From beginners’ questions to the finest details, this post tells you everything you need to know about Houses in Multiple Occupation.
It’s likely that you will need to get an HMO license if renting out an HMO property in England & wales. There are three kinds of HMO licensing: Mandatory, Additional and Selective.
Here we will explain what an HMO is, then go through the rules for the three types of licenses that exist, so you can work out if your property requires an HMO license.
Is My Property an HMO?
The short definition of a House in Multiple Occupation is:
- a rented property
- with three or more people who are not from one household
- who share basic amenities
Two people are not part of the same household unless they are members of the same family, or are a couple, including same sex couples. Half-blood relations count the same as whole blood, and stepchildren count the same as children.
A basic amenity can be a toilet, bathroom or cooking facilities such as a kitchen.
The above should be enough for you to know if your property is an HMO. In general. If you are renting to three or more people who aren’t related or a couple, (e.g. three professionals), you will have an HMO. If you are renting to a single family, you most likely don’t have an HMO.
What is a Large HMO?
There is a second category called Large HMOs. This is important because it relates to the first kind of licensing.
Your property is a large HMO if:
- it has over four tenants
- the tenants aren’t all part of the same household
- they share basic amenities
- the building is at least three storeys high
What about Lodgers?
In some cases, lodgers form an exception. If the property is occupied by the landlord, then up to two lodgers who are not part of their household can also live in the property without it being an HMO.
Mandatory HMO Licensing
The Housing Act (2004) made the licensing of large HMOs mandatory. Because it was brought it via an act of parliament, this Mandatory Licensing is sometimes statutory licensing.
If you do you do not properly license your HMO, then you can face an unlimited fine. You apply for a license by contacting the local council that covers the location of the property.
The license usually lasts for five years. You will have to pay a fee for the license. You do not need to notify your tenants about your license applications if their AST’s minimum term is less than three years, or if they are on a periodic tenancy.
In addition to Mandatory Licensing, local councils may set up extra criteria via which HMOs in their area can require a license. This is called Additional Licensing. These powers were given to local government to help tackle low rental sector property standards and tackle anti-social behaviour.
Just what those criteria are varies from council to council. They could, for example, decide to expand the Mandatory Licensing criteria, so that all HMOs of two or more stories require a license.
Further, Additional Licensing is often only in place in specific areas within the authority. Usually, it is in areas where rental demand is low, or antisocial behaviour is high.
The best way to find out whether your HMO requires Additional Licensing is to get in touch with your local authority.
If you already have an HMO license due to Mandatory Licensing, you won’t need to get another to satisfy Additional Licensing.
There is a third level of licensing, which has powers to go even further than Additional Licensing in its scope. Even non-HMO properties can require a license under Selective Licensing Schemes.
Selective Licensing can be brought into an by the local council if it is experiencing high levels of deprivation, migration or crime, poor conditions, or low demand and anti-social behaviour.
Selective Licensing usually covers all privately rented properties within an area that is experiencing these problems, regardless of whether they are HMOs of not.
Just like additional licensing, if you already have a license due to Mandatory Licensing, then you will not need an additional license. Here again, the best way to find out if your property requires a license is to contact the council in which it is located.
An Example of HMO Licensing in Practice:
Let’s look at the London borough of Southwark as an example of a local council where all three type of licensing are in operation.
Firstly, like everywhere in England & Wales, Mandatory Licensing is in place for large HMOs in Southwark.
Secondly, the Southwark council has decided to bring in additional licensing covering the entire area of the borough. The scope they have chosen for their Additional Licensing is all HMOs. Therefore, all HMOs in Southwark need to be licensed. In practice, this supersedes the mandatory licensing, and HMO landlords will only need one license.
The map below illustrates this, as the highlighted zone in which the Additional Licensing scheme applies covers the entire borough.
Finally, for key areas where social difficulties exist, the council has chosen to implement Selective Licensing. The scope of the Selective Licensing is all privately rented property. Even though all HMOs in the borough are covered by Southwark’s Additional Licensing, its Selective scheme then goes further, and applies to any rented property within the defined areas.
This means that landlords who have any rented properties in the highlighted zones of the map below are required to have a license.
Southwark have chosen a very broad scope for both their Additional and Selective licensing. Their Additional scheme applies all HMOs, and their Selective scheme applies to all rented property in the defined areas. It is, however, possible for councils to choose narrower criteria for licensing.