HMO licences in England

The legal definition is in section 254 of the Housing Act 2004. A property is a house in multiple occupation when three or more tenants live in it, those tenants make up more than one household, and any of the toilet, bathroom or kitchen is shared.

The household test is what trips most landlords. A household is a single person, a couple in a relationship, or members of the same family living together. Three friends from different families are three households. A couple plus their two children are one household. So a house let to a couple and their child is not an HMO. A house let to two friends and a third unrelated tenant is.

Shared facilities means tenants from different households using the same kitchen, toilet or bathroom. A six-bed flat where every bedroom has an ensuite and there is no shared kitchen is not an HMO. The same six-bed flat with a shared kitchen is.

A self-contained flat with one tenancy covering everyone inside is not an HMO at the flat level, even if the building it sits in is a converted house. The HMO test runs at the unit of let, not the building, unless the building is a section 257 conversion (more on that below).

Mandatory HMO licensing comes from the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018. The rule is national. Every council in England has to operate it. There is no postcode lottery and no opt-out.

The threshold to remember is five and two. Five or more people. Two or more households. Sharing a kitchen, bathroom or toilet. If the property meets all three, the landlord needs a mandatory HMO licence from the council before any tenant moves in. The licence is granted to a named person at a named address, runs for up to five years, and carries conditions the council attaches when it issues the licence.

The five-occupier test counts people, not bedrooms. A four-bedroom house let to four tenants is below the threshold. The same four-bedroom house with a fifth adult sleeping in the lounge is at the threshold. Children count. Lodgers count if the property is not owner-occupied.

A property dropping below five does not automatically lose its licence. The licence holder has to inform the council in writing. The council usually revokes the licence on request, and may move the property to the additional HMO scheme if one is running locally.

A council can designate part of its area or the whole of it for additional HMO licensing under section 56 of the Housing Act 2004. The scheme catches smaller HMOs that fall below the mandatory threshold but where the council judges that licensing would improve management standards in the local market.

A typical additional scheme covers houses let to three or four occupiers from two or more households where facilities are shared. Some schemes also include section 257 HMOs (see below). The scheme designation lasts up to five years and the council has to consult before renewing.

Whether an additional scheme applies to your property is a postcode question. The designation usually names wards, lists streets, or draws a boundary on a map. A house on one side of a ward boundary can be inside the scheme; a house on the other side can sit outside. The postcode confirms the council. The address confirms the scheme membership for street-list schemes.

See which councils run an additional HMO scheme, with the fees, term dates and area lists for each.

The conversion definition sits in section 257 of the Housing Act 2004. A converted building is a section 257 HMO when it has been split into self-contained flats, less than two thirds of the flats are owner-occupied, and the conversion does not meet the 1991 Building Regulations standard.

Section 257 HMOs do not count toward the mandatory threshold. The mandatory rule only applies to non-self-contained HMOs. But a council's additional scheme can bring section 257 buildings inside its scope, and many do for the safety reasons that flow from older conversions failing modern fire-safety standards.

For section 257 HMOs the licence sits at the building level, held by the freeholder or the leaseholder with management responsibility. Each flat is a unit on the licence, not a separate licence application.

Applications go directly to the council where the property sits. Almost every council has moved its application process online. The form takes the property address, the landlord's correspondence address, any managing agent's details, a floor plan, the safety certificates, the EPC, and the fee.

The licence is granted to a named "licence holder" with a "right to manage" the property. That is normally the freeholder for a house, or the long leaseholder for a flat. A managing agent can hold the licence in their own name with the owner's written agreement.

The council then runs a fit-and-proper-person test on whoever will hold the licence. Recent housing offences, fraud convictions, or unspent immigration breaches can block a licence. The same test applies to anyone managing the property day to day.

Most licences run for five years. The council can shorten it. Renewal is a fresh application, not a tick-the-box continuation. Fees and conditions can change between cycles and the council can refuse renewal where the property no longer meets the standard.

There is no national fee. Each council sets its own. Most charge somewhere between £600 and £1,500 for a five-year mandatory licence, with the additional HMO licence usually priced at the same level or a little lower. London councils sit at the upper end. Some smaller councils undercut £500.

A common pattern is a two-part fee. Part A is paid on application and is non-refundable; it pays for the council's processing work. Part B is paid when the licence is granted and is sometimes refunded in part if the application is withdrawn before the licence issues.

Discounts often exist for landlords accredited by a recognised scheme, properties with an energy performance certificate of B or above, and multi-property applications submitted together. Discounts have to be claimed at the point of application. Backdating them after the licence has been granted is rare.

Turning a family home into an HMO is a change of use under the Town and Country Planning Act 1990. The default permitted development right lets a Class C3 dwellinghouse become a Class C4 small HMO (three to six occupiers) without a planning application. That right disappears in areas covered by an Article 4 direction.

A growing number of councils now have Article 4 directions in HMO-pressured wards. Inside an Article 4 area, the change of use needs full planning permission before the property can be operated as an HMO. The HMO licence application then sits on top of the planning consent.

Going from C4 to a sui generis seven-or-more-occupier HMO needs planning permission everywhere, Article 4 or not. The planning route and the HMO licence route are separate processes run by different teams inside the same council, and both have to be cleared before tenants move in.

A standard buy-to-let mortgage almost always prohibits HMO letting. Lenders read it as a higher-risk arrangement and price it accordingly. Specialist HMO mortgage products exist, with loan-to-value caps usually tighter than vanilla buy-to-let and interest rates a half a point higher on average. Most lenders ask for the licence reference at drawdown and again at any rate-switch.

HMO insurance is also priced separately. Public liability, loss of rent and malicious damage cover all scale with occupier count. Insurers can void a claim where the property should have held an HMO licence and did not, so disclosure of the licence status sits on the policy schedule.

For overseas owners, councils usually expect a UK correspondence address for the licence holder and any managing agent. The address has to be a real one, not a virtual office, because the council uses it to serve enforcement notices.

Letting an unlicensed HMO is a criminal offence under section 72 of the Housing Act 2004. The council can prosecute through the magistrates' court, or it can choose to apply a civil penalty of up to £40,000 under section 249A. The civil penalty route is faster and does not need a court hearing, which is why it is now the default for most enforcement.

Tenants of an unlicensed HMO can apply to the First-tier Tribunal for a rent repayment order under section 41 of the Housing and Planning Act 2016. The order can cover up to twelve months of rent already paid. Universal Credit and housing benefit paid for the same period can also be reclaimed by the council.

Two relevant housing offences within twelve months can trigger a banning order. A banning order removes the landlord from the rental market for at least twelve months and the council enters them on the national rogue landlord database, which other councils can search.

On the tenancy side, a landlord cannot serve a valid section 21 no-fault eviction notice while the property should have an HMO licence but does not. The block lasts until the licence is in place. Existing tenancies stay valid; only the no-fault eviction route closes.