Your voice is needed! Birmingham Council threatening rented housing stock
by Patrick Garratt - 8th July 2019
Drastic Article Four plans will quash new rented properties in Birmingham
Birmingham City Council intend to implement restrictions across Birmingham that would restrict family homes being turned into houses in multiple occupation (HMOs).
This policy will:
- Wipe thousands of pounds off the value of properties across the city
- Limit the supply of affordable accommodation
- Restrict the options for student and young professionals who rely on HMOs.
Article 4
Article 4 Directions restrict people from converting family homes into small HMOs – accommodation for three to six people, who aren’t part of the same family. To convert a property in an Article Four area, the owner would have to apply for planning permission. Planning is currently only required for larger HMOs.
What the council wants to do
Currently, some areas around Selly Oak, Edgbaston and Harborne have Article Four restrictions.
The Cabinet of Birmingham City Council wants to implement a city-wide Article 4 Direction. This restricts the conversion of family homes (known, for planning use, as Class 3/C3 properties) to houses in multiple occupancy (Class 4/C4) without a change of use application being made.
A change of use from C3 to C4 will only be approved if there is a concentration of less than 10% HMOs within 100m and the change would not create a “continuous frontage of three of more non-family houses”.
The restrictions would come into effect on 8th June 2020.
Who is affected?
As I mentioned above, throttling the creation of smaller HMOs has the potential to cause problems for landlords and young tenants, alike.
Birmingham’s population is rising faster than the national average and it is a younger city, than most. (https://www.birmingham.gov.uk/info/20057/about_birmingham/1294/population_and_census/3) HMO accommodation is essential for younger residents, as it is often the only affordable option for living in the city.
Landlords will lose out as the council are regulating who they can rent their properties to.
Homeowners will be prevented from selling to investors, who are happy to pay higher prices than residential buyers.
You can read our full response at the end of this post.
Existing HMOs
Existing HMOs will not be affected. That said, owners will need to register them with Birmingham City Council before the measures come into place.
If you do not register the property before the Article 4 Direction comes into place, you will need to apply for a Lawful Development Certificate for the existing use.
Applying for the certificate will incur a fee and you will need to provide evidence that the property had already been in HMO use.
Act now
A summary of the proposal can be found here: https://www.birmingham.gov.uk/download/downloads/id/12876/leaflet_and_feedback_form.pdf
Purple Frog are advocating for the rejection of this policy; our full response is below.
The consultation ends on Thursday 18th July 2019.
To respond click here: https://www.birminghambeheard.org.uk/economy/article-4-direction-relating-to-houses-in-multiple-1/
The consultation response can be completed in under a minute.
Purple Frog’s response
Emailed to: planningstrategy@birmingham.gov.uk
Posted to: Planning and Development, 1 Lancaster Circus, Birmingham, B4 7DJ.
Author: Patrick Garratt, of Purple Frog Group Limited, patrick@purplefrogproperty.com, 47 Calthorpe Road, Birmingham, B15 1TH
Date: 6th July 2019
Summary: I am the owner and Managing Director of Purple Frog Group, which lets and manages hundreds of HMO properties across Birmingham, Bristol and Nottingham. I lived in HMO accommodation whilst I was a student at the University of Birmingham and for five years after I graduated. HMO accommodation provided affordable housing in the places I wanted to live.
I do not support the introduction of Article 4 restrictions across Birmingham.
The cabinet report advises that the proposals have been made because “Local councillors and residents in a number of wards across the city have expressed concern about the high concentration of HMOs in their area.”
This is a typical example of NIMBY (not in my back yard) attitude; it would be unfair and short-sighted of the city council to only listen to the loud voices of a small number of residents and councillors who have raised ‘concerns’ and to not take into account the impact on the many thousands of residents who currently benefit from the affordable housing which HMOs provide and will most likely have no idea that this consultation is being carried out and may not understand how the changes could impact their lives.
Financial implications: Millions of pounds will be wiped off property values across the city.
