Whether you’re an HMO landlord or you’re considering investing in one, you should be aware of the regulations surrounding HMO licenses. Failure to obtain the appropriate license can be a costly mistake and could impact future HMO operations. We want to make sure you have all the information you need about HMO licensing in this post.
What is a mandatory HMO Licence?
HMO properties that meet the relevant criteria set by the UK government are required by law to have a mandatory HMO licence.
It ensures that all HMOs provide adequate accommodations for tenants and are effectively managed on an ongoing basis.
It is done by setting standards for the accommodation (both local and national – be sure to check both!) by having an inspection conducted by your local authority, and by making sure that the person(s) in charge of managing the HMO has adequate systems in place to ensure that it is effectively managed, and is considered fit and proper (no criminal record or previous violations of landlord licensing requirements).
Is a Mandatory HMO Licence Required for Your Rental Property?
First, you need to determine if your rental property requires a mandatory licence.
In general, an HMO is a property that meets the following criteria:
- The property is rented to two or more households of three or more people
- A number of facilities are shared within the property (e.g. toilets, bathrooms, and kitchens).
That’s how an HMO is defined, but not all HMOs require a license.
The mandatory licensing requirement only applies to HMOs with five or more tenants, which means HMOs with three or four tenants do not need a mandatory licence (although they may require another type of license depending on the area).
Planning permission and HMO licensing
The difference between planning permission for your HMO and licensing requirements for HMOs is often one of the biggest obstacles for new and aspiring HMO investors.
Government definitions of HMOs lack cohesion, with different answers depending on whether you’re looking at it from a licensing perspective or from a planning perspective. HMOs with five or more tenants are required to have a license (as explained above).
All HMOs are subject to planning policy, regardless of their size or number of occupants. A C4 use class is assigned to HMOs with six or more occupants. In addition, HMOs with 7 or more occupants are classified as Sui Generis.
Even if you have the right planning permission for your HMO, you might not meet the licensing requirements or vice versa – just because one is needed does not necessarily mean the other one is as well.
Requirements for Mandatory HMO Licences
The main reasons for HMO licensing are as follows:
- Tenants should have an adequate standard of housing
- A competent person or business should manage the property
However, what does this mean in practice? How can you ensure that your HMO is compliant so that you do not lose sleep over your license application?
Firstly, let’s take a look at the quality of the housing you provide.
The Housing Act 2004 specifies that for a licence to be granted, it must be “reasonably suitable for occupation by not more than the maximum number of households or persons“.
According to Schedule 3, there are minimum national requirements for HMOs, but these are very vague, and almost every local housing authority will have its own guidelines on top of these, usually called HMO Amenity Standards. You can usually find the answer by searching on Google or contacting your local housing department.
According to the guidelines, the following things should be expected:
- minimum room sizes for bedrooms and communal space,
- kitchens, food storage and cooking facilities,
- toilets, bathrooms and showers,
- heating, ventilation and electrical installations.
HMO license application process
An overview of the typical HMO licensing process
- Complete Application
- Submit Supporting Documents
- Fee Payment
- House Inspection
- Make Any Required Improvements or Changes
- Receive HMO Licence
An application form must be filled out and submitted, usually online, via the local authority’s website, or in person at the local authority’s offices.
Besides asking for basic information about you and your property, the application form also requires you to declare that your property meets government and local authority minimum HMO standards.
In addition, you will be asked to provide detailed information about the management arrangements for the HMO. If you’re using a letting agent, they can complete this section for you. The license should be in your name (rather than your agent’s), since licenses are not transferable, and if you change agents, you need to reapply.
There is also a fee that can vary from around £300 at the lower end to over £1,000 with some local authorities. Every 5 years, or whenever the license expires, you will have to pay a renewal fee (usually less than the original application fee).
You may also be asked to submit additional documentation, including:
- a measured floor plan of the property,
- electrical installation certificates,
- gas safety certificates,
- EPC certificates,
- sample tenancy agreements,
- criminal background checks, etc
Before making an application, check with your local authority if you’re unsure of what’s required. The local authority will inspect the property once you’ve submitted your application to ensure it meets the minimum standards. Your HMO will be licensed if everything is in order.