Mandatory HMO Licensing

Understanding mandatory HMO licensing

Understanding property licensing is not an easy task - we know that and we've been using the legislation since in came into force in 2006!

We appreciate most people don't have time to study the legislation and so we have prepared this free guide help you understand the requirements. We explain how the mandatory HMO licensing scheme applies to private rented properties in England, using a simple three-step approach.

Step 1: Is your property an HMO?

The first thing you need to decide is whether your property is a House in Multiple Occupation (HMO). You could read the legislation itself (Sections 254 – 260 Housing Act 2004) although you may prefer the much simpler advice on the website.

As a simple rule of thumb, an HMO is any property (house of flat) occupied by three or more people comprising two or more households who share facilities (kitchen, bathroom and/or toilet), even if they occupy the property on a single tenancy.

The occupants are all considered to be part of the same household (Section 258 Housing Act 2004) if they are all members of the same family. That includes people living together as husband and wife or in a similar same sex relationship, plus others related to them as parent, grandparent, child, grandchild, brother, sister, uncle, aunt, nephew, niece or cousin. A half-blood relationship is treated the same as full blood and a stepchild is treated the same as a child.

The Regulations also explain how live in employees, carers, migrant or seasonal workers should be counted for this purpose. There’s a lot of information to study if this scenario applies to you.

Step 2: Does the mandatory HMO licensing scheme apply to your property?

Ok, so you have established that your property is an HMO but are unsure whether it needs a licence. It is important to realise there are three types of licensing that operate in England:

Whereas mandatory HMO licensing applies throughout England, additional and selective licensing schemes are only found in certain areas. In you live in London, you can press the ‘Select Borough’ link at the top of the page to check what schemes apply in your borough. Elsewhere in the country, you will need to contact your local council.

Mandatory HMO licensing does not apply to all HMOs. It is restricted to certain larger properties under Part II of the Housing Act 2004 – an estimated 60,000 properties across England, although this will increase to an estimated 220,000+ properties when the rules change in October 2018. 

At present, you need a mandatory HMO licence if your property: 

  • Is three or more storeys high; and
  • Contains five or more people in two or more households; and
  • Contains shared facilities such as a kitchen, bathroom or toilet. 

Definition of storey

When calculating the number of storeys, the Regulations say that you must include:

  • Any basement – if it is used as living accommodation; constructed, converted or adapted for use as living accommodation; if it is used in connection with and as an integral part of the HMO or if it provides the main entrance from the street);
  • Any loft or attic if it is used as living accommodation; constructed, converted or adapted for use as living accommodation; if it is used in connection with and as an integral part of the HMO; and
  • Any other storey used wholly or partly as living accommodation or in connection with and as an integral part of the HMO.

If the accommodation is situated above or below business premises, you must also include each storey comprising business premises. So a two-storey maisonette above a shop is a three-storey property for the purposes of HMO licensing. Not many people realise that.

Licensing criteria set to change on 1 October 2018

In February 2018, new regulations were laid before Parliament that come into force on 1 October 2018. In summary, the government are removing the 'three or more storeys' criteria throughout England. 

What this means is that you will need a mandatory HMO licence if your property:

  • Contains five or more people in two or more households; and
  • Contains shared facilities such as a kitchen, bathroom or toilet.

When it comes to self-contained flats in purpose built blocks, things are a little more complicated. The government have decided to exclude purpose built flats within a block comprising three or more self-contained flats. 

Statutory Exemptions

The Housing Act 2004 and associated regulations list certain exemptions from HMO licensing including:

  • Any property occupied by just two people who form two households;
  • Buildings managed by a local housing authority, registered social landlord, police or fire & rescue authority or a health service body;
  • Buildings already regulated under certain other statutory provisions (Schedule 1 to SI 2006 Number 373)
  • Certain student halls of residence;
  • Buildings occupied principally for the purposes of a religious community whose principle occupation is prayer, contemplation, education or the relief of suffering; and
  • Buildings owner occupied with no more than two lodgers. 

Step 3: Apply for a mandatory HMO licence

If you find your property needs licensing, you will need a submit a licence application to your local council using their prescribed form. Councils usually ask for a floorplan of the property and various supporting documentation. You will also need to pay an application fee and the licence will be issued for up to five years. 

When the licensing criteria change on 1 October 2018, it was originally expected that the government would grant a 'grace period' of 6 months to apply for a licence. It seems that idea has since been dropped. As such, if you rent your HMO to five or more people, you need to ensure that a licence application is submitted before 1 October 2018. 

Ignore the law and you could pay a heavy price. You risk being prosecuted by the council and if found guilty you could get a criminal record, be fined an unlimited amount and ordered to pay court costs and a victim surcharge.

Alternatively, the council can issue you with a civil penalty of up to £30,000 or you could be subject to a Rent Repayment Order and may have to repay up to 12 months rental income.

Whilst the property is unlicensed, you can’t use a Notice of Seeking Possession under Section 21 Housing Act 1988 to evict your tenants. As such, it is far better to comply at the earliest opportunity and ensure you achieve compliance.

Need further advice and support?

If you find the whole licensing process a bit daunting and are based in the London area, we can help you. We offer a fixed price licence application handling service and you can find more information here. Several other companies offering a similar service can be found in our Landlord Suppliers Directory here.

If you still have questions and need expert advice, we can also offer a 30-minute telephone consultation, as explained here.  

Hopefully this has given you a useful overview of the mandatory HMO licensing scheme. Remember, this is not legal advice and you may want to refer to our disclaimer below.

For all the latest news and events, you can sign up for our free London Property Licensing newsletter here.

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