Government proposals to tackle complaints about student enclaves in university towns threaten disastrous consequences for students, landlords and local property markets.
 
In an attempt to address the impact that pockets of student accommodation can have in certain areas, the Government is proposing a new and more embracing definition of what constitutes a house in multiple occupancy (HMO).
 
At present, to be classed as an HMO a property has to be occupied by six or more unrelated persons - essentially people not in the same family. Letting to a higher number requires planning permission for ‘change of use’, a financially costly and time consuming process.
 
The new proposals would reduce to three the number of unrelated tenants needed to turn an ordinary let into an HMO let - meaning that change of use planning permission will have to be sought for a very large number of student let properties. Landlords who own such properties and who wish to continue in the student let market are likely to find themselves having to fork out legal fees while suffering lengthy void periods.
 
Ministers have argued that a clampdown is required because of a rise in complaints about litter, noise and anti-social behaviour emanating from student accommodation in residential areas.
 
John Denham, the MP for Southampton who was appointed Communities Secretary in the spring, has been a long term campaigner against the impact on towns of large student numbers. And now he is planning to tackle the issue through a change in the so-called Use Classes Order from 1987, which enables councils to control excessive concentrations of specific types of property.
 
His plans would not only limit the number of unrelated persons inhabiting a single property, but would also bring HMOs under greater council control. It seems likely that the plan would centre on controlling both the number and distribution of HMOs in an area by using the local planning system.
 
Denham has stressed that he is not being ‘anti-student’ and that he is aware that it is only a minority of students who are responsible for the sort of anti-social behaviour that the plans are trying to curb.
 
However, the National Union of Students, together with the British Property Federation, Federation of Small Businesses, National Landlords Association and Residential Landlords Association, has sent a letter to Denham, condemning the proposals.
 
Wes Streeting, president of the National Union of Students, said: ‘Students live and work within their communities and contribute hugely to their local areas through charity work and campaigning on local issues, not to mention the massive boost they give to the local economy.
 
’We would welcome these proposals if they were about improving standards of student accommodation, but we fear that they actually just amount to unconstructive headline grabbing.
 
’If John Denham is in fact planning to clamp down on houses of multiple occupancy in this manner, he will be forcing students to pay private companies to live in ghettoes away from the rest of the community, or to find accommodation in the unregulated market. This will do nothing to improve community cohesion’.
 
Liz Peace, chief executive of the British Property Federation, says: ‘You can’t use the planning system for social engineering to tackle anti-social behaviour’.
 
Other critics have pointed out that it is not just students who will be affected by the proposed changes. Young professionals who have found it impossible to get on to the property ladder have turned to shared occupancy as a way to save enough money for a deposit on a property. A lower cap would make finding this type of accommodation harder, as well as punishing others dependent on current HMO law, such as a couple who have taken in a lodger, but who then have a child.
 
Streeting adds: ‘It is not just students who live in HMOs. Many young professionals and migrant workers share houses - it is extremely foolish to propose that we displace all of these people in the middle of a housing crisis’.
 
This is also especially bad news for people who have been forced to enter the rental market due to the fall in property prices, so-called ‘accidental landlords’.
 
Not only have they been unable to sell their property but could now also be unable to rent it out until they comply with the new regulations. Even then, their property may not be included in the quota for that area, leaving them with an empty property, no income, and a buy to let mortgage to pay.
 
’If implemented, this proposal could have worrying consequences for everyone involved in the residential property market’, says Giles Ferin, planning principal at EMW Picton Howell, the commercial law firm. ‘If local authorities decide to limit the number of HMOs in an area, landlords and developers could find themselves left with empty properties for a considerable length of time’.
 
And many groups feel that the proposals will only help these problems in the short term, and in the longer term would cause a considerable rise in rental prices, as a drop in the number of eligible rental properties leads to demand vastly outstripping supply.
 
Mark Butterworth, director of the RLA says: ‘It's a small and vocal group of MPs who have formulated this policy and got the support of the new housing minister, but nobody seems to have thought it through’.

With the buy to let sector having suffered as a result of the recession, not is the time to stimulate the property market, not to introduce measures that give nothing but a huge warning sign to anyone considering investing in rental property over a certain size.
Essentially it can be summed up as: ‘Buy your rental property now, and in, say, six months time, we may decide you’ll need planning permission to continue to rent it out. However, even then it’s not guaranteed to be included in the limited number of HMOs we are permitting in this area. Sorry’.

So, smaller HMO type properties are hardly a wise investment opportunity just now. Hopefully the idea, which is nothing but an ill thought out, knee jerk reaction to small but vociferous groups of local nimbys, will not be put into practice.

If the proposals are implemented they will have far reaching and negative impacts on numerous socio-economic groups, local communities and the nation’s economic health as a whole. We can only hope the Government will come to its senses and bin the proposals as quickly and publicly as possible.