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Milly TurnerDo you own or manage a property that’s rented out to multiple individuals, including lodgers, but not all from the same family? If that’s the case, you might need to apply for an HMO licence – a requirement set by UK Government regulations for Houses in Multiple Occupation (HMO).
Simply put, an HMO is any property occupied by at least three people from more than one household, where tenants share common facilities like the kitchen, bathroom, or toilet.
Navigating the complex rules and regulations around HMO licences can seem overwhelming, but don’t worry—we’ve got you covered. This article will break down everything you need to know: what exactly an HMO is, when you need an HMO licence, how to apply, common misconceptions, and the consequences of failing to comply. Whether you're a seasoned landlord or a new property manager, understanding these rules is essential to ensuring your property remains in line with the law.
What is an HMO (House in Multiple Occupation)?
A House in Multiple Occupation (HMO) is essentially a rental property inhabited by individuals from separate households sharing common amenities such as the kitchen, bathroom, or toilet. A household in the HMO context can be identified as a single person or members of one family living together – this includes married couples, those living together, and people in same-sex relationships.
Examples of HMO Properties
HMOs often appear in various forms, offering a breadth of accommodation options for renters. Here are some examples:
- Shared Housing: These properties are typically leased by students or young professionals. Everyone has their bedroom but shares communal facilities.
- Bedsits: These are self-contained mini flats within larger properties, furnished with basic amenities that are usually shared.
- Hostels: Typically offering temporary accommodation, hostels come under the purview of HMOs.
What Are The Legal Requirements for Obtaining an HMO Licence?
Certain legal obligations necessitate an HMO licence for landlords if their property houses 5 or more individuals forming more than one household. Additionally, an HMO licence may be required for smaller HMOs depending on the local council's rules. For further information, often, local councils have the authority to determine their stipulations for HMO licensing within their borough.
What Is The Eligibility Criteria for Landlords?
To obtain an HMO (House in Multiple Occupation) licence, landlords must meet a set of legal and safety standards designed to protect tenants. Key requirements include:
- Property suitability: The property must be appropriate for the number of tenants, with adequate size and facilities.
- Fit and proper status: The landlord or managing agent must have no record of serious legal breaches or non-compliance.
- Gas safety: An up-to-date gas safety certificate must be submitted annually.
- Smoke alarms: Functional smoke alarms must be installed and regularly maintained.
- Electrical safety: Safety certificates for all electrical appliances must be provided upon request.
What Are The Required Documents and Application Process?
Landlords wishing to obtain a private sector HMO licence must begin by contacting their local council to check if a licence is needed. The application process necessitates that landlords present specific documents and meet distinct standards.
| Documents | Description |
|---|---|
| Updated Gas Safety Certificate | To demonstrate compliance with safety regulations regarding gas |
| Safety Certificates for All Electrical Appliances | To confirm that all electrical appliances in the property are safe for use |
| Proof of 'Fit and Proper' Status | Demonstrate a clean record with no criminal history or breach of landlord laws |
The council is responsible for ascertaining if the home meets the correct standards according to size, number of occupants, and management.
When Do You Need An HMO Licence?
An HMO (House in Multiple Occupation) licence is required under specific circumstances, primarily to ensure the safety and well-being of tenants in shared living spaces, including residential care homes. While the criteria for requiring a licence can vary depending on the location and the specifics of the property, here are the key situations when you’ll need an HMO licence:
1. The Property Houses Three or More Tenants
One of the most straightforward requirements for needing a residential or commercial HMO licence is the number of tenants. If the property is occupied by three or more tenants, the number of people who are not part of the same household (i.e., they come from at least two different households) generally requires an HMO licence. This applies regardless of the size or layout of the property.
2. Shared Facilities
A property that falls under the HMO category is typically one where tenants share basic facilities, such as a kitchen or bathroom. If multiple individuals or households share these common areas, the property is more likely to need an HMO licence, even if the tenant count is lower.
3. The Property is a Large HMO
A "large HMO" in the United Kingdom requires a licence if it is occupied by five or more tenants who come from more than one household and share facilities. In addition to meeting the tenant count, the property must also meet certain safety and space standards. Large HMOs are subject to stricter regulations, including fire safety measures, room sizes, and overall living conditions.
4. The Property is Not a Single Household
If the property is rented out to several different families or unrelated individuals who do not form a single household, it’s classified as an HMO. Even if the number of tenants is fewer than five, the property may still need an HMO licence based on the council's local rules.
5. Changing Property Use to an HMO
If you convert a property from a single household dwelling to an HMO property, you may need to apply for a separate licence even if the occupancy is within legal limits. Local councils typically require a licence whenever there is a change in the property’s use or the way it is rented out.
6. Overcrowding and Safety Concerns
If your property is deemed overcrowded according to local housing standards, it may need an HMO licence regardless of the number of tenants. Councils are keen on enforcing these regulations to prevent unsafe living conditions, such as inadequate fire exits, poor sanitation, or overcrowded rooms that compromise tenant safety.
What Are The Common Misconceptions About HMO Licensing?
