HMO Essentials: Do You Need One in the UK?

The rising popularity of serviced apartments attracts guests seeking hotel-like comforts while maintaining their privacy. To stand out among the competition and increase profitability, it’s crucial to enhance your marketing strategies for your multiple properties in town.

An HMO, or House in Multiple Occupation, is a property rented by at least three individuals who aren’t from a single household. The term “household” can refer to a single person, a couple, parents with children, foster parents, or carers.

In an HMO, occupants typically share communal spaces like the kitchen, bathroom, and sometimes living areas. This arrangement allows multiple individuals or households to live in the same property, sharing essential facilities while maintaining separate living spaces.

What is an HMO?

A house in multiple occupation (HMO) is a property shared by 3 or more unrelated tenants who share facilities like bathrooms and kitchens. If you plan to rent out an HMO in England or Wales, contact your council to confirm if a license is required.

A license is necessary for large HMOs in England or Wales, defined as follows:

Rented to 5 or more people from more than one household.
Tenants share bathroom, toilet, or kitchen facilities.
At least one tenant pays rent (or it’s paid by their employer).

Various accommodations can be considered HMOs, including:

Student housing
Bedsits
Hostels
Guesthouses
Houses with lodgers

Generally, if three or more unrelated people share facilities like a bathroom or kitchen, it’s considered an HMO.

What makes HMOs different to other rental properties?

HMOs can accommodate many people, with local authorities emphasizing safety. Tenant complaints are promptly addressed, and non-compliant landlords may face prosecution or council management takeover.

Additionally, running an HMO may necessitate obtaining a license for compliance with regulations.

Landlord responsibilities when managing an HMO

Landlords of HMOs must prioritize safety and compliance. Key aspects to manage include:

Gas safety – annual checks required.
Electrical safety – checks every five years.
Fire safety – install and maintain smoke and carbon monoxide alarms.
Provide rubbish disposal facilities.
Ensure functioning cooking, cleaning, and washing facilities.
Keep communal areas clear and clean.
Address overcrowding concerns.

HMO fines and do you need an HMO licence?

To rent out your property as an HMO in England or Wales, contact your council to determine if a licence is required. Generally, large HMOs need licences unless they qualify for an exemption. Licences are valid for up to 5 years and must be renewed. Each HMO you own requires a separate licence.

You must have a licence for large HMOs if:

It’s rented to 5 or more people from different households.
Some or all tenants share bathroom, toilet, or kitchen facilities.
At least 1 tenant pays rent.

Ensure HMO compliance, including preventing overcrowding and providing adequate facilities. You’re responsible for communal area repairs.

Penalties vary by council and may include:

Prosecution with unlimited fines.
Rent repayment orders, allowing tenants to reclaim up to 12 months’ rent.
Management orders, enabling the council to take over HMO management.

When Does a Property Require an HMO Licence?

To determine if an HMO license is needed for your property, consider the following checklist:

The property accommodates five or more tenants from two or more unrelated households.
Tenants share facilities like a kitchen or bathroom.

Keep in mind new licence conditions, specifying minimum bedroom sizes:

At least 4.64m2 for a child under ten.
At least 6.51m2 for a single person over ten.
At least 10.22m2 for two people sharing.

Ensure the property has these safety certificates:

GSC Gas Safety Certificate.
EPC Energy Performance Certificate.
At least one smoke alarm on each habitable floor.
Carbon monoxide detectors in rooms with solid fuel-burning appliances.

In some cases, you may also need a selective landlord licence from your local authority.

There are 3 types of property licensing: mandatory licensing of large HMOs, additional licensing, and selective licensing.

Mandatory Licensing

Mandatory licensing applies nationwide to HMOs with five or more occupants from two or more households. Starting on October 1st, this definition will change, requiring single-story flats and two-story maisonettes with five or more occupants to obtain a mandatory license. New conditions will set national minimum room sizes for sleeping accommodation, and landlords must follow local refuse schemes.

Additional Licensing

Some councils introduce additional licensing policies, extending licensing requirements to other sizes of HMOs beyond the mandatory ones. This means all HMOs in that area must be licensed.

Selective Licensing

Selective licensing is at the discretion of the borough and can apply to all rental properties in a given area. For example, a council may implement compulsory licensing for all residential rental properties on a specific street.

Before granting a license, the local authority must ensure that the property owner and any managing agent are fit and proper to hold a license and that the property meets the required physical standards.