If you let a property as an HMO, the regulations are tighter and there are far more management demands than for a single let property. And one of the key things to make sure you understand and get right is licensing. In our latest blog, we take a look at mandatory and additional licensing for HMOs, how to find out whether you need a licence for your property and what that means for you as a landlord.

Houses in Multiple Occupation (HMOs) are different to single lets in a number of ways. The rules on fire safety are much tighter, you’ll need specialist mortgage and insurance products, and the management and maintenance demands are higher. For more on all that, take a look at our separate blog, ‘Multiple occupancy vs. single lets: what’s the difference?’ https://www.pauk.property/blog/43-multiple-occupancy-vs-single-lets-whats-the-difference

Here, we’re taking a closer look at one of the key things you need to know about before you even make an offer on a property that you’re planning to let as an HMO: licensing.

The reason it matters so much is that, in addition to the national laws, each local authority in England can impose its own rules around which properties need to be licensed. The big potential issue for you as a landlord is that they may not even allow certain properties to be let as HMOs. So, if you don’t find out what the rules are in your particular area before you buy, you could end up owning a property that you’re simply not allowed to let in the way you’d planned.

There are two types of HMOs:

• If a property houses three or more tenants, who form more than one household (i.e. they’re not related) and share toilet, bathroom or kitchen facilities, it’s an HMO.
• If there are five or more tenants, along with the other conditions, it’s defined as a ‘large HMO’.

If you have a large HMO, it must be licensed. However, even if you have a smaller HMO, it may need to be licensed. Let’s look at that in a bit more detail.

What is licensing?

There are two types of licensing regulations that can affect landlords of HMOs in England:

1. Mandatory licensing. This is the national law that says all large HMOs must be licensed and meet certain specific conditions.
2. Additional licensing. Each local authority has the power to extend the mandatory licensing rules to smaller HMOs, meaning that even if you only have 3 people sharing a flat, it might need to be licensed. Additional licensing schemes can apply to the whole council area, or just certain wards or streets.

If the property hasn’t been let as an HMO before, you may also need to apply for planning permission for change of use: from C3 (single family homes or two sharers) to C4 (HMOs with 3–6 unrelated people) or Sui Generis (HMOs housing 7 or more people).

It’s important to check the licensing and planning requirements in your area, as housing policy can vary significantly from one local authority area to another. For example:

• In certain parts of Bristol, all small HMOs must be licensed, and you need to apply for planning permission for change of use. In some areas, the council won’t allow any more student HMOs and it is also turning down applications that would result in high levels of on-street parking.

• In contrast, Manchester City Council doesn’t currently have any additional licensing schemes, so only large HMOs need to be licensed, although you do need to apply for planning permission if the property was previously a family home.

Licences usually last for 5 years, and the cost is set by the council. There are big differences across the country, with fees generally ranging from around £400 to £1,000. Most councils have a standard licence fee per property, but some charge on a per-room basis.

What conditions need to be met to get a licence?

Firstly, there are mandatory conditions that apply to every HMO licence. Those include the health and safety rules that apply to any rented property – including gas and electrical safety and fitness for habitation standards – but then there are additional fire safety requirements, such as:

• Having a written fire safety risk assessment
• Fitting internal fire doors
• Having a smoke alarm in each individual ‘unit’ (usually a tenant’s individual bedroom) and a heat alarm in high-risk rooms, such as the kitchen
• Ensuring all alarms are interconnected and mains-powered
• Having a fire extinguisher on each floor and a fire blanket in each shared kitchen.

Unlike in a single-let rental, the bedrooms in licensed HMOs must meet minimum size requirements, to help ensure properties aren’t overcrowded. Bedrooms must be at least:

• 64 square metres if there’s one occupant aged under 10 years
• 51 square metres if there’s one occupant aged 10 or over
• 22 square metres if there are two occupants aged 10 or over.

Any part of the room where the height is under 1.5 m cannot be counted, so if your property has bedrooms under the slope of the roof, check the sizes carefully to make sure you’re legally able to let them.

Then the council can also choose to impose discretionary conditions, which can include things like installing additional washing or kitchen facilities, or the licence holder having to attend training courses.

Why might a council refuse to grant an HMO licence?

If the property doesn’t meet some of the conditions attached to a licence – for instance, you haven’t installed the right fire safety measures – then your licence will probably be refused or revoked. But the council can also refuse to grant a licence in the first place if they feel the property isn’t suitable to be used as an HMO in the way you’ve described on your application.

That might be because:

• They feel the area already has enough HMOs and they want to keep a certain balance of different types of housing
• The number of tenants you want to have will put too much strain on the facilities
• They require a certain number of off-road parking spaces to be provided and there simply isn’t the space
• They don’t feel the type of tenant you want to house – e.g. students, working professionals, unemployed people who are receiving benefits – is suitable for the area.

And there may be other reasons. If it’s just a case of changing the type of tenant or reducing the number of let rooms, you might still be able to secure a licence and make the investment work for you. But if the council simply doesn’t want any more HMOs in the area, there’s really nothing you can do.

And be aware that if the council checks up on your HMO and finds that either you don’t have the necessary licence or any of the licence conditions are being breached, you could be:

• fined up to £30,000 by the local council, without them having to take you to court;
• issued with a Rent Repayment Order, which means you could have to give up to 12 months’ rent back to your tenant;
• issued with a banning order, preventing you from letting property altogether.

So it’s crucial that you understand your licensing obligations and make sure you and your property remain compliant.

Overall, because so much relating to HMO housing policy is in the hands of each local authority, the more closely you can work with them, the better. Check their planning and licensing policies before you buy, and continue to get advice from both the housing department and local fire service while you’re refurbishing and furnishing the property, to ensure you’re providing the right facilities and won’t have any problems securing a licence.

As experts in the local rental market, we can advise you on all the licensing and planning regulations that apply to HMOs – and any rented property – in this area. Keeping up to date with local schemes and policies can be incredibly challenging, but we’re always here to help. So, whether you’re just thinking about investing in HMOs or you’ve got multi-lets up and running but have some queries, please do get in touch. Give us a call on 0118 9122370 or email office@pauk.property and we’ll get right back to you.