HMO Licences In The UK Explained

You have probably heard of HMOs (house in multiple occupation) and the need for an HMO licence, but what properties does this apply to? Is it any property that has 5 or more people? In this blog, I will detail exactly what properties are considered HMOs, which of these properties need an HMO licence, and how to apply for one.

Table of Contents

What is an HMO Licence?

An HMO licence is something that a landlord of an HMO must hold while they are letting out their property to tenants. HMO licences are required for all HMOs with 5 or more tenants from different households, and in some areas, with more than 3 tenants from different households that share kitchen and/or bathroom facilities.

By ‘household’ we mean tenants that are part of a family unit like parents and children, other relatives or half-relatives like aunts, uncles, grandparents, cousins and siblings, or a married or cohabiting couple. If several tenants share a house as friends, they are still technically from different households. If a family of two parents and three children share a house, this is not considered an HMO as they are all part of the same household.

Different Types of HMO Licence

There are several different types of HMO licence, including:

Mandatory HMO Licence

This type of licence is mandatory for all large HMOs which have 5 or more tenants from more than one household, at least some of the tenants share a bathroom, toilet or kitchen, and at least one of these tenants pays rent.

Additional HMO Licence

This type of HMO licence is for properties that have 3 or more tenants from different households that share bathroom or kitchen facilities. Whether or not a landlord needs this licence will depend on the local council in the area of the property.

Selective Licence

Some local councils have a scheme in place where all privately rented properties need to be licenced, no matter the number of tenants. This differs from an HMO licence but could still be required – check with your local council for more information.

Do I Need an HMO Licence for 3 Tenants?

The answer to this depends on the local council’s rules on HMOs. In some areas, only large HMOs with 5 or more tenants need to have an HMO licence. In other areas, houses with 3 or more tenants from different households need to have an HMO licence. To ascertain if your property needs an HMO licence, consult with your local council to find out the exact rules for the area.

Note: If the landlord lives at the property and lets out two rooms to tenants, this is not considered an HMO.

How to Get an HMO Licence

HMO licences can be obtained from the local council by completing an application form. A landlord should also have no criminal record or have committed any previous breaches of landlord law. The landlord should obtain the following documents:

Information about the structure and layout of the property
A gas safety certificate for the current year
An electrical safety certificate from within the last 5 years
A current fire risk assessment
Details of any persons or organisations with any interest in the property e.g. freeholders, leaseholders, managing agents or mortgage providers

The bedrooms in the property should also meet the following minimum size requirements:

1 tenant over 10 years old: 6.51 sqm or larger
2 tenants over 10 years old: 10.22 sqm or larger
1 tenant under 10 years old: 4.64 sqm or larger

A council authority is free to reject an HMO application if you cannot provide any of the above or fail a criminal background check. They may also refuse if they have a limit on how many HMOs are allowed within a certain area. I recommend you check with the local council to make sure you can obtain a licence before proceeding. The council may also send someone to inspect the property in person before granting the licence to check it is large enough to accommodate the number of tenants you wish to rent to, has sufficient cooking and washing facilities, and has suitable refuse storage and disposal facilities.

How Much Does an HMO Licence Cost?

The cost of an HMO licence varies depending on the council that is issuing it and can cost anywhere between £500 – £1500 per property. An HMO licence is for the individual property, not the landlord, so you may need to purchase additional licences. Each licence lasts for 5 years unless otherwise stipulated by the issuing council. Some councils will offer a discount when renewing an HMO licence, or if you are a member of a local Trusted Landlord Scheme.

What Happens to an Unlicensed HMO?

If a landlord fails to obtain an HMO licence when required or does not comply with HMO regulations, they could face serious consequences. These may include a fine of up to £30,000. Additionally, they could receive a banning order, which would prevent them from obtaining any HMO licence in the future. They could also be liable for paying back rent to tenants if they were renting out an HMO property without a suitable licence.

Despite the high cost and additional responsibilities of an HMO, they are still a popular choice for landlords and a worthy investment, as they can offer higher rental yields than a regular property let. Always do research into the area you wish to rent out an HMO, contact the local council to find out what kind of licence you need, and stay updated with all legal requirements for HMOs in the area.

Do you want to find out more about the exciting world of property investment? Join me, Liam J Ryan, at a FREE Assets For Life property event – click here to sign up or find out more.