What is a HMO licence? Your Houses in Multiple Occupation Guide

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A HMO is a house or flat that is let out to three or more unrelated people from more than one household with shared facilities like a kitchen, bathroom or communal living area. 

To operate a HMO in the UK, landlords may require a licence depending on the number of occupants and the local authority the accommodation is based in. Abiding with licensing compliance by submitting a licence application for your HMO property is essential – it is a criminal offence to operate an unlicensed HMO which could leave you liable to fines and penalties such as rent repayment orders to tenants for up to 12 months. 

Licensing was introduced to improve the quality of private rented housing, as HMOs are some of the poorest quality housing due to their transient tenants and difficulty with regulation. 

Upon receiving an application form, an inspector will come to the property to see if the HMO meets the standards required and that the landlord is a ‘fit and proper’ person. They will conduct various risk assessment and fire safety checks and grant a licence if the property is compliant. 

Licensing provides local authorities with the ability to assess the health and safety and quality of HMOs through an inspection of the property where they previously would not have the power or knowledge to do so.

Property licensing regulations differ for HMOs depending on the rules of the local authority they are situated in. There are three forms of measures that a council may have in place:

Mandatory licensing requires that all HMO properties with five or more people living together from two different households must obtain a licence. As per the Housing Act 2004, mandatory measures apply nationwide, regardless of the local council where your property is located.

An additional licence requires that all privately rented properties occupied by three or more people from two or more different households (i.e. aren’t members of the same family) obtain a licence.

These schemes can sometimes apply strictly to buildings over a certain number of storeys, or section 257 buildings that are comprised of self-contained flats.

This type of scheme can be introduced at the discretion of your borough or council, and may only apply to certain areas in the region, although it is often implemented regionwide.

A selective licence is necessary for all privately rented properties in a given area, regardless of the number of occupants and households formed. This is implemented at the council’s discretion, and often is targeted on a ward/street level to areas with the lowest quality housing. 

The HMO licence application process differs from council to council, but they will all require similar documents and standards in order for a landlord to get a licence to rent their property. 

Applications are to be found on each individual council’s website where they will outline the documents needed in an application pack, as well as the HMO licence fees. Your licence application must be received by the council upon a scheme’s launch to remove the risks of non-compliance. 

Documents that are often necessary to complete your application include: 

• building/property plan including measurements and any fire detection present
• DBS for the licence holder
• DBS for the manager (if different)
• electrical certificate (EICR)
• Energy Performance Certificate (EPC)
• gas certificate (if there is a gas supply)
• current tenancy agreement

Once you have completed your application, there are some steps the local council will have to take before your application is granted. The first of these will be a fit and proper person check on the landlord to determine if they are a suitable candidate for the management of the property.

From this point you may also expect an inspection from a health and safety officer who will carry out a housing health check. This will include ensuring the property is in line with physical standards and building regulations, has the proper gas safety in place, and has an adequate housing health and safety rating.

If the inspector finds any unacceptable risks during the assessment, the manager of the premises may be served an improvement notice to complete required works before being granted the licence. This means the landlord or managing agent will have a window of time to improve the property and take reasonable steps to reduce risk before they can hold a licence.

Any property with five or more people from two or more households must have a licence. Depending on the local council, landlords may also be liable to other types of discretionary measures outlined above.

If you rent out your property without a granted HMO licence, you may be liable to penalties. Letting agents and landlords who avoid licensing their properties can expect fines of up to £30,000 per unlicensed property, rent repayment orders of up to 12 months, and even banning orders from letting out properties in the future.

Agents and landlord’s are also responsible for ensuring previously granted licences are not expired. Letting agents and landlord’s are only usually considered compliant for a given property within five years of receiving a licence.

Looking to check if your landlord is compliant? Use our free property checker to see if your property requires licensing and planning permissions for an address of your choice.

Licensing is essential for any letting agent or landlord looking to operate a HMO property. With so many people living in HMOs and residential accommodation, it’s essential that you are compliant and up to speed with all the regulations necessary to operate your property legally.

Having trouble keeping on top of compliance? Here at Kamma we provide an automated solution for 100+ letting agents to remove the risk of non-compliance. Please book a demo to find out more.

Find out what licensing your property needs today.