What is an HMO licence?
HMO is an acronym standing for “House in Multiple Occupation”. The Housing Act 2004 set out the meaning of ‘house in multiple occupations’ (HMO).
An HMO is a residence occupied by three or more people sharing facilities such as bathroom, toilet or kitchen, who form two or more households.
A household may consist of a single individual or several people, providing all of these people are members of one family, with half-relatives being treated as full family members/relatives.
Section 258 of the Act classify a single household is they are part of the same family: married, same-sex relationship and relatives of any of the one these mentions (parents, grandparents, children, grandchildren, brothers, sisters, uncles, aunts, nephews, nieces or cousins).
There are a few exceptions of properties that are not classified as HMOs. These are:
- properties managed / controlled by the public sector bodies
- let by educational establishment by students
- occupied by religious communities ol,
- occupied by owners or member of their households
- occupied by two people
Do you need an HMO licence?
If you let out the following rental property, it will be an HMO:
- An entire flat or house which you let to three or more tenants.
- Bedsits which you let singly and where the tenants share facilities of a kitchen, bathroom and toilet.
- Separate flats (which include studio flats) let singly where the tenants share some facilities.
- A building which is entirely converted into flats which doesn’t meet the current regulations (the 1991 Building Regulations) and where a third of the flats are let on short-term tenancies.
For a rental property to be an HMO, tenant (s) must use it as their only /main, residence and the property should be used solely, or mainly, to accommodate tenants. If the property is let to students/ migrant workers or refugees, it will be treated as their only /main, residence.
If your property is classified as an HMO, (independent if you will need a licence or not), it must meet the health and safety standard (Housing Act 2004). This means that it should meet all the physiological, psychological requirements and protection against infection/ harm standards (Section 6 Housing and Health and Safety rating system).
If your property is an HMO, the next step is to determine if you will need a licence.
Different type of licence
It is important to know there are three types of licensing that operate in England:
- Mandatory HMO licensing
- Additional licensing
- Selective licensing
Mandatory HMO Licensing
Mandatory licencing, applies to HMOs nationwide and set out the basic criteria for a property to be deemed an HMO.
Mandatory HMO licensing does not apply to all HMOs. It is restricted to certain larger properties under Part II of the Housing Act 2004.You will need a mandatory HMO licence if your property meets the standard test, self-contained flat test or converted building test HMO definition in section 254 of the Housing Act 2004 and is occupied by five or more people.
National mandatory licencing scheme for larger HMOs since 2006.
Since 2006 all landlords have been required to licence HMOs that are: 3 or more storeys high, five or more people that form two or more households sharing some facilities.
Extension to mandatory licensing 2018
- Any storey with five or more persons in
- Two or more households
- HMOs above or below commercial premises
- Minimum room sizes for licensable HMOs
- Minimum room sizes for children living in HMOs
- Condition on storage and disposal of waste in an HMO
Thus, prior to 1 October 2018, the mandatory HMO licensing scheme only applied to properties that were three or more storeys in height, but that restriction has now been lifted.
Additional licensing applies where a council imposes extra policies for other sized properties to be licensed.
Over 50% of London Boroughs operating now with additional licensing and with more schemes on the way. Additional licensing applies to certain Houses in Multiple Occupation (HMOs) that fall outside the mandatory licensing scheme.
Each council has the power to introduce additional licensing but should only be introduced if a significant proportion of the HMOs are being poorly managed and are giving rise, or likely to give rise, to problems affecting the occupiers or members of the public.
Selective licensing will be at the discretion of each borough and can affect all rental properties regardless of the other criteria.
The local authority is likely to do this in areas with low housing demand and areas with significant and ongoing problems due to anti- social behaviour. This type of licence will last for maximum of 5 years and will be reviewed regularly.
Who is responsible for an HMO licence?
Before you are renting out your property it is important to find out if your property is an HMO and if you need a licence.
Failure to license is a criminal offence and can end up with:
- Civil Penalty Notice (CPN) up to £ 30000
- rent repayment order up to a year’s rent
- It is illegal to use Section 21 notice of eviction (Notice to quit) to remove tenants from an HMO until the HMO is licensed.
- Banning Orders may also apply against the most serious offenders
What does it mean for you as a Landlord?
- Trusted by tenants
- Online application
- Licensed fees based on units of accommodation
- Mandatory License is 5 years (renewable)
- Planning permission for change of use for HMOs of more than 6 unrelated adults (From sept. 2018)
How can I get an HMO licence?
Obtaining HMO Licence involving:
- Assessment of your property according to your Local Authority’s Standards
- Licence application
- Upgrading your Property if required
- Signing off
An application often requires the following documents:
- Criminal records disclosure document(s)
- A floor plan of the property, with the room sizes and the location of fire precautions added
- Electrical installation condition report/ certificate
- Energy Performance Certificate (EPC)
- Tenancy agreement
- Inventory of furniture and fittings
- Terms of contract with Estate Agent
- Gas Safety certificate (if the property has gas)
- Portable Appliance Test (PAT) report
When considering a licence application, the local authority will consider the following factors:
- Maximum tenant the property is suitable for
- If the prospective licence holder is a ‘fit and proper’ person to hold the licence and if this person is the manager of the property
- If there exist satisfactory management arrangements
Read more about HMO licence here
Contact today for more information. We can also help you with an application.