HMO Article 4: When landlords need planning permission

If you’re a property investor looking for high rental yields, Houses in Multiple Occupation (HMOs) are a good option for this. If you are able to get multiple rental streams from one single rental property, you’ll be able to scale your property portfolio to a different level. But it is worth noting that the HMO world is heavily regulated. If you overlook these regulations, this can lead to property closures, crippling council fines and a property that can no longer be rented out legally. 

Here, we’ll discuss the HMO Article 4 and how it impacts your planning rights. We’ll explain what an Article 4 Direction is, how to protect your capital before purchasing a property and when it removes your right to convert a house into an HMO. 

What is an Article 4 Direction?

So, what exactly is an Article 4 Direction? In order to understand Article 4, you need to first understand Permitted Development (PD) rights. Under UK planning laws, property owners have certain rights when it comes to making certain alterations or changes of use to their property without having to submit a formal planning application to the local council. (Gov.UK)

So, when you plan to change a standard family home into a small HMO, it will fall under these permitted development rights, which means you’ll need to move from Class C3 (dwellinghouse) to Class 4 (HMO) (Gov.UK). Here’s the difference between the two:

• Use Class C3 (Dwellinghouse): A standard home occupied by a single family or up to two unrelated people.
• Use Class C4 (HMO): A small shared house occupied by between 3 and 6 unrelated individuals who share basic amenities like a kitchen or bathroom.

In an area without the Article 4 direction, you’re able to make these transitions without needing planning permission. 

An Article 4 Direction is a process used by local planning authorities to override this and to completely take away permitted development rights. Now, you’ll need to apply for full planning permission in order to change the property from a C3 into a C4.  

It is important to note that large HMOs that are designed for 7 or more unrelated occupants will always require full planning permission from the local council, irrespective of whether or not the HMO is in an Article 4 Direction area. 

Why Do Local Authorities Use Article 4?

Article 4 Directions for HMOs are used as a means to manage the balance of local communities and are mostly used in areas where there is a high concentration of shared housing. This is especially true for university towns, coastal cities and high-density urban centres. These areas can put a lot of pressure on local infrastructure, and so councils will use Article 4 to control and mitigate issues, such as: 

• Parking congestion: HMOs will automatically have more vehicles parking around the building, which could cause issues for street parking. 
• Refuse and waste management: There will also be significantly more waste, which will increase litter. 
• Community imbalance: HMOs could increase the chance of anti-social behaviour or the closure of local schools due to the decrease in permanent families. 

So, if local councils can force landlords to apply for planning permission, they will be able to put a limit on the number of HMOs in a specific area. 

When Does a Landlord Need Planning Permission?

It can be confusing trying to keep up with when you may or may not need to submit planning permission. Here are the different scenarios in which you may or may not need to apply for planning permission: 

Scenario A: Small HMO (3-6 People) OUTSIDE an Article 4 Area

You won’t need to apply for planning permission for a small HMO outside an Article 4 area. This is due to the fact that the conversion is completely covered under the nationwide PD rights. You’ll be able to continue with changes made to the building, but you’ll still need to adhere to local property licensing rules. 

Scenario B: Small HMO (3-6 People) INSIDE an Article 4 Area

You’ll need planning permission for a small HMO inside an Article 4 area because the council has revoked PD rights within this area. You are not allowed to legally house three or more unrelated tenants without getting a Change of Use planning consent first.

Scenario C: Large HMO (7+ People) ANYWHERE

You will definitely need planning permission for a large HMO, as this class has never been protected by PD rights. This means that full planning permission is mandatory across the UK, both inside and outside Article 4 zones. 

What is the Difference Between Licensing and Planning Permission?

It is important to know what the difference is between HMO licensing and HMO planning permission because they are two different departments within a local council and are governed by different pieces of legislation. 

• HMO Licensing (Housing Act 2004): This deals with how appropriate the property is for human habitation, taking into consideration safety, amenity, size, and management. (Gov.UK)
• HMO Planning Permission (Town and Country Planning Act): Deals with the legal usage of the building and its impact on the local community. (Gov.UK)

It’s important to note that although you apply for an HMO licence, pay the fee and have the housing department grant it to you, you could still be in breach of local planning laws. Holding an HMO licence does not protect you from planning enforcement action if you are operating inside an Article 4 area without planning permission.

How to Check If a Property Sits Within an HMO Article 4 Area

You should never rely on a property listing or an estate agent’s word to assume the property is compliant. You’ll need to perform due diligence before purchasing the property or converting a building. This is how to check if a property sits within an HMO Article 4 area: 

1. Check the Local Council Website: Make sure you search the local authority’s planning portal to specifically look for Article 4 directions. Most councils will maintain a dedicated page listing all active directions. They will also hold detailed outlines of the exact streets that are affected. 
2. Use Interactive Planning Maps: Some councils will provide interactive maps that will allow you to put in the property’s postcode and then find out whether or not the property falls within a restricted area. 
3. Instruct Your Conveyancing Solicitor: You’ll need to instruct your solicitor to look for Article 4 constraints. 
4. Seek Pre-Application Advice:  If your property sits directly on the boundary line of a restricted zone, make sure you contact the council’s planning department to get advice on getting a definitive ruling in writing. 

Why Article 4 Matters Before You Buy, Convert, or Market

If you overlook Article 4 constraints, it can result in financial disaster, so make sure you check to see if your property falls within the area. Here’s why conducting this check is important: 

The Risk of Planning Refusal

You may find that your planning permission is refused if you buy a standard house inside an Article 4 area with the intention of turning it into an HMO. You may be left with a property that doesn’t bring in a high rental yield, causing you to flip the property. 

Council Enforcement and Penalties

If you decide to operate an unauthorised HMO within an Article 4 zone, this is a breach of planning control. So, if the council receives a complaint or gets wind of the breach during an audit, it can issue a formal planning enforcement notice. This notice forces you to stop using the property as an HMO, evicts your tenants and reverts the building back to a single-family home. If you ignore the enforcement notice, this can lead to unlimited court fines and maybe even a criminal record. 

Evidencing Lawful Use

You’ll need to ensure an HMO is operating legally if you decide to buy an existing small HMO within an Article 4 zone. If the HMO was set up after the Article 4 Direction was put into effect, the seller will need to produce the official planning permission document. 

If the HMO was in operation before the Article 4 Direction, it may benefit from established lawful use. However, you’ll need to ensure that you gather all the relevant information/proof to prove that it has been occupied continuously as an HMO without interruption. You’ll need to look for historic tenancy agreements, utility bills, and council tax records. 

Securing Mortgages and Insurance

HMO mortgage lenders and insurers will want to have all the relevant proof that the property is compliant with local planning regulations before they decide to release funds or validate a policy.  If you aren’t able to provide a planning certificate, your financing may be pulled. 

Article 4 directions can be complex to navigate, but they do not need to deter you from the HMO rental market. Restricted areas will highlight locations where tenant demand is high. 

If you’re looking for landlord insurance to help protect your rental property, make sure you get in touch with our team of specialists for a quote today on 01788 818 670. Or you can visit our advice centre for more information on how to manage your rental property.