Now sharing means caring

New rules for owners of flatshare property could hit the lettings market hard, says Chris Partridge

Rigsby would despair. The down-at-heel anti-hero of Rising Damp made his money by packing his large house with sharers - but imminent regulations on Houses in Multiple Occupancy (HMOs) will force such set-ups to be registered with the local authority, submit to inspections and comply with tight safety standards.

Rigsby would despair. The down-at-heel anti-hero of Rising Damp made his money by packing his large house with sharers - but imminent regulations on Houses in Multiple Occupancy (HMOs) will force such set-ups to be registered with the local authority, submit to inspections and comply with tight safety standards.

The new rules could, however, cause a shortage of flatshares as landlords sell up to owner-occupiers rather than go to the expense of complying. In England and Wales, the new regulations on HMOs were introduced in the Housing Act 2004, and will come into force later this year. In Scotland, however, HMO legislation was brought in by the Scottish Assembly back in 2000.

Scottish legislation makes it necessary to get a licence for most shared rented accommodation, says Colette Murphy of Braemore Property Management in Edinburgh. "In Scotland, any property let to three or more unrelated individuals must have a licence. This was brought in because of a fire in Glasgow where two people were killed, to improve the safety of flatshares."

The legislation has been effective in stamping out firetraps, but at a cost. "Rented properties have definitely improved and are safer places," Murphy says. "You need interlinked, mains-operated smoke alarms in every room, doors with fire-retardant membranes and proper fire escapes."

Even the elegant fanlights that are a feature of doorways in Georgian Edinburgh have to be covered up, so that if they break they cannot admit air to fan the flames. Electrical and gas installations must also be inspected and certified. Such is the complexity of HMO compliance, specialist companies have been set up to do the job on behalf of landlords.

The cost of complying is significant - Murphy estimates landlords spend on average £2,000 to 3,000 to bring a place up to scratch, plus an annual licence fee of up to £500, depending on the size of the property.

The hassle has pushed many landlords out of the sector, Murphy says, and those who remain have had to pass the cost on to tenants. "For a good double-bedroom flat in the city, you now have to pay £200 to £300 a month."

It is not all bad, however. "Landlords prepared to do the work have got themselves into a strong niche market," Murphy says. "Students are good tenants: they pay good rents, which are guaranteed by their parents, and take a lease for a whole year."

But proposals to extend the Scottish system to England and Wales have caused alarm among letting agents, who predict that buy-to-let landlords will sell up en masse. In the event, the regulations apply only to houses of three storeys or more, shared by five or more unrelated people. The licences will be for five years instead of one.

Despite this, the rules will have an effect on sharers, especially in centres such as London with a lot of tall, period houses, says Dale Hodgson of Hamptons. "It will hit the lettings market. A lot of properties will be affected, and it is likely to cause difficulties in big sharers' markets such as Oxford."

Letting agents are also worried landlords may inadvertently get a criminal record. "Non-compliance is a criminal offence, carrying a maximum £20,000 fine," Hodgson explains. "What worries us is that the regulations will be applied differently by different authorities, who can write their own rules." She says inspectors can focus on so many aspects of a building that it will be impossible to predict what work will be necessary to comply.

"The authorities can consider natural versus artificial lighting, personal washing facilities, drainage, space heating and so on, and will also be able to serve repair notices, which they can't do now."

The universities do not predict a shortage of shared accommodation, although Roland Shanks at the University of London accommodation office says rents are bound to rise. "This is good legislation and we welcome it. The only potential difficulty is that local authorities may not get extra money to enforce it, and it could take for ever to inspect all the properties."

In any case, students are turning away from sharing in large groups, preferring to find a flat with just one or two others. "We have noticed that larger properties are less popular," Shanks says.

"They used to get together in large groups, because they made friends in residences with lots of bedrooms off a corridor. But now most halls have cluster flats with smaller numbers sharing a kitchen, and they like to move together when they leave."