Landlord guidance

The Housing Act 2004 introduced the licensing of Houses in Multiple Occupation (HMOs) making it compulsory to licence all ‘higher-risk’ HMOs and giving powers to Councils to licence other types of ‘smaller’ HMOs to secure compliance if appropriate.

What is a HMO?

A House in multiple occupation (HMO) is defined as a building, or part of a building (for example, a flat) which:

more than one household lives in and shares an amenity, such as a bathroom, toilet or cooking facilities;
is a converted building where more than one household lives and doesn't entirely comprise self-contained flats (whether or not there is also a sharing or lack of amenities); or
comprises entirely of converted self-contained flats and the standard of conversion does not meet, at a minimum, that required by the 1991 Building Regulations and more than one third of the flats are occupied under short tenancies, (known as Section 257 HMOs).

And is 'occupied' by more than one household:

as their only or main residence;
as a refuge by persons escaping domestic violence;
during term time by students; or
for any other purpose as is prescribed in the regulations

And the households comprise:

families (including single persons and co-habiting couples (whether or not of the opposite sex); or
any other relationship that may be prescribed by regulations, such as domestic staff or fostering or carer arrangements

Why does the government want HMOs to be licensed?

Larger HMOs, such as bedsits and shared houses, often have poorer structural integrity or facilities and management standards can often be inadequate.

People who live in HMOs can be amongst the most vulnerable and disadvantaged members of society. As HMOs are the only housing option for many people, the government recognises that it is vital that they are properly regulated. Licensing is intended to make sure that:

Landlords of HMOs (or managers who have been employed) are ‘fit and proper’
Each HMO is suitable for occupation by the number of people permitted by the licence
The standard of management of the HMO is adequate
High risk HMOs can be identified and targeted for improvement

Where landlords refuse to meet these criteria, the Council can intervene and manage the property so that:

Vulnerable tenants can be protected
HMOs are not overcrowded
Councils can identify and support landlords, especially with regeneration and tackling antisocial behaviour

Do all HMOs have to be licenced?

No. Under the Housing Act 2004 there are three types of licencing:

Compulsory (required by law) licencing of HMOs for properties that are:
- occupied by five or more people in more than one household; and
- share amenities such as bathrooms, toilets and cooking facilities
Additional licencing of HMOs is a discretionary power that Councils may decide to apply to a particular type of HMO, for example, two-storey properties occupied by three or more students or asylum seekers
Selective licencing of other residential accommodation Properties that are not subject to HMO licencing could be covered under a selective licencing scheme. This is where the Council may declare that certain areas, for example, where there is low demand for housing and/or antisocial behaviour, are appropriate for selective licencing. This licencing would cover all forms of private rented housing, including HMOs. Councils may introduce the second two types of licencing wherever they feel it is appropriate to do so. Please note that licencing only applies to HMOs where rents or other considerations are payable.

How does it work?

Anyone who owns or manages a HMO that must be licenced has to apply to the Council for a licence. The Council must give a licence if it is satisfied that:

the HMO is reasonably suitable for occupation by the number of people allowed under the licence;
the proposed licence holder (and/or manager) is a fit and proper person;
the proposed licence holder is the most appropriate person to hold the licence;
the proposed management arrangements are satisfactory;
the person involved in the management of the HMO is competent; and
the financial structures for the management are suitable

What does a ‘fit and proper person’ mean?

The Council will carry out checks to make sure that the person applying for the licence is a fit and proper person. In deciding whether someone is fit and proper the Council must take into account:

Any previous convictions relating to violence, sexual offences, drugs and fraud
Whether the proposed licence holder has broken any laws relating to housing or landlord and tenant issues
Whether the person has been found guilty of unlawful discrimination
Whether the person has previously managed HMOs that have broken any approved code of practice. It is advisable for the landlord or manager to be a member of a professionally recognised body, or an approved landlord’s association that is affiliated to the National Landlords Association

What is in a licence?

