Additional HMO Licensing: Avoid Fines the Easy Way

Additional HMO licensing often catches landlords off guard due to unclear guidelines and varying council requirements. Missing the proper paperwork or failing to meet local standards can result in significant fines and legal complications.

This blog is a practical guide to help you understand if your property falls under additional licensing in England, what steps to take, and how to stay compliant since April, when the regulations were put in place. It's designed to simplify the process and give you the clarity you need to manage your property legally and confidently.

What Is Additional HMO Licensing?

Additional HMO licensing is a scheme introduced by some UK local councils to improve living conditions in smaller shared homes that don’t fall under standard HMO rules. While the start date varies by council, some areas adopted the scheme from June 2023. It was introduced to tackle overcrowding, improve safety standards, and give councils more control over private rentals. This helps ensure tenants live in safer, well-maintained properties and landlords meet clear responsibilities.

Usually, a property needs an HMO licence if five or more people from different households live there. However, even smaller HMOs may require an additional HMO licence under the additional licensing scheme. For example, if three or four unrelated people share a house or flat, your council might still ask you to apply for an additional licence.

Each council sets its rules, so that a property might need a licence in one area but not another. This is why it's essential to check with your local council if your property falls under this scheme.

Why Councils Enforce the Additional HMO licensing?

Councils introduce additional HMO licensing under Part II of the Housing Act for the whole borough. The purpose is to ensure that shared homes meet building regulations. It also ensures they are safe for occupiers and properly maintained. Licensing becomes more important in areas where less than two-thirds of the flats are owner-occupied. This includes privately rented properties used as sleeping accommodation by a single household. Some smaller HMOs that may benefit from a temporary exemption notice don't need a licence under the main rules, so this scheme helps cover more properties.

When a home has several tenants, things like fire safety, rubbish build-up, and repairs can sometimes be problematic. With this scheme, councils can ensure landlords follow the proper standards, give tenants a place to live, and deal with issues quickly. This is especially important for those exploring HMO mortgages for first-time landlords.

It also helps councils correctly record rented homes in their area so they can take action if rules are broken. Knowing the properties' locations, they can monitor them more quickly and ensure landlords meet their responsibilities. This also makes it simpler to take legal action if a landlord isn't keeping the property up to standard. In the long run, it helps improve the quality of rental homes in the area.

Properties That Need Additional Licensing

Some shared homes may not need additional HMO licensing, but many still do depending on the council’s rules. The properties that need it are usually smaller HMOs where fewer people live together, but they still need special rules to ensure their safety.

Here are some examples of properties that may need additional licensing:

• Properties with 3 or 4 tenants: In some areas, a house shared by three or four unrelated people could require a licence. Councils want to ensure the property meets safety standards, and they may also request your contact details, even with fewer tenants.
• Properties in specific areas: Some councils only enforce additional licensing in certain parts of a city or town. If your property is in one of these areas, you may need to apply for a licence even if it has fewer tenants.
• Certain types of buildings: Older properties or those with shared facilities, like bathrooms or kitchens, might need to be licensed to make sure they meet safety and living standards. Older buildings often require extra checks to ensure they're safe for multiple tenants.

Remember, the rules vary depending on your property, so it's always best to check with your local council.

How to Check If Your Property Requires One?

Checking if your property needs additional HMO licensing is essential, as councils have different rules regarding the type of HMO. Here's how you can find out:

1. Contact your local council: The easiest way is to ask your local council. They will tell you if your property needs a licence under their rules. You can find this information on their website or by calling them directly.
2. Check the council's licensing map: Some councils provide a map that shows areas where additional HMO licensing applies. You can look up your property's address on the map to see if it's in one of these areas.
3. Look at the number of tenants: If your property has three or more tenants from different households, it might need a licence, depending on the local rules. Check the regional council's requirements even if you think your property doesn't fall under the main HMO rules.
4. Ask a professional: If you're unsure, ask a property agent or lawyer specialising in rental properties. They can help you understand if your property needs a licence and how to apply.

Step-by-Step Licensing Process

If your property needs additional HMO licensing, the steps are usually simple and must meet the mandatory licensing criteria. Here's how to do it:

Step 1. Visit your local council's website.

Go to the housing or licensing section on the council's website. There, you'll find the application form and full details about the process, and if you need further advice, you can contact them directly.

Step 2. Fill in the application form.

You'll need to provide details about the property, including its size, number of residents, and safety features. Make sure the information is correct.

Step 3. Pay the fee

There is a fee for applying for the renewal of a licence. The cost depends on your local council. Some councils allow you to pay in parts, while others ask for full payment at once.

Step 4. Safety checks and documents related to electrical safety standards

You may need to upload or send copies of safety certificates, such as gas safety certificates, electricity checks, energy performance certificate (EPC), and proof of fire alarms. These show that the home is in a safe condition for tenants.

Step 5. Property inspection (if needed)

Some councils visit the property before granting a licence. They check for safety, living standards, and compliance with licence conditions, and tell you if anything needs to be fixed.

Step 6. Get your licence

If everything is in order, you'll get your HMO licence. It usually lasts for 3 to 5 years, depending on the council. Make sure you follow the rules during this time.

Benefits of Complying with Additional Licensing

Following the rules for additional HMO licensing benefits landlords and tenants, including the necessary licence fee.

