In 2004, the Housing Act introduced HMO licenses. As a result of overcrowded conditions and poor fire safety measures, they were developed to protect people living in share houses.
Houses in multiple occupations have required licences since 2006. There are some licenses that are mandatory. In addition to the mandatory licensing scheme, local authorities can run additional licensing schemes.
Here’s a guide to HMO licences and how they work.
What is an HMO property?
HMO is short for houses in multiple occupation
An HMO must meet one of the following criteria in order to be considered an HMO under the Housing Act 2004:
- Buildings or apartments that share basic amenities, such as bathrooms, toilets, and kitchens: this is known as the ‘standard test’
- ‘Converted building test’ refers to a building that has been converted and is not entirely self-contained
- A building that is declared an HMO by the local authority
- A section 257 HMO is a converted apartment block where fewer than two-thirds of the flats are owner-occupied and the conversion does not comply with relevant building standards. If you would like to check which category your property may fall into, click here
The Government defines an HMO as a property with up to 3 occupants from more than 1 household. A large HMO is when there are 5 or more people from more than 1 household.
Licencing for non-HMO properties:
For properties not subject to mandatory licensing, councils can implement a selective licensing scheme. In addition to student houses near universities and blocks converted into flats, this also includes properties in certain geographical areas.
Councils may introduce selective licensing schemes to require all properties within a prescribed area to be licensed, regardless of whether they are HMOs. The purpose of this is usually to raise standards in the private rental sector, typically in cases of low-quality housing and poorly managed rentals.
Selective Licencing can be very confusing as it could be on one road but not the road next door. To have borough coverage they need to have government approval.
The cost of mandatory HMO licences varies by the council, so it depends on where the property is located. Licensing fees should not be too high since they are only meant to cover operating costs.
If your HMO licence application is turned down, your application fee will be refunded.
Prices for licencing can be found on your local council page or at https://www.hmohub.co.uk/hmo-licence-cost/
How long do they last:
An HMO licence usually lasts for five years, but some are granted for shorter periods of time. An HMO licence is required for each property, and it must be renewed before it expires.
Make sure you don’t obtain an HMO license and then promptly forget about it.
It is important that you keep up to date and set reminders about when your Licence is going to expire.
How do I know if I need one?
HMO licensing is determined by the landlord. In court, carelessness will not be accepted as an excuse for failing to obtain an HMO license.
HMO licence requirements have already been outlined. Generally, it should be self-explanatory, however, you might want to check with the housing department of your council if you are unsure whether your property requires an HMO license. You can check licence details at:
Penalty for not having a licence:
If an unlicensed HMO meets the licensing requirements, there are penalties. Fines of up to £20,000 will be imposed on landlords who fail to apply for a licence. Failure to comply with licence conditions can also result in fines for landlords. Magistrate’s Court hears all cases.
You cannot be prosecuted if you have applied for a licence or exemption, but no decision has been made.
A Rent Repayment Order can be requested by the current or former tenants of a property evicted by a landlord. Up to 12 months of rent can be reclaimed. Housing benefit payments can also be reclaimed by councils for up to 12 months. Even if the tenants were paid directly, the money comes from your pocket.
You can appeal against the decision of the Residential Property Tribunal if you believe you were unfairly prosecuted or penalized for failing to have an HMO licence or meeting HMO requirements.
How to apply for a licence
The UK government website provides application forms for HMO licences. To find the correct link, go to the website of your local council.
Payment will be required before you begin the submission.
The application should be accompanied by copies of all essential documents. Among them are:
- Gas Safety Certificates for the property
- Electrical Safety Certificate for the property
- A plan of the property
A sample tenancy agreement, PAT certificates, fire alarm records, and maintenance records may also be requested.
A freeholder, mortgagee, and managing agent must be notified if you wish to apply for an HMO licence. Tenants do not need to be informed.
Various checks must be completed before an HMO licence can be granted. Any time during the five-year term, the council can inspect the property. To prevent health and safety violations, these checks are conducted.
At Lofti we allow you to upload your licence and receive notifications about when you will need to renew it. It also allows your tenants to see the licence document, so you protect yourself from rent repayment orders. HMO landlords can also manage all their properties through Lofti property management system saving 60% in admin time.