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Do I Need a HMO Licence for 3 Tenants? What You Should Know

Thinking of renting your property to three tenants? You might need an HMO licence, and not knowing the rules could cost you. HMO (House in Multiple Occupation) licensing isn’t just red tape—it’s a legal requirement that can impact how you manage and market your property in London. Whether you’re a seasoned landlord or just stepping …

Do I Need a HMO Licence for 3 Tenants? What You Should Know
6 May 2025
3 min read

Thinking of renting your property to three tenants? You might need an HMO licence, and not knowing the rules could cost you.

HMO (House in Multiple Occupation) licensing isn’t just red tape—it’s a legal requirement that can impact how you manage and market your property in London. Whether you’re a seasoned landlord or just stepping into the rental game, understanding when and why an HMO licence is needed is crucial.

In this blog, we’ll break down exactly what qualifies as an HMO, when a licence is required (especially for three tenants), the legal risks of getting it wrong, and the benefits of doing it right. Plus, we’ll cover key FAQs to keep you informed and compliant.

What Is HMO?

An HMO, or House in Multiple Occupation, is defined as a property where at least three tenants not part of the same family share amenities such as kitchen or bathroom facilities. There are various types of HMOs, with properties housing five or more people requiring shared facilities referred to as large HMOs. The rule mandating an HMO licence holds true across England, Scotland, and Northern Ireland, although the details may vary.

When is a HMO Licence Required?

HMO licensing requirements depend on the type – additional or mandatory. An HMO licence is mandatory when a property houses five or more unrelated individuals sharing facilities. This holds regardless of the area your property is located in, specific to England. However, for properties with three to four occupants who are unrelated, it transforms the use of the property legally into an HMO, aligning with the management of houses regulations, but does not mandate a Mandatory HMO Licence.

Do I Need an HMO Licence for 3 Tenants?

Yes—you will likely need an HMO licence if you’re renting your property to three or more unrelated tenants who share facilities like a kitchen, bathroom, or toilet. This setup meets the criteria for a House in Multiple Occupation (HMO), and in many cases, it triggers the need for licensing.

The key factor isn’t just the number of tenants—it’s whether those tenants form more than one household. In legal terms, a household can be a single person, a couple, or family members living together. So, three friends or co-workers renting rooms in the same house would count as three separate households. That arrangement typically qualifies as an HMO.

Whether a licence is required depends on your local council's rules. While the national standard in England requires licensing for properties with five or more tenants, many councils operate additional HMO licensing schemes that cover smaller HMOs—including those with just three tenants. That means even if your property doesn't meet the national threshold, you could still need an additional HMO licence under local regulations.

Quick checklist:

  • Are your tenants from more than one household?
  • Do they share kitchen or bathroom facilities?
  • Is your property located in an area with additional or selective HMO licensing schemes?

If you answered yes to these questions, it's time to check with your local council—you may need to apply for an HMO licence to stay compliant and avoid penalties.

What is The Criteria for Requiring an HMO Licence?

To determine whether your HMO property needs an HMO licence, you’ll need to consider how many people live there, how they’re related, and what facilities they share. Here’s a breakdown of the core criteria:

1. Number of Tenants

If your property is occupied by three or more people who form two or more separate households, it may be classified as an HMO. A household is typically defined as:

  • A single person
  • A couple living together
  • Family members (including step- and foster relationships)

Three unrelated individuals sharing a property = three separate households.

2. Shared Facilities

An HMO involves tenants sharing basic amenities such as:

  • Bathrooms or toilets
  • Kitchens
  • Living areas (in some cases)

If the tenants have exclusive use of self-contained facilities, it may not count as an HMO, depending on the layout.

3. The Property’s Use

The property must be used as the tenants’ main or only residence. HMOs can include:

  • Shared houses or flats
  • Bedsits
  • Certain converted buildings

Student lets and housing for migrant workers often fall under this definition as well.

4. Licensing Thresholds

There are two main types of licensing:

  • Mandatory HMO Licensing: Required across England for properties with five or more tenants forming two or more households, sharing facilities.
  • Additional Licensing: Introduced by local councils for smaller HMOs (usually 3 or more tenants), even if they don’t meet the national threshold. Selective licence may also be applicable in certain areas, depending on local council regulations.
  • Yes—you will likely need a licensable HMO licence if you’re renting your property to three or more unrelated tenants who share facilities like a kitchen, bathroom, or toilet. This setup meets the criteria for a House in Multiple Occupation (HMO), and in many cases, it triggers the need for licensing.

5. Building Type and Layout

Whether a mandatory licence is required depends on your local council's rules, especially if there is a selective licensing scheme in place. While the national standard in England requires licensing for properties with five or more tenants, many councils operate additional licensing schemes that cover smaller HMOs—including those with just three tenants. That means even if your property doesn't meet the national threshold, you could still need a licence under local regulations.

What Are The Legal Implications of Non-Compliance?

Failure to comply with HMO licensing regulations invites legal repercussions. Both Financial Penalties as well as other stringent Legal Actions can be taken against landlords who don’t acquire the required HMO licence.

