Types of HMO Licence Explained: Mandatory, Additional & Selective

There are three types of property licence that can apply to HMOs in England: mandatory, additional, and selective. They operate under different rules, apply to different property types, and are administered at different levels. Confusing one for another — or not realising you need more than one — is one of the most common mistakes HMO landlords make.

This guide explains each licence type, the key differences between them, and how to determine which applies to your property.

Mandatory HMO Licensing

What it covers

Mandatory licensing applies to HMOs that are occupied by five or more people forming two or more separate households who share amenities. This is a national scheme — every local authority in England must operate it. There is no discretion; if the property meets the criteria, it must be licensed.

When it was introduced

Mandatory licensing was introduced by the Housing Act 2004 and originally applied only to properties of three or more storeys. In October 2018, the storey requirement was removed, significantly expanding the number of properties caught. A two-storey house with five tenants sharing a kitchen now requires a mandatory licence where previously it did not.

Key features

• National coverage — applies in every council area in England and Wales
• Property-specific — the licence is tied to the property, not the landlord
• Five-year duration — standard licence term (councils can grant shorter licences)
• Conditions attached — maximum occupancy, fire safety requirements, management standards
• Fit and proper person test — the licence holder must pass this assessment
• Fee set by council — typically £500–£1,500 for five years

Who needs it

Any landlord (or their agent) who owns or manages an HMO with five or more occupants from two or more households sharing facilities. This includes:

• Traditional shared houses with five or more tenants on individual ASTs
• Properties let on a room-by-room basis to five or more unrelated individuals
• Properties with bedsit-style accommodation where five or more people share a kitchen or bathroom
• Purpose-built HMOs meeting the occupancy threshold

It does not apply to:
– Properties where all occupants are from a single household
– Purpose-built blocks of self-contained flats (each flat is assessed separately)
– Properties managed by housing associations, councils, or educational institutions (exemptions apply)

Additional HMO Licensing

What it covers

Additional licensing extends HMO licensing to properties that fall below the mandatory threshold. Typically, this means HMOs with three or four occupants from two or more households — properties that are HMOs by definition but too small for mandatory licensing.

How it differs from mandatory

Additional licensing is a discretionary scheme introduced by individual local authorities. A council must go through a formal consultation and approval process before implementing it. Not all councils have additional licensing; those that do may apply it to the whole borough or only to specific areas.

Key features

• Local scheme — only applies where the council has specifically adopted it
• Must be evidence-based — the council must demonstrate that HMOs in the area are being managed badly enough to justify the scheme
• Five-year scheme duration — the scheme itself lasts five years and must be renewed
• Similar conditions to mandatory — room sizes, fire safety, management standards
• Separate fee — typically £400–£1,000 for five years

Who needs it

Landlords with HMOs in areas where the council has adopted an additional licensing scheme, where the property:

• Houses three or four people from two or more households sharing amenities
• Does not meet the mandatory licensing threshold
• Is within the geographic area covered by the scheme

Checking whether additional licensing applies to you:

1. Search "[your council name] additional HMO licensing" online
2. Check the council's private sector housing pages
3. Contact the council's licensing team directly
4. Check the GOV.UK database of approved licensing schemes

Some councils have had additional licensing for over a decade; others have never introduced it. The situation changes regularly as councils adopt, renew, or let schemes expire.

Selective Licensing

What it covers

Selective licensing is fundamentally different from the other two schemes. It applies to all privately rented properties in a designated area — not just HMOs. A single-let property with one tenant can require a selective licence if it falls within a designated area.

How it differs from HMO licensing

Selective licensing is not an HMO-specific scheme. Its purpose is to address broader issues in the private rented sector: poor property conditions, anti-social behaviour, low housing demand, high crime, high deprivation, or high levels of migration. The conditions attached to selective licences focus on property management, tenant referencing, and maintaining property standards — they do not typically include the HMO-specific requirements around room sizes and fire doors.

Key features

• Area-based — applies to specific geographic areas designated by the council
• All private rentals covered — not just HMOs
• Requires Secretary of State approval — for schemes covering more than 20% of the council area or 20% of privately rented properties
• Five-year scheme duration — must be renewed after expiry
• Lower fees — typically £300–£750 for five years
• Management-focused conditions — tenant referencing, property condition, anti-social behaviour management

Who needs it

Any landlord with a private rental property in a selective licensing area. This includes:

• Single-let properties (one household)
• HMOs (in addition to any HMO licence required)
• Student lets
• Properties let through letting agents

If your HMO is in a selective licensing area, you may need both an HMO licence and a selective licence. These are separate applications with separate fees.

