Can HMO License Be Transferred? Rules for Landlords

Owning a House in Multiple Occupation (HMO) in England can be a lucrative investment, but it comes with responsibilities, especially when it comes to the HMO license. If you're selling an HMO property or thinking of buying one, you might wonder if the HMO license can be transferred.

The quick answer is, no, you can’t transfer it. This often leads to confusion, delays, and legal issues.

In this blog, we’ll explain why you can’t transfer the HMO license, what you need to do to apply for a new one, and the legal steps involved when buying or selling an HMO property. By the end, you’ll have all the answers and a clear understanding of what to do next.

Why can't HMO Licenses be transferred?

A House in Multiple Occupation (HMO) license is specific to the property and its licence holder. When a property is bought or sold, the HMO license cannot be transferred because it applies solely to the property and its licence holder, not the owner. The new owner must apply for their own HMO license, even if an existing licence is already in place for the existing owner.

The local council needs to assess the new owner's ability to meet the necessary HMO standards, such as cleanliness, fire safety, and general property management. Just because the previous owner was able to meet these criteria doesn't guarantee the new owner can do the same. The council must ensure the new owner can maintain these standards to keep the property safe and compliant for tenants.

What Happens to the HMO License When the Property Changes Ownership?

When an HMO property changes ownership, the existing l icense doesn’t automatically transfer. The new owner must apply for a new licence to ensure the property remains compliant. Failing to do so can result in penalties and legal complications.

License Cannot Be Transferred: The HMO licence is tied to the specific owner and property. Therefore, it cannot be transferred when ownership changes, requiring the new owner to apply for a completely new HMO licence.
New Owner Must Apply: Even if the property has a valid HMO license, the new owner must apply for a permit to take responsibility for the property and meet legal requirements.
Council Assessment: The local council must assess whether the new owner can maintain all the required HMO standards, including fire safety and cleanliness, to ensure the safety and well-being of tenants.
Application Timing: The new owner must apply for a new HMO license as soon as they acquire the property to avoid delays, fines, or legal complications from operating without one.
Legal Compliance: Operating an HMO without a valid license is illegal and could result in significant fines, penalties, or the inability to rent out the property as an HMO legally.

These steps ensure that the property meets safety standards and remains compliant with the law under new ownership.

Process of Applying for a New HMO License

Post-property takeover, applying for a new HMO license revolves around ensuring that the property aligns with the licensing conditions. This primary stage involves a thorough check of the property's compliance with license regulations. It is followed by a detailed and accurate application to the local council. The application conveys the landlord's readiness and competence to maintain HMO standards efficiently.

Steps Involved in Making a New Application

In precise terms, we can break down the process of applying for a new HMO license into these fundamental steps:

Check Eligibility: The first step is to ensure that the property meets the criteria for an HMO. This includes having at least three tenants from two or more households and sharing amenities like the kitchen and bathroom.
Gather Required Documents: You must provide several documents to apply for an HMO license. These often include proof of identity, gas safety certificates, electrical safety certificates, and fire safety compliance documents.
Complete the Application Form: The application form can be found on your local council's website. Ensure to fill in all required details about the property, its layout, and the number of tenants.
Submit the Application: Once the form is complete and all documents are ready, submit the application to your local council. Some councils may allow online submission, while others may require you to send it by post.
Council Inspection: After receiving the application, the local council typically inspects the property to check its safety standards. This will include checking fire safety measures, sanitation, and the general condition of the property.
Pay the Fee: The application process involves a fee that varies by council. Be sure to pay the cost in full to avoid delays in processing your application.
Wait for Approval: Once the application and inspection are complete, the council will process the request. If everything is in order, they will issue the HMO license. This process can take several weeks, so applying well in advance is essential.
Maintain Compliance: Once you receive the license, you must maintain the property to the required standards. Regular inspections may be carried out to ensure ongoing compliance with safety regulations.

What the Council Expects in a New Application?

Councils determine a new HMO license's approval or denial based on several key factors:

Factor	Expectation
Previous Valid License	A valid previous license can indicate the likelihood of approval.
Property Compliance	The property must meet HMO licensing conditions and safety standards.
Regulation Understanding	The new landlord must demonstrate knowledge of relevant HMO regulations.
Full Completion	All details in the application must be complete and accurate.

This thorough evaluation ensures that the property will continue to meet HMO standards under a new landlord’s management.

Selling Property with an Existing HMO License

Selling a property with an existing HMO licence requires careful consideration of the licence’s transferability. The new owner must apply for a new licence, as the existing one doesn't automatically carry over. It’s important to ensure compliance with local regulations to avoid any legal issues during the sale.

