Should holiday accommodation used by workers need an HMO Licence?

01.07.19

At the moment, people in Scotland who spend periods of time working away from home – often in B&Bs and other holiday accommodation – are not protected by the same rules that apply to people living in shared rented property as their principal home.

However, that could soon change. The Scottish Government is currently consulting on whether to add new categories of properties to the definition of a House in Multiple Occupation (HMO). Adding these would mean that the owners of some types of holiday accommodation may have to obtain an HMO Licence before they could continue to let the property.

Why is the consultation happening?

The Scottish Government is reacting to concerns expressed by local authorities about the number of workers living in B&B and other holiday accommodation for long periods of times in circumstances which mirror an HMO. The aim is to address potential health and safety concerns including fire safety, overcrowding and to ensure such properties are generally fit for use and well-managed.

Current HMO rules

Currently, an HMO licence is needed where three or more unrelated people occupy a property as their main or only residence, and share kitchen or bathroom facilities. An HMO must meet certain physical standards and fire standards. The owner of the property is responsible for obtaining an HMO licence from the local authority in whose area the property is situated. The local authority must be satisfied that the property meets the required standards, is suitable for use as an HMO and that the owner and any manager is a fit and proper person to operate an HMO. Non-compliance with the HMO requirements is a criminal offence and can result in a fine of up to £50,000.

For the property to be an HMO, the occupiers must be using the property as their main or only residence and so, currently, holiday accommodation does not require an HMO licence. The consultation is looking to change this to allow local authorities to consider the manner in which the property is being used, without having to worry about the occupiers having a principal home elsewhere.

Will all holiday lets be affected?

It’s important to note that the consultation does not intend for all holiday lets to become HMOs. Instead, it is targeting accommodation used by “contract and transient workers”.

What exactly is the consultation proposing? :

According to the draft regulations, contract and transient workers are defined as persons “whose employment, due to its location or any other reason, requires them to live in accommodation which is not their only or main residence.” This very wide definition is presumably designed to catch as many scenarios as possible, to ensure that the policy motive is not frustrated.

The draft regulations propose that both the type of accommodation and the manner in which it is being occupied must be taken into consideration when deciding whether an HMO licence will be needed.

They suggest that where a physical and/or operational change has been made by the owner to B&Bs, hostels or hotels, or to the nature of the business to accommodate workers in a manner which differs from the use of the premises by tourists, an HMO licence should be needed. An example of such a change would be where workers are allowed to use a B&B’s kitchen to prepare evening meals. This is not what tourists would usually be able to do, so if this takes place, an HMO licence would be required.

Type of workers and holiday accommodation affected

The draft regulations also propose that an HMO licence should be needed where workers engaged in seasonal, agricultural or other work - or waiting to go offshore or on return from offshore - are living in any of the following:

  • living accommodation in the same premises where the worker is employed;
  • a flat or house;
  • a serviced apartment;
  • self-catering accommodation also used for tourism lets;
  • lodgings consisting of a rented room or rooms in another person’s house;
  • a non-traditional or temporary structure designed or adapted for living accommodation, which is not:
    • a caravan (as defined by section 29 of the Caravan Sites and Control
    • of Development Act 1960); or a tent, van, shed or similar structure, used for human habitation.

For hotels, hostels and B&Bs, the key is whether changes have been made to the property or the business. For the other properties, it is the type of worker that they are hosting.

So, three or more unrelated workers occupying a serviced apartment will not trigger the need for an HMO licence - unless the workers are engaged in seasonal agricultural or other work, or are using the property as accommodation before or after being offshore. It is not clear from the draft order whether the reference to “other work” is meant to be other seasonal work or whether it is intended to encompass all other work.

Finally, there is a catch-all for all of the property types. An HMO licence will be needed where workers live in the accommodation with another person or persons, who call that property their main or only home, and the number of workers and other persons together amount to three or more unrelated persons.

In summary, the way the property is being used will be key to determining whether an HMO licence will be needed. The example given to illustrate that is a B&B being used by workers in the same way as tourists would use the property – no HMO licence would be needed. However, it may not always be so straightforward to determine.

Impact for accommodation owners

If the proposed timescales in the regulations are retained, i.e., one day’s use by three or more workers in any one year could trigger the need for an HMO licence, the regulations will be far reaching and potentially costly for some accommodation owners.

If you would like to share your views with the Scottish Government, the consultation will run until 8 July.