Article 4 directions for a house in multiple occupation (HMO) are an important part of planning legislation. In September 2022, Kamma’s data was tracking over 150 active directions throughout England and Wales. Its growing popularity as a tool used to control the number of HMOs in an area means that letting agents and landlords should have a working knowledge of Article 4. This guide will help all property managers understand the basics and use cases of HMO Article 4 directions.
HMO Article 4 directions are a legal means through which a council can require property owners to obtain planning permission when converting single homes or residential properties (C3 use class) into HMOs (C4 use class). The main focus of this piece of legislation is to withdraw the rights permitted under the Town and Country Planning (General Permitted Development Order, GDPO) of 2015.
The GDPO gives homeowners Permitted Development Rights (PDRs) to convert their homes how they see fit, including changing the use class of their properties if they wish, without having to create a formal planning application. Article 4 directions are designed to remove specific PDRs in either specific areas of the council or the entire council.
The idea behind this is to grant councils powers that can help control the housing market in certain areas, preventing ‘over-flooding’ in the community. Article 4 directions can be used to restrict the number of HMOs in a given area, especially when considering how the development may affect the area and how the development characteristics may compare with its surroundings. It’s important to keep in mind that Article 4 only applies to smaller HMOs of up to six residents maximum or other C4 properties. Anything larger than six is considered a larger HMO, which falls under a separate house class and requires different permissions.
HMO Article 4 directions directly impact the number of properties letting agents and landlords can manage in a designated area. For example, C4 class HMOs are often rented to students or young people, which are groups that have a reputation for being ‘bad’ neighbours. An Article 4 direction seeking to limit the number of students or young people in area puts pressure on an already limited affordable housing stock, which impacts other groups wishing to reside in an HMO, while also doing little to decrease the actual demand. As the demand for HMOs increases alongside a decreasing supply, prices increase for all tenants.
C4 use class rental properties are being bought and sold for a higher price than C3. This is because of two reasons: less investor activity and investor’s ability to add value. Investors have been known to take precautions in cities where Article 4 directions exist with regards to buying C3 houses and developing them to C4 HMOs. And less investor activity in the C3 market means slower market growth for regular homeowners. C3 houses are less desirable because investors cannot gain from rental returns and the ability to add value to C4 housing is inhibited.
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