A house in multiple occupation is one of the most tightly regulated types of rented property, and the rules catch out landlords who did not realise their property qualified. Letting an unlicensed HMO that needs a licence is a criminal offence, it can bring an unlimited fine, and it exposes you to a rent repayment order where a tenant can reclaim up to twelve months' rent. So the first job is working out whether your property is an HMO at all.
What counts as an HMO
In broad terms, a property is an HMO if at least three tenants live there forming more than one household, and they share a toilet, bathroom or kitchen. A household means a single person or members of the same family living together. So three friends sharing a house are three households, which makes the house an HMO. A couple and their child are one household, which does not. The concept covers house shares, bedsits, and some flats occupied by unrelated sharers. It does not usually cover a single family, however large, or a couple.
Mandatory licensing
Some HMOs must be licensed wherever they are. Mandatory licensing applies to an HMO occupied by five or more people forming two or more households who share facilities. If your property meets that description, you need a mandatory HMO licence from the local council, regardless of the number of storeys.
The licence sets conditions. There are national minimum room sizes, so a room let for sleeping has to meet a floor area threshold, and overcrowding a licensed HMO is a breach. There are rules on kitchen and bathroom provision proportionate to the number of occupants, on fire safety including alarms and fire doors, and on the general condition and management of the property. The council can inspect to check.
Additional and selective licensing
Beyond the mandatory scheme, councils have two further powers, and this is where many landlords are caught out because the rules vary from one area to the next. Additional licensing lets a council require licences for smaller HMOs that fall outside the mandatory scheme, for example a three or four person share. A council can bring this in for part or all of its area.
Selective licensing goes wider still and can require a licence for ordinary single-family rentals in a designated area, often introduced to tackle poor conditions or antisocial behaviour in a particular neighbourhood.
Because these schemes are local and change over time, you cannot assume your property is exempt just because it is not a large HMO. Check your specific council's website for both additional and selective licensing before you let, and check again if you buy in a new area.
Applying and the conditions
You apply to the local council, pay a fee that varies by area, and provide details of the property, its layout, its safety provision and its management. A licence typically lasts up to five years. The council may require works, such as additional fire doors or an upgraded alarm system, as a condition of granting it. You also have to be a fit and proper person, and a history of relevant offences can count against you.
Once licensed, you have to keep to the conditions for the life of the licence, and manage the property to the HMO management standards, which are more demanding than for a standard let. That includes maintaining the fire safety measures, keeping shared areas clean and safe, and displaying your contact details in the property.
The cost of getting it wrong
Operating a licensable HMO without a licence is an offence. On top of a fine, the council can pursue a rent repayment order, and a tenant or the council can reclaim up to twelve months of rent paid during the unlicensed period. You also cannot use certain possession routes while the property should be licensed and is not. The financial exposure is large enough that the licence fee and the required works are the cheaper path by a wide margin.
If you let to sharers, or you are thinking of converting a family let into a house share, check the HMO position first. The definition is broad, the local schemes vary, and the penalty for guessing wrong is one of the heaviest in the sector.
This article is general information, not legal advice. HMO definitions and local licensing schemes vary by council and change. Check your local authority's current rules or take professional advice before acting.
