A toolkit guide for responding to Article 4 Direction consultations

Introduction

The NRLA exists to support landlords and to lobby national and local government on behalf of our members-we are fighting for a fair deal for the nation's landlords.

Alongside the NRLA's consultation submission to proposals, we know that some members want to submit their objections as well to the local authority. That is why we have produced a handy guide for landlords should they wish to do so.

What is an Article 4 Direction?

It is a planning direction made by local authorities that removes permitted development rights. When used around HMOs, this is a C3 (Dwelling House) to a C4 (House in Multiple Occupation consisting of 6 people or fewer). Normally landlords have permitted development rights to convert a property from a C3 to C4, but an Article 4 Direction removes these rights and planning permission will need to be obtained first before proceeding.

Most land and buildings in England are categorised depending on their purpose, or the use class order sets out use and these categories. So, for example, C1 covers hotels and guest houses, and C2 covers residential institutions such as nursing homes, hospitals or colleges.  

You also have conservation areas, which under Section 69 of the Planning [Listed Buildings and Conservation Areas] Act 1990) designate an area as a conservation area, any locality of special architectural or historic interest. This means the planning authority has extra powers to control works and demolition of buildings to protect or improve the character or appearance of the area. If you have a property in a conservation area, you would require planning permission if you wanted to change the character or appearance of the building, which you would have to apply to the local authority directly for.  

Current article 4 direction consultations

Liverpool (closes 19th February 2021)

Liverpool City Council recently launched a consultation on introducing Article 4 directions in the wards of Anfield, Central, Greenbank, Kensington and Fairfield, Picton, Princess Park, Riverside, Tuebrook and Stoneycroft and Wavertree Wards and parts of Kirkdale and Church Wards. Landlords can view a ward map to see these areas, and respond directly to the consultation on the council's website here.

Beeston (closes 26th February 2021)

Broxtowe Borough Council is consulting on plans to introduce an Article 4 direction for HMOs in parts of Beeston and Beeston Rylands.If approved, it is proposed that the direction will come into force on 26 March 2022. More information about the areas the scheme would cover and how landlords can have their say in this consultation can be read online here.

Legislative background

The legislation was first introduced in 2010, with the then Planning Minister John Denham creating C4 as a new class, to halt the so-called "studentification" taking place in certain towns and cities.  
 
There are two main types of Article 4 Direction: 

  • Non-immediate Directions (permitted development rights are only withdrawn upon confirmation of the Direction by the local planning authority following local consultation) 
  • Immediate Directions (where permitted development rights are withdrawn with immediate effect but must be confirmed by the local planning authority following local consultation within six months, or else the Direction will lapse). 

The Direction does not apply retrospectively, so any development undertaken before it comes into force is not affected. 

Current location for Article 4 Directions

By latest NRLA estimates, there are currently between 75-80 local authorities in England who have introduced Article 4 Directions relating to HMOs.  

The NRLA has produced a visual map showing where these locations are.

Consultation process

The local authority does not need formal permission from the Secretary of State to introduce an Article 4 Direction but does need to notify them. An Article 4 Direction can be removed at any time by the local authority, but unlike property licensing, there is no limit on how long a Direction can be in force. 

However, a local authority does need to consult on the introduction of an Article 4 Direction, allowing the opportunity for representations to be made that can be incorporated into the council's decision-making process. Like discretionary licensing, these consultations need to be well publicised and accessible for all. 

Arguments Against Article 4 Directions

During a consultation, the local authority will make a set of arguments justifying why they believe removing permitted development rights for HMOs will benefit the community and housing market in the local and broader area. 

Unintended Consequences  

Renters who need access to cheaper accommodation due to their financial situation (affected by Coronavirus, for example) will view shared housing as a viable option for their housing needs. With Article 4 Directions in place, those renters will naturally struggle and may have to move out of the area or borough entirely, uprooting work and social connections.  
Local authorities have existing powers to apply planning controls to HMOs with five or more people without the need to introduce an Article 4 Direction.  

The need for HMOs in certain communities 

Certain sections of the community need HMO accommodation in small HMOs, and only the PRS provides this kind of accommodation. Tenants needing this kind of accommodation can only find it by renting from a private landlord. 

As Class C4 is directed solely at the PRS imposing an Article 4 Direction to restrict/ban small HMOs will have a direct impact on supply. If supply is reduced, this will have the consequence of driving up rent levels. The presence of small HMOs has dramatically helped local economies and large regional employers such as Universities. 

These restrictions do nothing to reverse the negative impact shared houses can have on an area if anything they put areas without an HMO Population at higher risk as new HMOs will be on the lookout for new areas. 

Property Condition 

Small HMO accommodation is frequently located in the older areas of cities or towns; often inner-city areas. It's commonly encountered in older housing stock such as pre-1919. It, therefore, needs considerable expenditure to renovate it and bring it up to modern standards, such as substantial investment in improving energy efficiency. In these areas where students are concentrated landlords have been prepared to make improvements and commit a great deal of capital expenditure.   

Rent Increases  

Article 4 Directions will reduce the supply of small HMOs in areas where there are demand and a need for them. As always with the law of supply and demand, this will lead to increases in rents in those areas, mainly if they are close to places of work such as for example hospitals and the primary university. Pushing up rental levels will not help those who want this kind of accommodation.   

Alternatives to introducing Article 4 Directions for HMOs  

If there are difficulties in areas populated by HMOs, local authorities already have other extensive other powers to deal with, for example, anti-social behaviour and waste management. The local authority can work with private landlords to deal with these concerns wherever they arise. Very importantly, these can have an immediate impact rather than waiting for much longer planning processes to operate, if they work at all. 

Other factors to consider  

There can be a confusion also when it comes to what properties are classed as HMOs and what legislation they come under. Multi-Occupancy properties created by registered providers aren't classified as HMO's in the 2004 HA, so are exempt from both licencing and planning.  

Sometimes the main driving factor of introducing Article 4 is a local authority believing there are a significant number of ‘problem’ HMOs which can be mistaken but are in fact Registered Providers - or leased by Registered Providers. Some of these RPs are based out-of-area and are not providing the level of support their client group needs, despite them getting higher levels of housing benefit to provide support.  

Factors to consider for landlords with current Article 4 Direction properties

Although the introduction of an Article 4 Direction can put boundaries in front of landlords, it can have some benefits to landlords with existing HMO properties in established Article 4 Direction areas.

For existing properties with permitted development rights removed, the value of the property can increase because the local competition is reduced, driving up demand for those C4 properties.  

Before purchasing property, a landlord should instruct a conveyancer to research the property to establish if there is an Article 4 Direction in place in the area, to ensure that you are fully informed should you wish to convert that property to a small HMO.

What is the NRLA position on Article 4?

The NRLA’s position on Article 4 Direction is that they distort the housing market. Local authorities should use their existing enforcement powers rather than the blunt instrument of planning permission to address the condition, quality and environmental issues that affect HMOs. 
 
We believe that landlords should retain permitted development rights as determined by demand in the market. Article 4 Directions fail to address criminal landlords and poor management as they can still operate outside of the law and acceptable standards.  

It is vital that elected councillors and officials consider the overall impact on their area very carefully rather than worry too much about issues in a relatively small area. In any case, there is no guarantee that planning powers will have any impact, and indeed, they will take a long time. 

Further resources

London Property Licensing- https://www.londonpropertylicensing.co.uk/hmo-article-4-directions 

Gov.uk guidance on permitted development rights- https://www.gov.uk/guidance/when-is-permission-required