Buying a House in Multiple Occupation (HMO) in a London borough like Lewisham, which has an Article 4 Direction in place, can be a rewarding investment—but it comes with its own challenges. Here, we outline our experience purchasing an unlicensed HMO in an Article 4 area and share the necessary steps and documentation to ensure compliance, particularly if the council’s planning department questions the use of the property.

Our Purchase: An Unlicensed HMO in Lewisham’s Article 4 Area

Recently, we acquired an The Common Misconception in Fire Risk AssessmentsHMO property in Lewisham, an area under Article 4 Direction since January 2024. This direction removes the “permitted development rights” that typically allow a switch from residential (C3) to HMO (C4) without planning permission. If the HMO was already in operation before Article 4’s enactment, it could be considered lawful existing use, meaning we would not have to risk applying for planning permission and being rejected.

Our goal was to obtain an HMO license and continue operations as an HMO legally, avoiding any issues with the planning department questioning our use of the property. By ensuring we could prove it had been an HMO for many years, we successfully avoided unnecessary complications.

Steps to buying a HMO an Article 4 Area

Step 1: Understand Article 4 and Its Implications

When purchasing an HMO in an Article 4 area like Lewisham, it’s crucial to understand the impact of the Article 4 Direction. In Lewisham, converting a property from C3 (single dwelling) to C4 (HMO) now requires planning permission unless it can be proven that the property was being used as an HMO before January 2024.

Step 2: Secure Proof of Existing Use

If the property was an HMO before Article 4, securing documentation to prove its prior use is critical. For our purchase, the property was unlicensed, so we made it a condition of the sale that the landlord provide four years’ worth of Assured Shorthold Tenancy (AST) agreements to demonstrate the property’s ongoing HMO use.

While we also requested council tax and utility bills as additional evidence, the seller did not have them. This wasn’t a major issue since the ASTs alone were sufficient to establish the property’s lawful use under the “balance of probability” standard.

Supporting documents like council tax records or utility bills showing multiple occupants can add further credibility, but ASTs are often the strongest and most straightforward evidence.

Step 3: Anticipate Potential Council Scrutiny

Unlicensed HMOs in Article 4 areas often attract attention from the council’s planning department. To avoid unnecessary planning permission applications, ensure you have strong evidence of the property’s HMO use before the Article 4 Direction came into force.

The UK government’s guidance states that the “balance of probability” applies when assessing lawful existing use. If the local authority has no counter-evidence and your proof is precise and unambiguous, your claim should be accepted. In our case, the ASTs provided by the seller were essential in preparing for potential council inquiries.

Key Advice When Buying an HMO in an Article 4 Area

1. Check if the Property is a Licensed HMO:
   • If the property already has an HMO license, there’s no need to worry about the planning department contacting you. A valid license is usually sufficient proof that the property has been operating as an HMO, particularly if it predates the Article 4 Direction.

      

2. Secure Proof of Existing Use:
   • If the property is unlicensed, collect documentation to prove its use as an HMO before Article 4 came into effect. This includes at least four years of ASTs, and if possible, council tax records or utility bills. Make it a condition of the sale that the seller provides this evidence.

      

3. Prepare for Council Contact:
   • Be ready for potential inquiries from the planning department. Ensure your documentation is precise and complete, as this will strengthen your case and avoid complications.

Final Thoughts

Our experience buying an HMO in Lewisham’s Article 4 area taught us that preparation and documentation are key. By securing ASTs and understanding the implications of Article 4, we successfully demonstrated the property’s lawful HMO use without needing to apply for planning permission.

If you’re considering a similar investment, thorough due diligence, evidence gathering, and understanding the basics of HMO management are essential. By following these steps and preparing for potential inquiries, you can confidently invest in HMOs in Article 4 areas while staying compliant with local regulation.