Understanding HMO Article 4 Directions in London: A guide for property investors

London, a city of rich history and relentless urban growth, has always been at the epicentre of real estate development. As the landscape of the city changes, so too do the regulations that govern it. In this review, we take a dive into one such regulation – the Article 4 Direction– and what it means for investors in the capital.

 

What is Article 4 Direction?

The HMO Article 4 Direction is a regulation that mandates obtaining planning permission when converting a property into a House in Multiple Occupation (HMO). Article 4 in general is a tool used by the council to restrict permitted development rights within specific areas. There are different types of Article 4 Directions, including those that focus on conservation areas, flood risk and HMO restrictions.

For landlords and investors, it’s vital to consider that the specific HMO Article 4 grants local authorities the ability to specify areas where HMOs are permissible, define property alterations, and ultimately approve or decline conversion applications.

If you’re contemplating an HMO conversion in an area impacted by Article 4 Direction, be prepared to navigate the planning process, taking into account the additional layers of complexity it adds to your project.

Before addressing how this legislation affects those investing in London’s boroughs, it’s essential to understand what an Article 4 Direction actually entails, specifically in relation to HMOs. At its core, Article 4 Direction is an order made by a local planning authority that removes certain permitted development rights for HMO change of use. In simpler terms, it’s a mechanism local councils employ to hold a tighter grip on HMO conversions that would otherwise proceed without the need for formal planning permission.

Learn further about Article 4 or find out more about the list of HMO Article 4 areas in the UK.

 

Why is HMO investment so relevant for London investors?

London’s diverse and dynamic nature has seen a significant rise in the demand for housing. The city’s unique blend of traditional and contemporary landscapes is continuously evolving to accommodate its growing populace. A lucrative strategy that many property investors employ is converting single-dwelling houses (use class C3) into a House in Multiple Occupation (HMO) designed for three to six unrelated residents (use class C4). On the surface, this approach appears to be a straightforward and profitable venture, bypassing the need for planning permission. However, with the advent of Article 4 Directions specifically targeting HMOs, investors in the capital need to be more vigilant and strategic in their approach.

 

Which boroughs have Article 4 Directions for HMOs?

In Greater London, the enforcement of Article 4 Directions for HMOs varies between boroughs. This distinction is essential for property investors to understand, especially if they are considering converting a property into an HMO. As of summer 2023, London’s boroughs can be categorised into three groups based on their Article 4 status for HMOs, those fully subject to Article 4, those with partial coverage, and those having no Article 4 in place.

• Boroughs such as Hounslow, Barnet, Brent, Enfield, Newham, Barking and Dagenham, Havering, Bexley, Waltham Forest, Greenwich, and others have their entire areas under Article 4 for HMOs.
• Boroughs such as Hillingdon, Ealing, Haringey, Southwark, Lewisham, Merton, Bromley, and others have parts of their jurisdiction under Article 4 Directions for HMOs. However, it’s important to note that even within boroughs that have partial Article 4 Directions, specific areas may have more stringent or relaxed rules.
• Boroughs like Camden, Islington, Hackney, Westminster, City of London, Lambeth, Kensington & Chelsea, Hammersmith & Fulham, Wandsworth, and others (shaded without stripes below) do not have Article 4 Directions for HMOs covering their region.

For a visual representation, and to see the full list of boroughs affected by Article 4 for HMOs in London, take a look at the following detailed diagram.

Boroughs entirely covered by Article 4 for HMOs

No investing strategy is complete without considering both the risk and potential gain. So, the question property investors need to ask themselves is whether properties situated within a borough governed by an HMO Article 4 Direction still hold appeal, and whether securing planning permission is a prerequisite before proceeding with the conversion.

Article 4 serves to benefit local communities by preventing an over-saturation of HMO properties within a designated area. While this can pose a challenge for investors, it aims to strike a balance between housing and services, as well as safeguarding the quality of life for those living in these areas. The latter remains a significant factor driving demand in the property market.

Boroughs in Greater London entirely covered by Article 4

• Barking and Dagenham
• Barnet
• Bexley
• Brent
• Croydon
• Enfield
• Greenwich
• Havering
• Hounslow
• Newham
• Redbridge
• Tower Hamlets
• Waltham Forest

Boroughs partially covered by Article 4 for HMOs

In areas where HMO Article 4 Directions apply partially, the regulatory restrictions are specific to certain sections rather than the entire area. For investors looking to negotiate this landscape, it’s crucial to comprehend the intricacies involved. To begin, familiarise yourself with Article 4, gaining a clear understanding of how it influences HMO properties.

One of the key early steps is assessing the potential for obtaining planning permission, a crucial aspect that can significantly impact your investment strategy. Additionally, many investors find it advantageous to target properties already categorised as C4 in areas with Article 4 restrictions, streamlining the conversion process. It’s essential to have a deep grasp of local regulations, particularly the nuances of the planning permission process, as this will be instrumental in your investment journey. As part of your due diligence, determining whether your chosen investment area falls under Article 4 is a mandatory step.

Last but not least, consider the possible impact on the local community, such as the potential for increased crime rates, noise, and parking issues due to a concentration of HMOs. In this context, seeking areas with lower competition, high tenant demand, and excellent accessibility becomes a strategic move. While investing in HMOs within an Article 4 area can be more challenging due to additional planning requirements and the possibility of application rejection, careful planning and thoughtful consideration can still yield profitable results.

Areas in Greater London partially covered by Article 4

• Bromley
• Ealing
• Haringey
• Hillingdon
• Lewisham
• Merton
• Southwark

 

Boroughs without Article 4 direction for HMOs

In areas untouched by HMO Article 4 restrictions, investors enjoy the advantage of existing permitted development rights, allowing the conversion of properties from single homes or residential units (C3 use class) to HMOs (C4 use class) without the strain of obtaining planning permission. This streamlined process grants investors a valuable opportunity, yet it demands a strategic approach.

Understanding and keeping up to date with Article 4 Directions and how they may affect property market in the future remains advisable. Investors must delve into local regulations, evaluating both the need for planning permission and its attainability, again, an essential part of due diligence. Moreover, considering the impact on the community is pivotal. High concentrations of HMOs can disrupt the local atmosphere, affecting living in the community and thus impacting demand. To navigate these challenges successfully, investors and landlords often seek areas with high demand but limited supply, ensuring that their investments not only comply with regulations but also harmonise with the neighbourhood dynamics.

Areas in Greater London not under Article 4

• Camden
• City of London
• Hackney
• Hammersmith & Fulham
• Harrow
• Islington
• Kensington & Chelsea
• Kingston Upon Thames
• Lambeth
• Richmond Upon Thames
• Sutton
• Wandsworth
• Westminster

In essence, investing in HMOs within non-Article 4 areas offers a smoother journey, yet it asks for a profound understanding of local laws and community dynamics. By blending this knowledge with a strategic property selection process, investors and landlords can optimise their investments and contribute positively to the communities.

Need assistance with your HMO project?

Bringing your project from plan to success under the complexities of Article 4 can be quite challenging. If you’re seeking guidance on your HMO project, consider consulting with an architect who has extensive experience in this area. Our team at HMO Architect has assisted hundreds of individuals in obtaining HMO planning from various councils across the country. We possess the expertise and dedication to support you through every step. We’d love to help bring your vision to life. Reach out to us today.

You can also learn more about other policies that may affect your HMO conversion plans in this guide.