HMO Licensing Guide: England & Wales

As a private landlord, it is essential to know whether your rented property needs to be licensed by the local council. With different licensing rules in place across the country, landlords can feel confused about what they need to do. 

OpenRent has asked Richard Tacagni, a Chartered Environmental Health Practitioner and expert in property licensing, to prepare this guide to help you navigate the complex world of property licensing.

The Three Types of Property Licensing Scheme

The first thing to note is that there are three different licensing schemes in England and Wales, all introduced under the Housing Act 2004:

  • Mandatory HMO licensing
  • Additional licensing
  • Selective licensing

Whereas selective licensing schemes can include all private rented properties, mandatory HMO and additional licensing schemes are restricted to Houses in Multiple Occupation (HMOs).

It is important to remember that landlords letting out properties in Wales must also comply with the Rent Smart Wales scheme.  

Mandatory HMO Licensing 

In England, mandatory HMO licensing applies to most HMOs occupied by five or more people.

This includes:

  • shared houses and flats occupied by students and young professionals
  • bedsits with shared kitchen, bathroom or toilet facilities 
  • certain properties converted into a mixture of self-contained and non self-contained accommodation

There is an unusual exemption that applies to flats in multiple occupation within a purpose-built block that contains three or more self-contained flats. This exemption only applies in England.

The mandatory HMO licensing scheme is more limited in Wales. It only applies if the HMO is three or more storeys in height and occupied by five or more people. 

If your property is occupied by fewer than five people, it won’t need to be licensed under this scheme in England or Wales. That will be good news for some landlords.

Additional Licensing 

In England and Wales, each council can decide to implement an additional licensing scheme to bring more HMOs within the scope of licensing. This predominantly relates to HMOs occupied by three or four people.

Before introducing such a scheme, the council must consult widely for at least 10 weeks. They must then publish a public notice giving at least three months’ notice before such a scheme is introduced. 

Each and every additional licensing scheme is different. For example, some apply to the whole borough whereas others are restricted to certain council wards or streets. Some include all HMOs occupied by three or more people whereas others may only include HMOs with four or more people. 

If you have an owner-occupied property and share accommodation with one or two unrelated lodgers, this falls outside the HMO definition. However, owner occupied properties with three or more occupiers are classed as HMOs and may need to be licensed.

To find out if there is an additional licensing scheme in your area, you should visit your council’s website or give their Private Sector Housing Team a call.

Selective Licensing

In England and Wales, each council can decide to implement a selective licensing scheme to extend licensing to all private rented properties. This includes houses and flats occupied by families, couples, single people and two people sharing. 

These licensing schemes can be introduced in areas experiencing high levels of anti-social behaviour, low demand, deprivation, migration, crime or poor housing conditions.

Before introducing such a scheme, the council must consult widely for at least 10 weeks. They must then publish a public notice giving at least three months’ notice before such a scheme is introduced. 

Whilst some selective licensing schemes apply borough wide, it is more common for schemes to focus on certain wards or even individual streets. If you rent out accommodation within the scheme boundary, you must apply for a selective licence unless your property already has an HMO licence.

Again, to find out if there is a selective licensing scheme in your area, you should visit your council’s website. If you are unsure whether your property falls within the scheme, try to contact your council’s Private Sector Housing Team.

Getting Things Wrong Can be Costly    

Although these schemes are complex and vary from area to area, ignorance of the law is no defence. To minimise the compliance risk, I would recommend checking at least once per year whether a licence is needed, as well as at each tenancy renewal. Licensing schemes are subject to regular change and the trend among local authorities is toward more, and wider, licensing schemes. 

If you let out a licensable property without applying for a licence, you can be prosecuted in the Magistrates Court and given a hefty fine. Alternatively, the council can give you a civil penalty of up to £30,000 without any prior warning.

In addition, your tenants can recover up to 12 months’ rent by applying for a Rent Repayment Order. Plus, a Section 21 eviction notice is invalid unless the correct licence application has been submitted. 

Understanding the Licensing Process

Some councils still use paper application forms for their licensing schemes, while others have developed online application systems. 

Each application system is different and the form should explain what supporting documents are required. For example, many councils ask for a floor plan and the latest gas and electrical certificates. Some ask for more extensive documentation. Councils can also ask to inspect the property. 

Crucially, you will need to pay an application fee. Most councils collect the fee in two instalments. The price of licence fees charged varies considerably, from a few hundred pounds to well over one thousand pounds.

You will be compliant with the licensing scheme from the date you submit a valid licence application. That means completing the form, providing any supporting documents required and paying the fee. 

After that, it can take a long time for your licence applications to be approved. In my experience, anything from a few months to a year or two is not unusual. 

You can still rent out your property once you have applied for a licence, provided it is in good condition, free of any serious hazards and well managed. Make sure you retain proof that you have applied (e.g. a copy of your paper application form or a confirmation email from the council). 

If you want more information, you can find more detailed guides to mandatory HMO licensing, additional licensing and selective licensing on the London Property Licensing website.

The London Property Licensing website also contains a free guide explaining the property licensing requirements in every London Borough. Simply visit our website and click on the orange ‘Select Borough’ link at the top of the page.

If you get stuck and need advice, you can book a 30 minute telephone consultation to discuss any property licensing queries in England. We find that is usually enough time to answer most common queries. 

By Richard Tacagni MCIEH CEnvH, London Property Licensing 

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This article is not intended to form legal or investment advice. Investments in property are not guaranteed and can decrease in value as well as increase.