Do I Need an HMO Licence for Three Tenants? Landlord HMO Guide

Houses in multiple occupation (HMO) have different rules and need special licences compared to other rental properties. 

Figuring out whether your property is an HMO and which licences you need can be challenging.

Questions like "Do I need an HMO licence for three tenants?” or “How do I perform an HMO licence check?" can leave you feeling uncertain.  

This guide answers these questions and explains everything landlords and housing associations need to know about HMO licencing. 

What Is an HMO?

A property is considered an HMO if it has:

• At least three tenants from more than one household

• A shared bathroom, toilet, and kitchen facilities

A household is defined as:

• A single person

• Members of the same family living together

• People who are married or living together, including those in same-sex relationships

The following examples would be classed as an HMO:

✔️ Three friends renting a three-bedroom house together

✔️ Two members of the same family renting a three-bedroom property with a friend

✔️ An unmarried couple renting a two-bedroom house with a friend

✔️ If an Airbnb is rented out on a long-term basis and it fulfils the other HMO requirements, then a licence may be required 

The following examples would not be classed as an HMO:

❌ Three friends renting a three-bedroom house, where each has their own kitchen, bathroom and toilet facilities

❌ A family of three renting a three-bedroom property

❌ Three siblings renting a house together 

❌ Holiday lets such as Airbnbs do not require an HMO licence if they are solely used for short-term holidays.

Source: Pexels 

When Do You Need an HMO Licence?

There are two types of licences for houses in multiple occupation: a mandatory HMO licence and a local authority HMO licence. 

The type of licence you need depends on your local authority’s requirements, as well as the number of people living at your property and their relationship to one another. 

In all cases, you must comply with the Licensing and Management of Houses in Multiple Occupation Regulations under the Housing Act of 2004.

1. Mandatory HMO licence

These licences are for larger HMOs in England and Wales. Your property requires a mandatory licence if:

• There are five or more residents living at your property who are from two or more households. 

• Some or all of them share kitchen, bathroom and toilet facilities. 

• At least one resident pays rent. 

• The property comprises two storeys. 

A mandatory licence is valid for five years and you need a separate one for each HMO you operate.

👨‍👩‍👧‍👦 What happens if I have three or four tenants?

If you have three or four occupants where one or more is not related, then your property doesn’t require a mandatory licence.

However, it will still be classed as an HMO if it meets the other criteria. Also, local authority licencing schemes may require a different licence. 

2. Local authority HMO licence

Whether you have a large or small HMO, you may also require a separate licence depending on your local council’s requirements. 

You should check with your local government which of the following licences potentially apply to each of your properties: 

🏠 Additional HMO licencing schemes 

Additional HMO licencing usually applies when your property is classed as an HMO but doesn’t require a mandatory licence.

These schemes are usually set up by local authorities to ensure fire safety standards in HMOs that fall under their jurisdiction.

They may apply to an entire city, or specific neighbourhoods or streets.

🏷️ Selective HMO licences

Selective licencing schemes can apply to all rented properties in a defined area, not just HMOs.

They are used by councils to address issues regarding housing demand, the quality of rented accommodation, as well as crime and antisocial behaviour. 

As with an additional HMO licence scheme, a selective licence isn’t issued by all councils [...], so it’s worth checking your local authority’s requirements.

🏢 Purpose-built flats

Purpose-built, self-contained flats in a block with more than three flats are exempt from mandatory HMO licencing. But they still could be subject to selective licencing by your local government.

📜 Section 257s

A Section 257 HMO is a special designation given to flats that were converted without the sign-off of proper building regulations.

Some councils include this category in their additional licencing schemes. You can learn more about Section 257 in the Housing Act of 2004. 

Source: Pexels 

How Do I Perform an HMO Licence Check?

The best way to check which HMO licences your property needs is to contact your local government.

You can usually find relevant information on their website. 

For example, if you’re based in Bristol, Liverpool, or Birmingham, you can register your HMO on their respective council websites: 

• Bristol City Council

• Liverpool City Council 

• Birmingham City Council 

How Much Does an HMO Licence Cost?

HMO licence fees vary between councils. To give you an idea of what to expect, here is what Bristol City Council charges:

• New HMO licence: £1,420

• Licence renewal: £1,100

On top of this, Bristol City Council charges an extra £50 per household where there are more than five separate households at a property.

• Additional licencing scheme new application: £1,255 - £1,300

• Selective licencing scheme: £799

What Are Your Key Responsibilities as an HMO Landlord?

Since HMOs accommodate multiple unrelated tenants who share common areas, landlords of these properties need to abide by a set of defined safety rules. 

These are outlined in the Licensing and Management of Houses in Multiple Occupation Regulations. 

This legislation stipulates that, as an HMO landlord, you must:

✔️ Provide property manager contact details for each household and display them in a communal area. 

✔️ Maintain fire escapes and take precautions, e.g. that they are free from obstruction, and take steps to protect occupants from injury. 

✔️ Maintain water supply and drainage. 

✔️ Ensure annual gas safety checks are carried out and electrical installations are checked every five years. Make sure you have an updated gas safety certificate for your rental property. 

✔️ Maintain, repair and keep clean all common areas and installations, and ensure common areas have adequate lighting. 

✔️ Ensure each unit and its furniture is clean at the start of each new tenancy and maintain the internal structure and installations in each letting. 

✔️ Provide adequate waste storage facilities and ensure appropriate waste collection.  

Which Other Factors Should You Consider? 

On top of the above list, you should also consider the following if you have houses in multiple occupation: 

1. Risk management

Your local council will carry out a housing health and safety rating system (HHSRS) risk assessment on your HMO within five years of receiving your licence application. 

This includes a fire risk assessment, as well as an evaluation of your property’s structural integrity and any environmental dangers. Additionally, they may inspect communal areas to see whether they're clean and well-maintained. 

Make sure your safety certificates are up to date before this inspection. If the inspector finds unacceptable risks, then you must eliminate them.

2. Report changes

As an HMO landlord, it’s your responsibility to report any changes that occur on your property to your local council. 

You must tell your council if:

• You intend to make changes to an HMO.

• Your tenants intend to make changes.

• Your tenants’ circumstances change - for example, if they have a child. 
  
  

3. Council requirements

Your local council may add other conditions to your licence when you apply for it. 

For example, they may ask you to improve the standard of your facilities or implement additional safety measures.

You can appeal to the First-Tier Tribunal if you disagree with the conditions set by your council.

Source: Pexels 

What Are the Penalties for Non-Compliance?

Failure to comply with HMO licence requirements or housing regulations will result in a fine. This could include:

• An unlimited fine for renting out an unlicenced HMO (usually £10,000 - £40,000).

• Tenants may also seek a rent repayment order covering the previous 12 months' rent if the property was rented out without a licence.

• A £30,000 fine if your Section 257 HMO doesn’t comply with the Licensing and Management of Houses in Multiple Occupation. 

Plus, you may not be able to evict tenants if your property isn’t licenced. 

A Section 21 eviction notice will be invalidated if the property is an HMO and the landlord doesn’t have the correct licences.

Avoid HMO Non-Compliance

One way to keep up with your HMO landlord compliance requirement is to use a digital service like EVO.

Our compliance add-on helps ensure that jobs that are related to meeting regulatory and licence requirements are diarised.

This means that you will receive reminders for these tasks, allowing you to remain compliant and avoid any penalties or fines for non-compliance.

Find out more about EVO and how it could assist you with your HMO requirements.