Informing the Buyer: It's essential to notify the buyer that they must apply for a new HMO license. This ensures they understand the legal process and are not caught off guard.
Timely Application for the New License: The buyer must apply for their HMO license as soon as the property is sold, especially if the old licence was previously active. Failing to do so could lead to legal issues and prevent the property from being legally rented as an HMO.
Council Notification: The seller should inform the local council of the change in ownership as soon as possible. This will help avoid confusion and ensure the property's status is updated in the council's records.
Ensuring Compliance for Sale: Before selling the property, the seller should ensure that the HMO property fully complies with all necessary regulations. This includes ensuring that safety certifications (such as gas and electrical safety) are current.
Impact on the Sale Price: A valid HMO license may add value to the property, as it ensures that the property is ready for multi-tenant occupancy. However, the buyer must factor in the cost and time required to apply for a new license after the sale.
Continuing Landlord Obligations: Even after the sale, the seller may remain responsible for any issues or fines related to the property before the ownership change. Therefore, resolving any outstanding HMO-related matters before the sale is crucial.

The Legal Process When Selling a HMO Property

Selling a House in Multiple Occupation (HMO) property involves a few key legal steps that ensure the transaction is smooth, compliant, and transparent. Here’s what to expect:

1. Notify the Local Council:

It's vital to inform the local council of the property sale immediately. This ensures the council updates its records and removes the previous owner's details from the HMO license, preventing any confusion regarding ownership.

2. Ensure Compliance with HMO Regulations:

Before selling, ensure the property fully complies with all relevant HMO regulations. This includes checking that safety certifications for gas, fire, and electrical systems are up to date to avoid legal issues during the sale process.

3. Transfer or Update Tenancy Agreements:

If the property is currently tenanted, review all tenancy agreements and ensure they are adequately transferred or updated to reflect the change in ownership. This will provide clarity for tenants and protect the new owner from potential disputes.

4. Agree on Sale Terms:

The sale agreement should clearly outline the terms related to HMO compliance, including responsibility for any existing documentation. This protects the seller and buyer from misunderstandings or potential legal liabilities after the transaction.

Effectively managing your HMO license as a managing agent is crucial to ensuring that the property stays compliant with local laws and continues to meet necessary safety standards. Here's how to manage your license properly:

Managing Your HMO License

Effectively managing your HMO license is crucial to ensuring that the property stays compliant with local laws and continues to meet necessary safety standards. Here's how to manage your license properly:

Maintaining Compliance with Local Laws

To maintain compliance with local laws, regularly review the HMO regulations set by your local council. This includes ensuring the property meets safety standards such as fire safety, gas and electrical checks, and proper waste management in the living accommodation. Be aware of any local changes to HMO regulations and act promptly to update your property accordingly. Staying informed and proactive can prevent potential fines and ensure your property remains fit for multiple occupancy.

Renewing or Varying Your HMO License

HMO licenses are typically valid for five years. When renewing your license, you must submit a renewal application to the local council before the current permit expires. Suppose there are significant changes to the property, such as the number of tenants or the property's layout. In that case, you may need to apply for a variation to your existing license. This ensures that any alterations are legally recognised and compliant with local regulations.

By managing your HMO license carefully, you ensure your property's continued legality and safety, which helps avoid fines and other legal complications.

Can HMO License Be Transferred? Let The HMO Mortgage Broker Assist You

If you're buying or selling a property with a House in Multiple Occupation (HMO) licence, you might be wondering if the licence can be passed on. The answer is no — a new owner must apply for their licence. This can feel unclear, but that's where The HMO Mortgage Broker steps in.

We help landlords understand what this means for their mortgage and licensing journey. From finding the right lender to ensuring you meet local council requirements, our experts simplify the process. Reach out today for free quotes and clear guidance on managing your HMO mortgage needs. Request a free quote and let us handle the hard part!

Conclusion

Navigating through the system of HMO licenses requires understanding their non-transferable nature, the reasons behind it, and how new applications must be made after any property ownership change. Ensuring that a property maintains its HMO status requires the landlord to familiarize themselves with the obligations associated with selling an HMO property and maintaining compliance with local laws, among other things. It's also crucially important for landlords to understand how to manage HMO licenses, especially when it comes to renewing them. This comprehensive guide aims to clarify these matters, helping landlords navigate the English rental market more effectively.

Frequently Asked Questions

Can an existing HMO license be revised instead of applying for a new one?

No, an existing HMO license cannot be revised, and it continues to denote the original licensor. Each new property owner must apply for their separate HMO license post property acquisition.

What is the first step in applying for an HMO license?

The first step in applying for a new HMO license entails ensuring that the property is compliant with the licensing conditions while the new owner understands related regulations.

Is there a grace period for transferring an HMO license?

There's no grace period for transferring HMO licenses as they fundamentally cannot be transferred from one property owner to another.

What are the penalties for not reapplying for a new HMO license after a sale?

Failing to reapply for a new HMO license post-sale can lead to license breaches, subjecting both the previous and new owners to potential legal sanctions.