Rule changes which have greatly increased the number of HMO properties across the country, are having a number of unintended consequences including an increase in the threat of ‘ambulance chaser’ firms targeting landlords.

The warning came from David Whittaker, CEO of Keystone, who was speaking at yesterday’s FSE Midlands show, which took place at the Ricoh Arena in Coventry.

Whittaker warned the audience at FSE Midlands that their HMO landlord clients could be targeted by ‘ambulance chaser’ solicitor firms who are looking for new sector opportunities following the end of the period when PPI claims can be made.

“Ambulance chasers are moving from PPI to HMOs,” said Whittaker, “and they are targeting tenants suggesting that their landlords don’t have the necessary licence and they can take them to court. There is big money to be made here and these ambulance chasers are suggesting to tenants they can take landlords for £20-£30k, and they’ll be taking 10% of this. This will be bad news for your customers if they don’t know what they’re doing.”

Whittaker outlined how cases have already been brought against HMO landlords including a recent case where four students in Leeds successfully sued their landlord and won £15k in reclaimed rent.

He said this was a consequence of landlords not obtaining a HMO licence which means that landlords cannot evict a tenant and tenants can reclaim the rental income they have already paid.

The rules, introduced in October 2018, have left thousands of new properties requiring HMO licences because of the removal of the three-storey rule and the introduction of minimum room sizes. All houses with five or more people who form two or more households now require a HMO licence.

Whittaker also said that Councils need to up their game in terms of dealing with HMO licence applications. “Councils need to increase staffing capacity to handle the increase level of licence applications,” he said.

“In Kingston-upon-Hull, for example, they have a three-person HMO team; one lady is on maternity, one is on long-term sick, and the Head of Department is answering the phones. That’s not a good situation to be in.”

He did however suggest that landlords shouldn’t worry too much about the turnaround time in receiving a licence as long as they had put their application in. Whittaker said that many councils had backlogs, while others were suggesting it would take a number of months to process the application. Plus, different authorities were charge vastly different fee levels and the likelihood is that these fees would be pushed up.