What is an Article 4 Direction?

With regular Buy-to-Let investing becoming less financially attractive, we are regularly contacted by Landlords hoping to get involved in House in Multiple Occupancy (HMO) property investment. Landlords are increasingly turning to HMO’s – also often called ‘Multi-Lets’ or ‘Co-Living’ – as a means of benefitting from increased cashflow.

HMO property investment however is not as simple as buying a house and adding more bedrooms. As the volume of available HMO properties have increased over the years, councils and planning departments have taken a much harder stance and are actively trying to prevent Landlords from creating HMOs in some areas. Read on as we explain how the Article 4 Direction works in Nottingham.

Certain works to properties across England are covered under the General Permitted Development Order (GDPO), meaning that planning permission is not required to undertake those works. Under normal circumstances, converting a property from a C3 planning use (Dwelling House) to a C4 planning use (House in Multiple Occupation) is covered within the GDPO and therefor can be carried out without obtaining planning permission. This falls under what is called Permitted Development Rights.

It is important to note that the term ‘House in Multiple Occupation’ relates to a residential property shared by between 3 and 6 unrelated residents who also share basic amenities (such as kitchens or bathrooms) and use it as their main residence. In other words, the definition is triggered at the point when a third unrelated party lives within the property. Where more than 6 people share a property, an alternative planning use class known as Sui Generis (‘of it’s own kind’) comes into force, and this use class requires planning permission regardless of whether or not an Article 4 direction is in place.

An Article 4 direction is used by some councils to remove the permitted development rights associated with converting property from C3 use class to C4 use class. Where an Article 4 direction of this nature is in place, landlords and property investors are required to seek planning permission before converting a property for use by 3 – 6 unrelated tenants.

It is important to note that Planning Permission and Property Licensing are two separate things and do not go hand in hand with one-another. A property can have the correct Licence but no planning permission, and vice versa. It is a common misconception that if a property has a licence, then it automatically also has the correct planning use. More on this later.

For several years now, local councils have implemented an Article 4 Direction as a means of being able to control or limit the volume of HMOs within a given area. In some cases, an over saturation of C4 classed HMO properties has created challenges for neighbouring residents living within normal C3 dwellings. Examples of these challenges include noise, anti-social behaviour, waste management and parking.

Popular student areas tend to be more regularly targeted by Article 4 directions as working residents and families often struggle to mix with neighbouring students and the resultant differences in lifestyle. In these cases, councils use Article 4 to try and create a more balanced societal environment by restricting further shared housing.

Finally, councils may implement an Article 4 Direction in order to ensure a good supply of homes remains for general family occupation, as opposed to landlords and property investors creating streets of shared housing.

Article 4 in Nottingham was first introduced by Nottingham City Council on 11th March 2012 and covered the whole of the Nottingham City Council jurisdiction. Today, landlords wishing to convert a standard residential property into a shared house within the Nottingham City Council border must obtain planning permission. The full Article 4 document and map can be found here.

Broxtowe Borough Council followed suit on 26th March 2022 but rather than impose a blanket restriction, decided to only restrict certain parts of Beeston and Beeston Rylands. A map of these restrictions can be found here.

Whilst it is not impossible to obtain planning permission for a HMO conversion within an Article 4 direction area, both councils have made it quite clear that in most cases planning permission will not be granted. Despite this, we do see occasions where landlords or property developers have been able to obtain C4 planning permission, with some having had to go to appeal to fight their case. Typically, this will involve the use of a specialist planning consultant as well as a good knowledge of the location in which the landlord is trying to create the HMO.

Considerations when trying to obtain C4 planning use within an Article 4 location will include the density of nearby HMOs within a given radius, the impact of ‘losing’ a residential home, parking implications, the requirement for more shared housing (if there is one) and many other factors which councils and planning departments are likely to try and discourage.

Landlords and property investors regularly ask the question “If I have a HMO licence on a property in an Article 4 location, but have not applied for planning, does this mean I can continue to let it to sharers?”

Unfortunately, the answer is not always clean cut. As mentioned previously, planning and licensing must be looked at separately from one-another. Ultimately, a council cannot refuse to grant an HMO licence on a property that meets the required HMO licensing amenity standards (set by each individual council, but backed by a national framework which includes minimum room sizes and other requirements).

If it cannot be demonstrated that the relevant planning permission is in place, it is likely that the council will grant only a 12-month licence. The idea being that the landlord will then have 12 months to get their planning affairs in order. If planning permission is not granted within this time the licence will expire and the landlord will have no choice but to convert the property back to C3 status (less than 3 unrelated parties).

There are, however, circumstances within which a council will be somewhat hard fetched to not grant planning permission for an existing HMO and these circumstances are often known as Grandfather Rights. If it can be demonstrated that a HMO has been running safely and compliantly for 10 years or more then the landlord is much more likely to obtain planning permission via what is known as applying for a Lawful Development Certificate (LDC).

The key in obtaining an LDC often centres around being able to provide evidence to the planning department of the property having been used as an HMO for the requisite time. Required evidence will likely be in the form of the following paperwork:

• Tenancy Agreements showing continuous use / little or no voids.
• Proof of ownership
• Utility bills
• Photographs (historic and current)
• Witness statements (neighbours etc)
• Rental income history / receipts etc

Again, instructing the assistance of a planning consultant can help although we have successfully obtained LDCs for our both own properties and client properties in the past. Should the planning department refuse to provide the LDC, a landlord can appeal with a view to obtaining this.

There are still several ways to invest in HMOs within Nottingham. We have listed a few of these below:

1. Buy an existing HMO.

A simple search on Rightmove will uncover a number of existing HMOs for sale in Nottingham, varying in price and location. Ensuring that the property has the correct planning use and / or Lawful Development Certificate will be key prior to the viewing. The downside with buying an existing HMO is that more often than not they will come at a premium and in many cases it can be difficult to create the same level of cashflow that can be achieved from the conversion of a C3 property. Many property investors like the idea of being able to simply take on a well performing HMO investment without the hassle of having to carry out significant alterations to the structure of the property.

2. Look at areas outside of an Article 4 direction.

This can be a blessing or a curse depending on where the landlord chooses to invest. Successful HMO property investment is not as simple as buying a house in any location and turning it into a shared property. There are several factors that will determine the level of tenant demand, the quality of the tenant, and ultimately the success of the property investment in general.It is possible to invest in good quality locations outside of Article 4 areas and in some cases this can be more successful than investing within Article 4. We know this because as investors ourselves have done this several times.

If you wish to discuss this strategy in more detail, call us to book in a property investment consultation with one of our Directors.

3. Purpose built HMO accommodation

This strategy is somewhat more advanced and often utilised by highly experienced property investors and institutional investors. Whilst some local councils use Article 4 as a means of controlling HMO investment in areas, they do recognise (in most cases) that there is still a need to house tenants who would have normally lived in those HMOs. This is where purpose-built accommodation can come into play.Our experience in Nottingham is that Purpose Built Accommodation is often received much more favourably in the eyes of planning departments, mainly due to the propensity for the accommodation to be located closer to or within the City Centre. Couple this with the ability to build larger and more densely configured developments, whilst causing less of an inconvenience to residents in the suburbs of the City, and it can be assumed that planning departments will be much more receptive.

Still have a question?

Give us call on 0115 981 9651 and we will do all we can to help you.