People often hold misapprehensions surrounding HMO licensing – a prevalent one being that only large-sized properties housing numerous tenants require a licence. While this holds true for mandatory HMO licencing, smaller HMOs may also be required to have a licence based on local council discretion.
1. "Only large HMOs need a licence"
Many landlords believe only properties with five or more tenants require a license. In reality:
- Mandatory licencing applies to properties with 5+ people from 2+ households.
- However, many councils require licenses for smaller HMOs under additional or selective licensing schemes.
2. "If I rent to a group of friends, it's not an HMO."
Even if tenants know each other, if they are from different households (i.e., not related), the property can still be classified as an HMO.
3. "Once I get a licence, I'm set for life"
HMO licences typically last up to 5 years, but landlords must:
- Renew them before expiry
- Maintain compliance throughout the period
Some councils may inspect properties and revoke licenses for breaches.
4. "I can make modifications after getting licensed without telling the council."
Changes like adding bedrooms or altering the layout must be reported. Unapproved modifications can invalidate the license.
5. "If the property is already licensed, I don’t need to do anything when I buy i.t"
Licences are not transferable between owners. A new landlord must apply for a new license upon purchase.
6. "It’s just a formality—I’ll get approved no matter what"
HMO licencing involves strict property standards, including:
- Fire safety measures
- Room sizes
- Sanitation facilities
Applications can be refused or delayed if the property doesn’t meet requirements or the landlord fails the "fit and proper person" test.
7. "The council won’t check"
Councils conduct spot checks and may act on tenant complaints or neighbor reports. Operating an unlicensed HMO can lead to:
- Fines up to £30,000
- Repayment orders
- Criminal prosecution
If you’re a landlord or managing agent, understanding these details is key to staying compliant—and avoiding hefty penalties.
Penalties for Non-Compliance
Non-compliance with licensing rules is a serious offense and triggers severe penalties. If you are found letting out an unlicensed HMO, you could invite heavy fines, tarnish your reputation, and face legal consequences.
Legal Consequences for Unlicensed HMOs
Landlords operating unlicensed HMOs can face daunting legal consequences. Such breach of laws can result in an unlimited fine, inflicting a significant dent in their financial reserves. Moreover, neglected or dangerously managed properties attract prohibition orders, ultimately forbidding the landlord from letting the property. Excessively, landlords can be handed control orders, mandating them to surrender the management of the property for a particular period.
Potential Fines and Legal Actions
The fines imposed on landlords for running unlicensed HMOs are not capped, implying an immense financial burden bearing upon those found guilty. Additionally, landlords may face Rent Repayment Orders, ordering them to repay up to 12 months of collected rent. Any legal action initiated against landlords not only results in financial losses but can also irreversibly tarnish their reputation. Hence adhering strictly to the rules is not just legally, but also financially beneficial.
Secure the Right HMO Mortgage with Expert Guidance from The HMO Mortgage Broker
Looking to invest in an HMO property but unsure about financing options? The HMO Mortgage Broker is here to make your journey smoother and more straightforward. As experts in the HMO market, we understand the unique challenges and opportunities of property investment in Houses in Multiple Occupation.
With tailored advice, a wide range of mortgage products, and a deep understanding of the HMO industry, The HMO Mortgage Broker is committed to helping you secure the right finance for your property. Whether you're a first-time HMO investor or a seasoned landlord expanding your portfolio, we provide expert guidance every step of the way.
Why choose us?
- Specialised Expertise: We know the HMO market inside and out, giving you an edge when securing your mortgage.
- Access to Exclusive Deals: Our strong relationships with lenders allow us to offer you competitive rates and exclusive mortgage options.
- Personalised Service: Your financial goals and property ambitions are unique. That’s why we offer bespoke advice to match your needs.
Conclusion
Understanding what an HMO licence is and when it’s required is integral to avoiding legal complications while renting out your property. Become familiarised with your responsibilities as an HMO landlord, rising above potential misunderstandings and paying careful attention to the criteria, conditions, and temporary exemption coverages of the HMO licensing. Important to note that even though smaller HMOs are generally exempted from licensing, there are exceptions. When in doubt, consulting your local council can shed light on whether your property would be categorised as HMO in its purview, and if a licence is necessary. Always remember, non-compliance carries hefty penalties – stay well informed and avoid the risk.
Frequently Asked Questions
Who needs an HMO licence?
An HMO licence is necessary for landlords who rent out property to 5 or more people forming multiple households and share amenities like the toilet, bathroom or kitchen.
How often do I need to renew my HMO licence?
On average, an HMO licence is effective for 5 years post issuance, post which landlords must apply for renewal.
Can you apply for an HMO license before purchasing the property?
No, you cannot apply for an HMO licence prior to purchasing the property as the licence is property-specific and non-transferable.
What happens if you don’t need a license, but you still apply?
If you apply for an HMO license when it’s not required, your application may be rejected, wasting time and resources. Additionally, some councils might impose penalties or fines for unnecessary applications. It’s crucial to understand local regulations before proceeding.
Property Finance Specialist
Milly Turner is a senior HMO mortgage reported with over 6 years of experience in property finance. She specialises in helping both new and experienced landlords navigate the complexities of HMO mortgages and portfolio expansion.