Penalties and Fines

Non-compliance with HMO licensing can lead to significant penalties and fines as outlined under the Housing Act 2004, Section 72. Some of these include:

  • Financial Penalties: Sections 249A and Schedule 13A provide for the levying of fines.
  • Rent Repayment Order: Tenants can apply for an RRO under Housing Act Section 234 Regulation 5.
  • PACE Interview Under Caution: This interview stands for Police and Criminal Evidence, held when there's breach of law or regulation.

Possible Legal Actions

Besides pecuniary penalties, landlords may face legal actions for negligence toward HMO licensing. Examples of such possible actions include:

  • Application by tenants for rent arrears due to non-acquisition of a licence.
  • An HMO licence ensures you’re operating within the law. It protects you from hefty fines, potential prosecution, and even being banned from renting out properties. The HMO licence application process also proves that your property meets important safety and living standards, reducing liability risks.
  • In worst-case scenarios, landlords can be banned from letting properties in the future.

What Are The Benefits of Having an HMO Licence?

While the licensing process may seem like an extra layer of bureaucracy, holding a valid HMO licence comes with several practical and financial advantages that can elevate your property business. Here’s why it pays to be licensed:

1. Legal Protection and Peace of Mind

An HMO licence ensures you’re operating within the law. It protects you from hefty fines, potential prosecution, and even being banned from renting out properties. Licensing also proves that your property meets important safety and living standards, reducing liability risks.

2. Higher Rental Yields

Licensed HMOs often bring in more rental income than standard single-let properties. By renting individual rooms, you can maximise your return per square foot, especially in high-demand areas like university towns or city centres.

3. Improved Tenant Trust and Retention

An HMO licence signals to prospective tenants that the property is properly managed, safe, and compliant. This can help attract more responsible tenants and improve tenant satisfaction and retention rates.

4. Increased Property Value

Licensed HMOs can be more attractive to property investors and buyers looking for turnkey rental opportunities. A licensed, income-generating HMO may carry a higher valuation than a standard buy-to-let.

5. Access to More Tenants

With an HMO licence in place, you're legally allowed to house multiple tenants from different households. This expands your potential tenant pool and increases occupancy options.

6. Credibility with Local Authorities

Being a licensed landlord of residential or commercial HMOs can make future interactions with the council smoother, especially if you're looking to expand your portfolio or apply for planning permission.

Why Choose The HMO Mortgage Broker?

When it comes to HMO financing, specialist knowledge isn’t optional—it’s essential. That’s where The HMO Mortgage Broker stands out.

Unlike general mortgage providers, The HMO Mortgage Broker is 100% focused on helping landlords and property investors secure the best possible funding for Houses in Multiple Occupation. Whether you're purchasing your first HMO, refinancing an existing portfolio, or converting a property, they bring deep market insight, lender relationships, and deal-structuring expertise that typical brokers simply don’t offer.

What Sets Them Apart?

  • Specialist HMO Expertise – They understand the unique challenges of HMO lending, from licensing and valuation to rental income projections and complex layouts.
  • Access to Exclusive Lenders – Get matched with mortgage products that aren’t available on the high street or through general brokers.
  • Tailored Advice – They work with new and experienced landlords alike, offering strategies for growth, tax efficiency, and long-term portfolio performance.
  • End-to-End Support – From your initial inquiry through to completion, their expert team guides you every step of the way.

If you're serious about HMO investment, don't settle for a one-size-fits-all approach. Partner with the UK's trusted specialists and unlock smarter finance solutions with The HMO Mortgage Broker. Get a free quote now!

Conclusion

HMO licensing can feel like a legal maze—but if you’re renting to multiple tenants, understanding the rules isn’t optional, it’s essential.

If you're unsure whether you need a licence for three tenants, getting clarity upfront can save you from costly mistakes down the line. While national rules set the baseline, many local councils have additional licensing schemes that catch landlords off guard. That’s why knowing the difference—and the penalties for getting it wrong—is key.

From avoiding fines to boosting your property’s value and tenant appeal, the benefits of being licensed far outweigh the hassle. And when it comes to compliance? It’s always better to stay one step ahead than risk falling behind.

Frequently Asked Questions

What is the minimum room size for an HMO?

The mandatory HMO licence specifies minimum room sizes. Single occupancy rooms must be at least 6.51 square meters, while double occupancy rooms should be no less than 10.22 square meters.

How often must a HMO licence be renewed?

An HMO licence should be renewed after a term of five years. The rule applies to both Mandatory HMO Licences and council-specified Additional Licences.

Can a tenant request an HMO licence check?

Absolutely. Tenants can request a check on the existing HMO licence of their rented accommodation as part of their basic rights.

Do I need an HMO licence for 4 tenants?

While a Mandatory HMO Licence isn't obligatory for four tenants, an Additional HMO Licence may be needed based on the local council's requirements.

Do I need an HMO licence for 2 tenants?

No. A property with two tenants doesn't come under the definition of an HMO and hence doesn't require a Mandatory or Additional HMO Licence.

Do I Need an HMO Licence for 4 Rooms?

Yes, you may need an HMO licence for a 4-room property in Wales if it's rented to three or more unrelated tenants who share facilities. While the national rule applies to five or more tenants, many local councils require a licence for smaller HMOs, including those with four. Always check with your local authority to confirm licensing requirements.

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Milly Turner

Property Finance Specialist

Milly Turner is a property finance specialist with expertise in HMO mortgages and investment property solutions.

10+ years experience