in order to regain possession.

The tenant, however, insisted that the payments of six months’ rent should be treated as deposits that had not been protected, and that the section 21 was therefore invalid and she was entitled to compensation. A County Court judge upheld the tenant’s claim, but this ruling was overturned in the Court of Appeal.

What does the ruling mean?

The Court of Appeal’s ruling upheld the landlord’s right to ask for six months’ rent in advance and for it not to be treated as a deposit.

The Court posed the question of how the tenant would have reacted had they been asked to pay rent for one of the months covered by the six months that had already been paid. The Judge concluded the response would have been that the rent had already been paid.

The final part of the case focused on the question of whether or not the money had been properly protected – but, as the Court had already found that the money did not constitute a deposit, this was ultimately deemed irrelevant.

What does the case mean for landlords?

Johnson v Old has three main implications that landlords should consider.

•  To win the same argument it is vital that tenancy agreements are well drafted. Johnson v Old was complicated by a poorly drafted document. Had the tenancy been better written, it is likely that the case would never have gone so far.

•  Landlords are free to ask for several months’ rent in advance, and this is a reasonable response in circumstances in which a tenant cannot pass credit referencing requirements.

•  Provided the tenancy agreement is correctly drafted and the payment is genuinely rent paid in advance, then is unlikely to be treated as a deposit, and it is therefore unlikely that it will need to be protected.

Case summary

The full report of the case can be read here.

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