Can this simple idea solve the problem of unhealthy rabbit hutch HMOs?

There are several types of HMO but the type we tend to think of when we hear the term ‘HMO’, is where people rent their own room and share parts of a property with other ‘households’ (ie people who are not family members).

They are increasingly popular with both tenants and with landlords:

Why HMOs are popular with tenants:

They are popular with tenants largely because they are affordable.  However, they can also be pleasant places to live, if the rooms are attractive and well maintained and the other occupants are congenial.  

Indeed they can be preferable to a single, eg ‘studio’ flat as sharing with others means you are less likely to be lonely (one of the big problems of modern life). 

Why HMOs are popular with Landlords:

HMOs are popular with landlords as they allow them to earn more money from their investment.  

For example, in a Guardian article by YMCA CEO Alan Fraser he explains that as Housing Benefit pays out per bedroom, rather than by floor space, landlords are encouraged to chop up family homes into smaller and smaller spaces to rent out as HMO rooms.

This way, a property which would rent at £674.99 if rented out to a family, will earn its owner £1746.78 a month if some of the rooms are chopped up to increase the number of bedrooms to six which are rented out to single people.

There is now a whole industry telling landlords how to do this.  So long as the bedrooms are above the minimum bedroom size, the authorities will allow it and the benefits office will pay out.

The Problem:

However, houses, where the income potential is maxed out in this way, can be deeply unpleasant places to live, with little shared living space other than a small kitchen (and maybe a scruffy garden).  They can also be unhealthy with damp and mould often rife and can create ideal breeding grounds diseases such as COVID 19.

We, the taxpayers, are all paying for this.  As Fraser says in his article:

The ballooning housing benefit bill has not been caused by social tenants making fraudulent claims, or by social landlords milking the system. It has been caused by private landlords using the taxpayer to artificially inflate their investment returns.

A solution?

However, Fraser has a solution.  We should, he suggests, link housing benefit payments to floor space rather than to bedrooms. 

This would then mean that the landlord would get the same income when a property was rented to a family as if it were rented to six HMO tenants.  They would also get more income if that family were housed in a more spacious property.

Were this to happen, it would probably result in the rapid conversion of HMOs back to family homes as they are considerably less bother to manage plus the landlord does not have the expense of getting an HMO license.

Those properties which remain HMOs would have less incentive to cram in so many people which would hopefully mean more shared communal space for residents. Making them pleasanter and healthier places to live.

At the stroke of an administrative pen (says Fraser), a whole investment strategy built on exploiting the system would be undermined, and the housing benefit bill could be more effectively controlled. It would also incentivise councils and housing associations to reverse the recent trend in social housing and start to build more spacious homes once again. And perhaps most important of all, it could drive improvements in the safety of tenants in the private rented sector in our post-pandemic world.

It sounds like a good plan.  But will it ever happen?  

Despite the problems associated with rabbit hutch HMOs, it can’t be denied that they do take more people off the street.  So as long as we have a problem with homelessness and an urgent need to find rooms for single people there will, I suspect, be little incentive to change the current system. 

What do you think?