The licence will specify the maximum number of people who may live in the HMO. It will also include the following conditions, which apply to every licence:

A valid current gas safety certificate, which is renewed annually, must be provided and a valid current Electrical Installation Certificate must be provided at a minimum of every five years
Proof that all electrical appliances and furniture are kept in a safe condition
Proof that all smoke alarms are correctly positioned and installed as per the Smoke and Carbon Monoxide Alarm (Amendment) Regulations 2022
Each occupier must have a written statement of the terms on which they occupy the property, for example, a tenancy agreement

Councils may also apply the following conditions:

Restrictions or prohibitions on the use of parts of the HMO by occupants
A requirement that the condition of the property, its contents, such as furniture and all facilities and amenities, bathroom and toilets for example, are in good working order
A requirement for specified works or repairs to be carried out within a particular time frame
A requirement that the responsible person attends an approved training course

How long will it last?

A licence will normally last for a maximum of five years, although it can be for a one-year period if there are doubts over the application or how the property will be managed.

How much will it cost?

Landlords will have to pay a fee to cover the administration costs of the licence procedure. This will vary depending on the amount of time and resources that are needed to satisfy all the licencing conditions.

Can the Council refuse to licence my property?

Yes, if the property does not meet the conditions set out above and the landlord or manager is not a fit and proper person.

What will happen then?

If a landlord fails to bring an HMO up to the required standard or fails to meet the fit and proper person criteria, the Council can issue an Interim Management Order (IMO), which allows it to step in and manage the property. The owner keeps their rights as an owner. This order can last for a year until suitable permanent management arrangements can be made. If the IMO expires and there has been no improvement, then the Council can issue a Final Management Order. This can last up to five years and can be renewed.

Can I appeal?

You may appeal if the Council decides to:

Refuse a licence
Grant a licence with conditions
Revoke a licence
Vary a licence
Refuse to vary a licence

You must appeal to the First Tier Tribunal, normally within 28 days.

Temporary exemption from licencing

If a landlord or person in control of a property intends to stop operating it as an HMO or reduces the numbers of occupants and can give evidence of this, they can apply for a Temporary Exemption Notice. This lasts for a maximum of three months and ensures that a property in the process of being converted from an HMO does not need to be licenced. If the situation is not resolved, then a second Temporary Exemption Notice can be issued. When this expires, the property must be licenced, become subject to an Interim Management Order, or cease to be a HMO.

Are there any other penalties?

It is an offence if the landlord or person in control of the property:

Fails to apply for a licence for a licensable property; or
Allows a property to be occupied by more people than are permitted under the licence

A fine of up to £30,000 may be imposed. In addition, breaking any of the licence conditions can result in fines of up to £5,000.

Rent repayment orders

A tenant living in a property that should have been licenced, but was not, can apply to the First Tier Tribunal to claim back any rent they have paid during the unlicensed period (up to a limit of 12 months). Councils can also reclaim any housing benefit that has been paid during the time the property was without a licence.

It will be an HMO if it is one of the following:

IS MY PROPERTY A HMO? It will be a HMO if it is one of the following:	Housing Act 2004 section and schedule numbers
A shared house lived in by people who belong to more than one family* and who share one or more facilities**	S254(2) (The ‘standard test’)
A house in bedsits lived in by people who belong to more than one family* and who share one or more facilities**	S254(4) (The ‘converted building test’)
An individual flat lived in by people who belong to more than one family* and who share one or more facilities**	S254(3) (the ‘self-contained flat test’)
A building of self-contained flats that do not meet 1991 Building Regulation Standards. Exemptions: If it is occupied by only two people If it is occupied by the owner (and their family if any) and one or two lodgers If it is occupied by a religious community If the occupiers have their main residence elsewhere*** If no one in the property is required to pay rent If the owner or manager is a public body If the owner or manager is an educational institution A building of self-contained flats if two thirds or more of the flats are owner-occupied If the property is part of a guest house or hotel (unless an ‘HMO Declaration’ is made)	Sch 14, 7 Sch 14, 6(c) Sch. 14, 5 S259, S254(2)(e) Sch. 14, 2 Sch. 14, 4 S257(2)(b) (s255(1))
Exemptions: If the whole property is in self-contained flats. If the basement is in commercial use and there are only two residential storeys above. Family – husband, wife, co-habitee, child, step-child, foster-child, grandchild, parent, step-parent, foster-parent, grandparent, brother, half-brother, sister, half-sister, aunt, uncle, niece, nephew, cousin. Facilities – basic amenities: wc, wash hand basin, shower, bath: cooking facilities. **Accommodation use by full-time students while they are studying is taken to be their main residence.	S258 S254(8) S259(2)(a)

Houses in Multiple Occupation (HMO)