HMOs - Guide to Understanding Houses of Multiple Occupation

Published: 10/11/2023

Definition of HMO: Houses in Multiple Occupation (HMO), or a House of Multiple Occupancy is an entire house or flat that is rented out to two or more tenants who are not from the same household, as defined by the Housing Act 2004.

Do You Need an HMO License?
The necessity of obtaining an HMO license hinges on various factors, including the number of people residing in the property and the specific council ward in which it's located. To demystify the rules, let's address some crucial questions surrounding HMO licensing.

Understanding HMO Licensing
First and foremost, what exactly is HMO licensing? An HMO, or House in Multiple Occupation, is a house or flat occupied by three or more individuals from two or more households who share common facilities.

Mandatory Licensing
By law, large HMOs housing five or more tenants sharing facilities must be licensed by their local council. This is called mandatory licensing and applies to large HMOs throughout England.

Additional Licensing
This license is required when three or more individuals - capped at 5 individuals - making up two or more households are sharing facilities. It is important to note that not all councils enforce or apply Additional Licenses within their borough, but many London councils do enforce them, with the Royal Borough of Greenwich and Tower Hamlets due to enforce these from early 2024.

Selective Licensing
The Housing Act of 2004 grants local councils the authority to introduce selective landlord licenses applicable to privately rented properties within specified geographic areas. If your property is located within these specific geographic areas, or council wards then an application must be made with the local council.

Determining Your Property's Licensing Needs
If your property accommodates five or more unrelated tenants who share facilities, you will likely require an HMO license. For smaller HMOs, detailed information can be found on the council's website. It's worth noting that some properties may be exempt from these regulations, so be sure to check if any exemptions apply to your situation.

Meeting Licensing Standards
To secure an HMO landlord's license, your property must meet specific standards and conditions. These standards are in place to ensure the property is safe and habitable for your tenants. Typically, HMO landlords must demonstrate compliance with gas and electrical safety standards, the correct smoke alarm system installation, and a valid tenancy agreement for each occupant.  Moreover, you must prove you are a 'fit and proper person' to hold the license.

Applying for an HMO License
When applying for an HMO license, the process occurs through the Council portal. Before you initiate your application, ensure you have all the necessary property information, including room sizes, details about the property's structure and safety equipment, and floor plans.

Furthermore, you'll need to join a landlord accreditation scheme to demonstrate your responsibility as a landlord. The Council website provides more details and links to accreditation schemes.

Renewing Your License
Renewing your HMO license is a straightforward process. You can apply for a new property license through the portal in the same manner as your original application, with similar fees.

Understanding License Costs
Licensing fees vary across councils. However, they are commonly divided into two instalments: Part A is paid upon application and Part B is payable upon license issuance.

License Duration
Typically, HMO licenses last five years, but this period may be reduced to three years if the council finds evidence of poor management or other issues. They also may expire earlier, on the expiration of the local councils HMO and Licensing scheme. Please check with your local council.

Consequences of Breaching License Conditions
Non-compliance with HMO licensing regulations can lead to severe consequences. Landlords who disregard these rules risk prosecution, a criminal record, and substantial fines. Alternatively, the council can impose a civil penalty of up to £30,000. Failing to apply for a license also leaves the door open for tenants to apply for a Rent Repayment Order (RRO), which allows them to reclaim the rent for up to 12 months' worth of rent. This is on top of any potential from the point of  period Moreover, failing to obtain a license may hinder your ability to secure one in the future, as you must pass the 'fit and proper person' test.

Appealing Council Decisions
If you disagree with the council's decision regarding your license application, you can appeal to the independent First-tier Tribunal (Property Chamber). Be sure to initiate this process within 28 days of the council's decision.

If you're a new landlord, consider contacting a letting agent for guidance on HMO licensing and other property-related concerns. Contact us today to discuss your property and explore how we can assist you. We're here to help with any property-related queries you may have.

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