Understanding and getting to grips with Houses in Multiple Occupation (HMO) and property licensing can be a daunting prospect for many buy-to-let landlords. In this article, we hope to demystify this important aspect of renting out a property.
Failing to obtain a licence or breaching its conditions can result in a heavy fine, criminal conviction and a rent repayment order.
When letting out a property, it is essential to understand any licensing requirements which might apply. Engaging with the local authority and your local branch as soon as possible in the letting process is the best way for you to ensure you’re compliant.
What is a House in Multiple Occupation?
Under the Housing Act, an HMO is defined as any property let to three or more tenants comprising two or more households sharing a kitchen, bathroom, and toilet. These are commonly referred to as “Small or Basic HMOs”.
Self-contained flats in converted buildings that didn’t comply with the latest building regulations (typically those converted before 1992) could be viewed as a s257 HMO when more than two-thirds of the flats in the building are rented out and not lived in by the owner.
Not all HMOs require a licence; however, all must comply with HMO Management Regulations and the Fire Safety Regulatory and Reform Order. We will look at the three types of licences later in this article.
Property licensing is managed by local authorities, all of whom have different approaches and requirements.
What types of HMO licence are there in England?
There are three types of property licences:
Mandatory Licence
Irrespective of the local authority area, a licence will always be required where there are 5 or more occupants comprising 2 or more households. These are often referred to as “Large HMOs”.
Additional Licence
A local authority may, at its own discretion, decide to introduce an additional licensing area or number of areas. When this occurs, all small/ basic HMOs within the area(s) will require a licence.
Selective Licence
Selective licensing schemes allow local authorities to designate tenanted properties in certain areas, wards, streets and even whole boroughs as requiring a licence regardless of the number of occupants or households in occupation. A primary reason for local authorities introducing selective schemes is widespread anti-social behaviour in a particular area. Where a scheme covers more than 20% of their geographical area the local authority must obtain consent from the Secretary of State.
What is a household?
Broadly speaking, a household can be a single person or a number of people who are members of the same family, including grandchildren, uncles, aunts, nephews, nieces or first cousins.
For example, an unmarried couple and a foster child would be viewed as one household. A married couple living with a friend or colleague would be viewed as two households.
How do I get a licence when one is needed?
Licences, which typically last for five years, are obtained from the local authority. Licences will come with a number of important conditions. Local councils can check whether or not these conditions are being met, either by visiting the property and/or in dealing with a tenant complaint.
How much is a licence and how long does a licence last for?
Licence application fees vary, but on average, they cost in the region of £500 to £700, and typically last for 5 years. Discounts for licences issued partway through a scheme are unusual.
Individual and local authorities may introduce selective or additional schemes for which a landlord may apply, in which case, the length of a licence will depend on the unexpired term of the scheme.
What kind of licence conditions and HMO regulations are there?
These vary from local authority to local authority, but will usually encompass the following areas:
- Health, safety, and tenant welfare. Fire safety, heating, and ventilation are usually key considerations.
Suitability of accommodation for the number of occupants. This includes minimum room sizes.
- Landlord and agent suitability to hold a licence and manage the property “fit and proper person”.
- Adequate property and tenancy management arrangements
- Property inspections
- Anti-social behaviour management
- Recycling and waste disposal
Is planning permission required?
It is important to check whether HMO related planning restrictions apply in an area. These can apply to small/ basic HMOs under an Article 4 directive. An HMO with 7 or more tenants will require planning consent regardless of the local authority area in which it is situated.
What about Wales & Scotland?
In Wales, mandatory licence requirements only apply where the property has 3 or more storeys. Additional licensing is the same as in England.
In Scotland, any HMO let out to 3 or more unrelated people who share a bathroom and kitchen facilities requires a licence.
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