Current selective licensing areas

Over 60 local authorities currently operate selective licensing schemes in England. Some of the largest include:

• Liverpool — city-wide selective licensing (renewed multiple times)
• Newham, London — borough-wide scheme
• Burnley — designated areas
• Blackpool — designated areas
• Nottingham — city-wide scheme

Check GOV.UK or your council website for current designations in your area.

Comparing the Three Licence Types

Feature	Mandatory HMO	Additional HMO	Selective
Applies to	HMOs with 5+ occupants, 2+ households	Smaller HMOs (3-4 occupants, 2+ households)	All private rentals in designated areas
Who decides	National law (automatic)	Local authority (discretionary)	Local authority (discretionary, with approval)
Geographic scope	Nationwide	Council-specific areas	Specific designated areas
Typical fee	£500–£1,500	£400–£1,000	£300–£750
Duration	5 years	5 years (scheme may not be renewed)	5 years (scheme may not be renewed)
Room size conditions	Yes (statutory minimums)	Yes (statutory minimums)	Not typically
Fire safety conditions	Yes (comprehensive)	Yes (comprehensive)	Basic
Can you need more than one?	N/A	Yes (mandatory + additional in some cases)	Yes (selective + HMO licence)

Section 257 HMOs

A Section 257 HMO is a specific type of HMO defined as a building that has been converted into self-contained flats where the conversion does not comply with the Building Regulations 1991 (or later) and at least one-third of the flats are let on short-term tenancies.

Section 257 HMOs are relevant because they can trigger licensing requirements even though they are technically self-contained flats. If you own a converted building that meets this definition, check with your council whether licensing applies — the rules are complex and council interpretation varies.

What Happens If You Get the Wrong Licence

If you obtain an additional or selective licence when you actually need a mandatory licence (or vice versa), you are technically operating without the correct licence. The penalties are the same as operating without any licence:

• Civil penalty up to £30,000
• Rent repayment orders up to 12 months
• Inability to serve Section 21 notices

Getting the licence type right matters. If you are unsure, confirm with your council's licensing team before applying.

Practical Steps

1. Count your occupants and households — five or more people from two or more households means mandatory licensing, no exceptions
2. Check for additional licensing — if you have a smaller HMO, search your council's website for additional licensing schemes
3. Check for selective licensing — search your council's website for selective licensing designations covering your property's postcode
4. Apply for all required licences — if you need both an HMO licence and a selective licence, submit both applications
5. Keep records — maintain copies of all licences, application confirmations, and condition schedules

If you are financing an HMO purchase, your mortgage lender will expect the correct licence to be in place. Contact The HMO Mortgage Broker to discuss how licensing interacts with your mortgage — we work with over 30 lenders who specialise in HMO finance.

For more on this topic, see our guide to Large HMO Mortgage Requirements.

Frequently Asked Questions

What is the difference between mandatory, additional, and selective licensing?

Mandatory licensing applies nationally to HMOs with 5+ tenants from 2+ households. Additional licensing is a local scheme covering smaller HMOs (typically 3-4 tenants) in areas designated by the council. Selective licensing applies to all privately rented properties in a designated area, regardless of whether they are HMOs. Your property may need one, two, or even all three types of licence depending on its location and size.

How do I know which HMO licence I need?

Check with your local authority's private rented sector or licensing team. They can confirm: whether your property needs a mandatory HMO licence (based on size and occupancy), whether additional licensing schemes cover your area, and whether selective licensing applies. Many councils have online checking tools where you can enter your property's postcode and details to determine your licensing obligations.

Do I need a licence for a 3-bedroom HMO?

A 3-bedroom HMO does not need a mandatory licence (which applies to 5+ tenants from 2+ households). However, it may need an additional licence if your local council has introduced an additional licensing scheme covering smaller HMOs. It may also need a selective licence if the property falls within a selective licensing area. Always check your specific council's requirements.

Can I apply for multiple HMO licences at the same time?

Yes, if your property requires both a mandatory and an additional or selective licence, you can submit applications simultaneously. Some councils have combined application forms. Note that each licence type has its own fee and conditions. Keeping track of multiple licence periods can be complex — consider using a property management system or spreadsheet to manage renewal dates.