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If you're planning to rent out a House in Multiple Occupation (HMO) in the UK, one of your first steps is obtaining an HMO licence. This legal requirement applies to properties rented by three or more tenants from different households who share facilities like a kitchen or bathroom.
The cost and fee structure of an HMO licence can vary widely depending on your local council, the size of your property, and the number of tenants. In this guide, we’ll break down the typical fees, explain what affects the cost, and outline additional expenses you might need to consider when applying for or renewing an HMO licence.
What Is An HMO Licence?
An HMO (House in Multiple Occupation) licence is a legal authorization required for certain rental properties where multiple people who are not from the same household live together and share facilities like kitchens or bathrooms. It ensures that the property meets specific safety, health, and management standards set by the local council.
In the UK, a property usually needs an HMO licence if:
- It's rented to five or more people forming more than one household and requires adequate management of household waste.
- Tenants share facilities such as a kitchen, bathroom, or toilet
- It's their main residence or only home
Local councils may also require smaller HMOs to be licenced under additional licensing schemes. Operating an unlicenced HMO when a licence is required can lead to fines and legal action.
Key Requirements for Obtaining an HMO Licence
To apply for an HMO licence, landlords need to satisfy several HMO requirements:
- The property must be deemed suitable for occupancy by a specific number of people.
- The proposed licence holder or manager must be a 'fit and proper' person, meaning they haven't been convicted of certain crimes or acted irresponsibly in relation to housing laws.
- Any necessary safety measures, such as fire alarms, must be correctly installed and functioning.
- Tenancy agreements adhere to the appropriate legal standards.
Detailed Breakdown of the Cost of HMO Licence
The cost of an HMO licence in the UK varies depending on the local council, the size of the property, and the number of occupants. Here's a detailed breakdown of the typical costs and factors involved:
1. Basic Licence Fee
Most councils charge a base application fee for processing the HMO licence. This fee typically ranges from:
- £500 to £1,500 for standard properties
- The average is around £850 to £1,000
Some councils charge a flat rate, while others use a tiered system based on the number of bedrooms or units, number of tenants, or the type of HMO (mandatory, additional, or selective licensing).
2. Additional Charges
Many councils break down the HMO licence fee into separate parts, including the application process. For example:
- An initial application processing fee
- A final payment once the licence is approved
- Additional charges for larger properties or more tenants
These may add another £100 to £300, depending on the size and complexity of the HMO.
3. Renewal Fees
Renewing a residential or commercial HMO licence (usually required every 5 years) is typically cheaper than the initial application, though not always. Expect to pay:
- Around £400 to £800 for renewals
Some councils offer discounts for early renewal or to accredited landlords.
4. Discounts and Exemptions
Some councils offer:
- Discounts for accredited landlords
- Reduced rates for charities or housing associations
- Discounts for multiple HMOs under one ownership (bulk licensing)
These can lower the total cost by 10–30%.
5. Penalties and Late Applications
If you fail to apply for a licence on time, you may face:
- Civil penalties up to £30,000
- Repayment orders (tenants can claim back rent paid during unlicenced periods)
- Criminal prosecution in serious cases
6. Other Costs to Consider
Beyond the licence fee itself, landlords often need to pay for:
- Gas safety certificates
- Electrical safety inspections (EICR)
- Fire risk assessments and improvements
- Property management upgrades
These can cost between £300 and £2,000, depending on the work required.
What Are The Additional Charges Associated with HMO Licensing?
In addition to initial and renewal expenses in the United Kingdom, there may be other charges a landlord needs to consider. This includes expenses linked to inspection fees and compliance-related engagements.
Inspection Fees
Inspection fees apply in instances like HMO advisory visits, immigration inspections, or inspections under the Housing Act. The costs vary depending on the specific inspection:
| Service | 2024 Fee | 2025 fee |
|---|---|---|
| HMO licensing advice | £232 | £255 |
| Provision of paper application form – new HMO licence | £259 | £285 |
| Provision of paper application form – renewal of HMO licence | £216 | £238 |
Compliance-Related Charges
Additional costs may also incur if there is non-compliance with the terms of the full licence. For instance, there might be a charge enforced if a property fails to comply with an enforcement notice, or if additional inspections are required due to concerns about non-compliance. These costs will be assessed on a case-by-case basis.
Discounts and Rebates on HMO Licences
Good news for landlords—the council has schemes that offer discounts and rebates on HMO Licensing fees, giving you the possibility of reducing initial application and renewal costs.
Eligibility Criteria for Discounts
Discounts often exist for accredited landlords who have demonstrated a strong track record in managing their properties. Landlords can potentially get rebates on application fees if they're part of the Rent with Confidence accreditation scheme, or if they provide requisite safety certificates before the issuance of the licence.
How to Apply for Discounts
Beyond the cost implications, operating an HMO without mandatory licensing or failing to adhere to its terms can lead to severe legal penalties, including fines and criminal charges. This underscores the necessity of understanding and complying with rules surrounding HMO licences.
Legal Implications and Penalties
Beyond the cost implications, operating an HMO without a licence or failing to adhere to its terms can lead to severe legal penalties, including fines and criminal charges. This underscores the necessity of understanding and complying with rules surrounding HMO licences.
Penalties for Non-Compliance
In situations where landlords feel unfairly penalised or tenants are living in substandard conditions in the borough, this April, both parties have legal recourse. They can seek advice and lodge complaints with the respective licensing authority and legal advisor.
Legal Recourse for Landlords and Tenants
In situations where landlords feel unfairly penalised or tenants are living in substandard conditions, both parties have legal recourse. They can seek advice and lodge complaints with the respective licensing authority and legal advisor.
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Conclusion
HMO Licensing is a significant aspect of managing multi-tenancy properties in the UK. While the licensing process might appear daunting initially, understanding the costs involved, the process to apply, and the potential penalties for non-compliance can offer clarity and direction for landlords. Mastery of these aspects not just saves you from running the risk of hefty penalties, but also equips you with the necessary information to make optimal financial and strategic decisions for your property portfolio.
Frequently Asked Questions
What is the cost difference between a new licence and a renewal?
The cost for a renewal tends to be less than a new licence because the administrative work and inspections associated with renewals are less than new applications.
Can charges vary by city or region?
Yes, individual councils set their HMO licensing fees, so the charges may differ by city or region.
Do I need an HMO licence if my tenants are all family members?
No. If your tenants are all part of a single 'household' (i.e., they are related or living together as a couple), an HMO licence isn't required.
Is the HMO licence fee a one-time payment or recurring?
While the HMO licence fee is paid initially, it needs to be renewed every five years. So, it is a recurring cost for as long as you operate HMOs.
Property Finance Specialist
Milly Turner is a property finance specialist with expertise in HMO mortgages and investment property solutions.