Section 7.3 of the cabinet report “Financial implications” doesn’t make any mention of the huge financial implications for property owners in the city. At best this is due to incompetent analysis, at worst it could be viewed as a deliberate attempt to play down the impact on property owners in the city.
The value of properties in areas where HMO properties are popular are significantly supported by the potential income which could be generated from letting the properties on an HMO basis even if they are not currently let on that basis.
The rental income which can be achieved by letting a four-bedroom property to four individuals as opposed to a family may be between 20-30% higher, this is reflected in the value placed on a property when advertised for sale.
The implementation of the proposed Article 4 Direction will mean many thousands of properties will no longer have the potential to be let on an HMO basis and as such the value of those properties will be drastically reduced. If the potential consequences of the proposed changes are more widely publicised, I’m sure the city council will receive many more objections to the Article 4 Direction.
It may well be those residents who complained about the impact of HMOs in their area who lose tens of thousands of pounds from the reduced value of their homes. Depending on the mortgages granted for those properties, the owners could end up being in a position of having negative equity in their homes, which they may only realise when they come to sell.
Fairness: The value of one property which is next to an existing HMO and as such would not be granted a change of use to C4 will be drastically reduced in comparison to a property next door but one to it which would be granted the change of use depending on the distribution of existing HMOs in that area.
Equality: The implications of these regulations will unfairly impact young people and is in breach of the Equality Act 2010.
Although I do not have access to city wide statistics (Birmingham City Council can use their data to confirm), from my experience in managing thousands of HMO bedrooms, the age of occupiers tends to be much lower than the average age of residents in the city. This is due to the fact that HMOs are suitable for students and those with lower budgets.
The potential negative consequences of restricting the supply of accommodation (increased rents, reduced choice) will unfairly impact younger people in the city.
Restricting supply: This regulation will severely limit the supply of additional affordable housing in the city.
BCC’s population projections report from 2016 estimates an increase in population in Birmingham of 7.2% (81,388), by 2026.
The most space-efficient way of meeting this demand is through high rise flats, the rents of which are far higher than most HMOs.
Sustainability of neighbourhoods: The population of the city is increasing, BCC will be required to provide more amenities in the city whether the population growth is in HMOs, housing estates or blocks of flats.
The cabinet report asserts: “High concentrations of HMOs can present challenges to the future sustainability of neighbourhoods and impact on their character and residential amenity. In connection with this, the Community Cohesion Strategy identifies that insecure housing and high levels of transience are an area of concern in the city.”
There are always strains on residential amenities in times of population growth; it is the job of the council to ensure amenities keep up with the changes in population, rather than to restrict where the population can live.
Arbitrary figures: Where is the research and calculations made to support the apparently arbitrary figure of 10% which BCC asserts is an over-concentration of HMO properties.
The cabinet report states:
“that an over-concentration of HMO properties would be considered in cases where they constitute more than 10% of residential properties within 100 metres of an application site. The proposed new policy also includes criteria to prevent the sandwiching of C3 housing by C4 uses and other non-family housing, and also to prevent a continuous frontage of three of more non-family houses.”
If BCC intends to use a social engineering policy such as the one proposed to dictate who can live where in the city, surely more rigorous research and analysis should be carried out? The figures of 10% and 100m seem to have been arbitrarily selected and have no basis in logic. Who has decided that an over-concentration of HMOs is where they make up more than 10% of accommodation within a 100m radius? Why not 20%? What is the varying impact on “character and residential amenity”, and “sustainability of neighbourhoods”? BCC has the ideal case study of Selly Oak and the surrounding Article 4 area to use for analysis, yet it seems to have decided not to use the data available to it in making such an important decision.
References:
Announcement of consultation:
Cabinet report:
https://www.birmingham.gov.uk/downloads/file/12873/cabinet_report
Population projection:
https://www.birmingham.gov.uk/downloads/file/4609/2016_population_based_projections
Main Image Credit: Photo © Ruth Sharville (cc-by-sa/2.0)