New rules relating to licensing of houses in multiple occupation (HMO) came into force August 2011. Landlords should be aware of these rules, which require a local authority HMO licence when a property is shared by three or more unrelated individuals.

There are some exceptions but a recent court case has shown that landlords should not try to avoid compliance with the rules by attempting to find inventive ways to meet some of the exemptions. More details can be found here.

The case involved an Aberdeen landlord who had a flat which was leased to six students.

• He put a clause in the lease saying that the occupiers 'agreed to live as a religious order/family in a way that maintains exemption' from the HMO regulations.
• He advised the council the flat was occupied by a Mormon family maintaining a Christian community.
• The landlord eventually applied for a HMO licence.
• At the committee meeting the landlord was asked if he had 'colluded' with the tenants in an attempt to evade HMO regulations. He answered that question in the affirmative.
• The local authority refused the licence on the basis that his attempts to create an exemption showed that he was not a ?fit and proper person? to be granted a licence.

The landlord then appealed to the sheriff court but the sheriff rejected the appeal. He found that the local authority was entitled to decide that the landlord was not a fit and proper person.

The sheriff upheld the committee's decision and advised:

• The landlord had sought to manufacture a situation to meet the terms of the available exemption.
• He did not lease the house to a religious group or a family.
• The landlord's argument that his attempt was analogous to tax avoidance was rejected. The sheriff took the view that the positive answer to the question about 'colluding' and 'evading' created an admission of dishonesty on the landlord?s part.

Bizarrely, the flat itself met all the relevant tests to be granted the licence. Had an application been made at the start it would have been granted instantly. The avoidance attempt cost the landlord his registration and significant court expenses.

The moral of the tale is clearly  don't try to be too clever! If you want help with a HMO licence, take proper advice - get in touch with the LetLaw team. We deal with this type of query on a daily basis.