New HMO licensing rules could impact London’s biggest rental market
Em Morley - October 13, 2021
Research by central London estate agency Bective has revealed how new HMO licensing rules will impact London’s biggest rental market, Westminster.
The new rules came into force in Westminster at the end of August 2021. They state that shared houses or flats where 3 or more people from 2 or more households share facilities now require licensing as HMOs (houses in multiple occupation). This is in replace of the rule that stated an HMO license wasn’t mandatory until 5 or more people were sharing facilities.
Bective’s research highlights that Westminster is the largest private rental market in London, where private rental stock accounts for 27% of all dwellings. In Westminster, this number rises to 42% of dwellings, followed by the City of London (41%) and Kensington & Chelsea (37%).
Top 10 boroughs ranked top to bottom for private rent as % of total stock
Westminster also has the 6th largest number of existing HMOs (9,539) of all London boroughs, trumped only by Ealing (20,429), Brent (16,984), Lambeth (12,000), Tower Hamlets (10,000), and Enfield (10,000).
Over the past three years, Westminster has seen the 8th largest increase in the number of HMOs, up 19% between 2017 and 2020, behind Hillingdon (668%), the City of London (614%), Lambeth (532%), Tower Hamlets (67%), Newham (58%), Waltham Forest (53%), and Harrow (36%).
Total number of HMO properties in London boroughs in 2017 and 2020, ranked from biggest 3-year increase to smallest
However, with these changes now in force, Bective points out it is likely the number of HMOs within the borough will now spike.
Tom Dainty, Head of Lettings and Property Management at Bective, comments: “The impact of these new rules will be two-fold. Yes, it’s undeniable that additional HMO licensing and tighter scrutiny when dealing with rule-breakers will benefit tenants by raising the standard of living.
“But, at the same time, this increased scrutiny, along with the additional costs, might tempt landlords to up sticks from Westminster and find more profitable investments elsewhere.
“This exodus will be of detriment to tenants. Less landlords means less stock, and less stock means higher rent prices. With Westminster’s average rent already more than £2,600 a month, this could further price more tenants out of the borough.”