Avoids fines and legal trouble

By obtaining the necessary HMO licence for your property, you protect yourself from the risk of substantial fines and legal action. In some cases, continued non-compliance can lead to criminal prosecution, which may involve even higher fines, legal costs, and reputation damage. Securing a licence ensures you're abiding by the law, preventing expensive and stressful legal troubles.

Keeps your property safe

An HMO licence ensures that important safety checks are carried out in your property. These checks include things like fire alarms, gas inspections, and electrical safety in addition to ensuring safety related to fixed combustion appliances, which are vital to protecting your tenants from potential hazards. Regular inspections help to identify any safety issues before they become a serious problem. This not only reduces the risk of accidents but also ensures your property is fit for habitation, offering peace of mind for both you and your tenants.

Gives tenants confidence

When tenants know that your property is licensed, it instils confidence and reassurance. They understand that you are a responsible landlord who has taken the necessary steps to ensure their safety and comfort. Licensed properties often undergo rigorous checks, and tenants feel more secure knowing that they are living in a home that meets health and safety standards. This positive reputation can help you retain good tenants and avoid disputes, ultimately leading to a smoother rental experience.

It makes you look professional

Owning a licensed property signals to both tenants and authorities that you are a professional and responsible landlord. It demonstrates that you are committed to maintaining high standards and following regulations. This can help attract high-quality tenants who are willing to pay fair rent for a safe, well-maintained home. A licensed property is also more likely to remain in good condition because it is regularly inspected for compliance with safety standards, contributing to its long-term value.

It helps avoid future problems

When your property is licensed, it is more likely to be compliant with the latest local council regulations. This proactive approach means that any future inspections will likely go smoothly, reducing the risk of penalties or further complications. Licensing also helps to build a positive relationship with the council, showing that you're taking your responsibilities seriously. This can make future interactions with local authorities easier and less stressful, as they will be more likely to view you as a compliant and trustworthy landlord.

Penalties for Non-Compliance

Not following the rules for additional HMO licensing can lead to serious problems.

Heavy fines

If you rent out a property without the proper HMO licence, you could face significant financial penalties. The local council can issue a Civil Penalty Notice (CPN) for an unlicensed property offence with a fine of up to £30,000. This penalty is enforced as an alternative to criminal prosecution. In more serious cases, you might even face court action, which can lead to additional fines and legal fees. This financial burden can be especially damaging if you are managing multiple properties.

Repay rent

If your property is found to be unlicensed, tenants or even the local council may request that you repay the rent you received while the property was unlicensed. This is a serious financial consequence, as you could be required to return a large sum, particularly if the property has been unlicensed for several months. Not only does this affect your cash flow, but it also undermines the financial stability of your rental business.

Banning orders

For landlords who repeatedly fail to comply with licensing regulations, the council has the authority to issue a banning order. This order prevents you from renting out properties for a specific period, and in some cases, it can be permanent. Once a banning order is issued, it is incredibly difficult to reverse. This can have a long-term impact on your business, as it halts your ability to generate rental income and tarnishes your reputation.

Damaged reputation

Being caught renting out an unlicensed property can severely damage your reputation as a landlord. Word gets around, and potential tenants may be hesitant to rent from you, fearing legal complications or poor property management. This can make it more difficult to find reliable tenants in the future, leading to increased vacancy periods and potentially lower rental income.

Extra checks in future

If you have previously been caught without the proper property licence, the council may subject your other properties to more rigorous inspections. This can lead to additional checks and delays when it comes to approving new tenants or conducting routine maintenance. The increased scrutiny can be time-consuming, costly, and frustrating for landlords who strive to comply with regulations.

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Conclusion

Additional HMO licensing in the private rented sector is no longer limited to large shared houses. Many smaller properties now fall under the scheme, and overlooking the rules can result in serious penalties. For landlords managing shared homes, understanding these requirements is essential to stay compliant and avoid fines.

Comprehending what Additional HMO Licensing is, why it's mandated, which properties require it, and how to apply for it constitute core knowledge areas. Recognising both the benefits of compliance and the penalties of non-compliance can further underline the importance of this understanding.

Remember, every step taken in adherence to these regulations helps elevate your reputation as a diligent landlord. Meeting licensing requirements doesn't just protect you legally – it promotes higher living standards for tenants, contributing significantly to a positive rental experience. Armed with the insights shared in this blog, take one confident step forward in expanding your HMO portfolio.

Frequently Asked Questions

What is the threshold for requiring additional HMO licensing?

The threshold for needing an Additional HMO Licence has become lower under recent council schemes. A property now falls under this requirement if it is rented out to three or four occupants from at least two different households, and they share basic facilities such as a kitchen or bathroom. Even smaller shared homes may need a licence, depending on local rules, making it important for landlords to stay informed.

How long does the licensing process take?

On average, once you've submitted your application along with the appropriate fees and necessary documents, your local council should contact you within 28 days. However, the total timeline may vary depending on individual councils' review process.

Can I appeal against a licensing decision?

Yes, if you are dissatisfied with the licensing decision, you can appeal to the First-tier Tribunal (Property Chamber) within 28 days of receiving the decision. It's crucial to seek legal advice and consider a consultation before submitting an appeal.

Are there exemptions to additional HMO licensing?

Yes, there are exemptions to Additional HMO Licensing. Some examples include specific buildings like those occupied for the purposes of a religious community or used by health authorities for the relief of suffering. If you suspect your property might be exempt, it's advisable to clarify with your local housing authority.