HMO licensing in England: what counts, what you need and what it costs to get wrong

Houses in multiple occupation are the most heavily regulated corner of private renting, and the rules trip up experienced landlords as often as new ones. This guide covers England. Wales, Scotland and Northern Ireland run their own schemes.

What is an HMO?

A property is an HMO when at least three tenants live there forming more than one household, and they share a toilet, bathroom or kitchen. A household is a single person, a couple, or members of the same family. Three unrelated sharers in a flat is an HMO. A couple plus one friend is an HMO. Two couples sharing is an HMO. A family of five is not.

Being an HMO does not automatically mean you need a licence, but it does mean the HMO management regulations apply: fire precautions, safe gas and electrics, adequate waste disposal and a duty to keep common parts in repair. Those duties apply from day one whether or not the property is licensed.

Mandatory licensing

Since October 2018 a licence is mandatory for any HMO occupied by five or more people forming two or more households, regardless of how many storeys the building has. Purpose-built flats in blocks of three or more flats are excluded, but a converted house split into bedsits is not.

Licences are issued by the local council, usually for up to five years, and cover one property each. Fees vary widely, from a few hundred pounds to well over a thousand, and the council will inspect. Conditions typically cover fire detection and doors, minimum room sizes, amenity ratios (kitchens, bathrooms and toilets per occupant), maximum occupancy, gas and electrical certificates, and a requirement that the licence holder is a fit and proper person.

Additional and selective licensing

Councils can extend licensing beyond the mandatory scheme:

• Additional licensing brings smaller HMOs (three or four sharers) into licensing within a designated area or across the whole borough.
• Selective licensing requires a licence for every privately rented property in an area, HMO or not.

Both schemes are local, time-limited (usually five years) and change often. Before buying or converting, check the council's current designations and any consultations on new ones, because a scheme introduced after you buy still applies to you.

Room sizes and occupancy

Licensed HMOs must meet national minimum bedroom sizes: 6.51 square metres for one adult, 10.22 square metres for two adults, and 4.64 square metres for a child under ten. Floor area with less than 1.5 metres of headroom does not count. Councils can set larger minimums as licence conditions and many do. A loft room that looks fine on a floor plan can fail on headroom alone, so measure before you invest in the conversion.

Planning: Article 4 and sui generis

Licensing and planning are separate systems and you need to satisfy both.

• A house shared by up to six unrelated people is planning use class C4. Changing a family home (C3) to C4 is normally permitted development.
• Many councils have removed that permitted development right with an Article 4 direction, so any change to a small HMO needs a planning application.
• An HMO for seven or more people is sui generis and always needs planning permission.

Buying a property that is trading as an HMO does not guarantee it has planning permission for that use. Ask for the decision notice or evidence of lawful use, and take advice before completing.

Fire safety and the fundamentals

Every HMO needs a fire risk assessment, interlinked detection appropriate to the layout, protected escape routes and, in most licensed HMOs, fire doors to bedrooms and kitchens. The council will specify what it expects for the property type. Gas safety certificates are annual, electrical installation condition reports at least every five years, and from 2030 the property will need an EPC rating of C unless an exemption applies.

The cost of getting it wrong

Operating a licensable HMO without a licence is a criminal offence. Councils can issue civil penalties of up to £30,000 per offence without going to court, or prosecute for an unlimited fine. Tenants and the council can apply for a rent repayment order of up to twelve months' rent. Section 8 possession is also restricted while an HMO is unlicensed. Banning orders and the rogue landlord database sit behind repeat offenders.

A practical checklist before you buy or convert

1. Confirm how many people and households the property will house, and whether that makes it licensable now or under any local scheme.
2. Check planning: C3, C4 or sui generis, and whether an Article 4 direction applies.
3. Measure every bedroom, including headroom.
4. Cost the fire safety works, the licence fee and the amenity upgrades before you agree a price.
5. Model the deal on realistic bills-included costs and a void allowance, not on a full house at asking rents.

AIRPROP owns and operates licensed HMOs and can review a property before you commit. Book a free call if you would like a second opinion.