First-time property investor or seasoned veteran, if you’ve bought HMOs you’ve probably wondered — do I need a HMO licence?
After all, I’m sure you’re an ethical investor and like to do things the right way.
Understanding the dos and don’ts of an HMO licence is important because it ensures you stay on the good side of the law.
And beyond that, it gives you peace of mind that your tenants are safe and you are compliant with the law.
This helps you sleep well at night.
HMO licensing is simple if you’ve done the right steps right, like planning and fire regulations.
So if you’re an investor that’s currently planning an HMO Conversion or even finished.
And wondering, do I need a hmo licence, so I can rent it out? This article is for you.
I’ll share when you need and don’t need a licence, the cost and time to get it and the process.
I’ll also share tips on handling refusals and checking for existing HMO licensing.
So stick here with me and read on till the end.
HMO Licensing (A Brief History)
Can A HMO Licence Be Transferred?
How To Check If A Property Has A HMO Licence?
Do I Need A HMO Licence?
The answer to the popular question “Do I need a HMO Licence?” depends on the number of occupants living in the property and if they are related or not.
If there are 3–4 unrelated occupants, “selective licensing” applies which means some councils may or may not enforce an HMO Licence.
If there are more than 5 unrelated occupants, “mandatory licensing” applies, meaning you definitely need an HMO licence.
HMO Licensing (A Brief History)
Originally mentioned in the Housing Act 1985, definitions of HMOs were made concrete in the Housing Act 2004.
Loosely defined, an HMO (or House of Multiple Occupancy) is a property rented out to 2 or more unrelated people who share common areas.
In the 2004 act, larger HMOs were also subjected to mandatory licensing.
Licensing was originally only mandatory for 5 occupants or more.
But since 2018, it’s now at the council’s discretion to enforce licensing for even 3 or more HMO occupants.
Do Small HMOs Need A Licence?
If you’re wondering, do I need a HMO Licence for a small HMO?
Smaller HMO’s (3–4 occupants) may or may not need an HMO licence.
This is called “selective licensing” and enforcing an HMO licence is completely at the discretion of the local authority.
So I recommend checking with your Council if a licence would be required for a small HMO.
Alternately if you send us a message we’d be happy to check it for you.
HMO Licence — Cost And Time
Being an investor myself, I know how important time and cost are.
After all, we all want to get the property compliant and tenanted as soon as possible.
Along with quality housing, it’s the reason we’re doing this project in the first place.
Including the HMO licence timeline and cost into your project plan is important.
What factors contribute to an HMO Licence fee? Is there a fixed cost or is it variable?
Let’s take a look.
HMO Licence Cost
The cost of an HMO licence is influenced by
- Number of rooms
- Council’s attitude towards HMOs
Digging a bit deeper, if the council feels that there are too many HMOs in the area they may take action to slow it down.
These may include forcing Article 4 restrictions, removing Permitted Development rights, increasing licensing fees and other resistance filters.
An HMO Licence can cost anything from £400 in a small town like Thetford to £800 in Liverpool for a 6 bed HMO to £1,500 in other councils.
HMO Licences are normally valid for up to 5 years and gives you complete peace of mind.
If you have any doubt, I advise you to get a licence and avoid the “monkey on the shoulder”.
HMO Licence fines are expensive (north of £3,000).
How Much Is A Large HMO Licence?
A large HMO with 5 or more occupants needs “mandatory HMO licensing” and the cost varies from £500 to £1,500 or even £2,000 for a 5 year HMO Licence.
There is no set fee and completely depends on the council. It’s often driven by the demand and supply of HMOs in the area and the number of occupants.
How Long Does It Take To Get An HMO Licence?
The next big thing after cost is time. Arguably more important than the cost.
How long does an HMO Licence take?
Although varying from council to council, a general guideline if you’ve done everything right is 2 weeks — 1 month from the application.
Some councils may take longer than others.
Budgeting for 1 month should be fine.
I say this time and again it’s important to get the preceding steps right (like planning, fire regulations, building control etc) before applying for the licence.
This will not only maximise your chances of success but also speed it up.
How Do I Get An HMO Licence?
OK, now you know a bit about HMO licences, the two types, cost and timeframe.
We’ve also answered the important question, do I need a HMO licence?
So that said, how do you go about getting one?
The process is pretty straightforward and shouldn’t be complex. Especially if you follow everything we recommend on this website.
That is to get your planning and building regulations right. This should be a breeze.
Step 1 — Visit Portal
Visit the Council Portal, you’ll be able to make an account and manage your HMO Licences.
Depending on the Council, this may be under the Environment Health Department or Housing Department.
Step 2 — Fill The Form
Fill out a lengthy application form in as much detail as possible.
Step 3 — Upload Documentation
Upload requested documentation and explanation letters should you not have specific documentation.
Some of the documents you may be asked to upload include
- Emergency Light Certificate
- Fire Detection And Alarm System Certificate
- Electrical Installation Certificate
- Energy And Power Certificate
- Gas Safety Certificate
- Construction Work / Building Control Certificate (for any building work carried out
- Planning Decision Notice (if planning was required)
- Permitted Development / Lawful Development Certificate
Step 4 — Pay Fees
The Council may need you to pay 50% fees upfront with the remaining fees paid once the licence is granted.
This completely depends on the council so please check it for your specific council.
Can A HMO Licence Be Refused?
Yes, it’s possible that an HMO licence could be refused, due to non-compliance.
For example, the use of incorrect or insufficient smoke alarms, inadequate fire standards.
The Licensing officer can go on-site to inspect the property and has the right of refusal if they deem the property unsafe.
Shortcomings in HMO Planning Permission or HMO Fire Regulations can also be costly.
Iterating again, it’s important you understand the end goal of your HMO project and work backwards with an experienced team.
Can A HMO Licence Be Transferred?
No, an HMO licence cannot be transferred.
So, do I need a HMO Licence if the previous landlord had one?
Yes. An HMO licence is tied to a landlord rather than a property.
So even if you buy an existing HMO, you’ll need to get your own HMO Licence.
How To Check If A Property Has A HMO Licence?
The easiest way is to check the council’s website.
You can find a list of licensed HMOs based on the postcode.
This may or may not include the name of the licence holder (depends on the council).
Tip — This is a good place to find potentially run down HMOs if you’re looking for a deal. If the property is licenced and already operates like an HMO, it’s likely you won’t need to apply for planning permission (change of use).
HMO Licence Exemption
There may be certain situations where you may be exempt from an HMO licence.
These rarely apply to HMO landlords looking to build their portfolios but I thought I’d mention it.
In these cases, the owner is exempt from an HMO licence because the property is not classified as an HMO.
The exemptions as mentioned in the Housing Act of 2004,
Non Comprehensive List Of Exemptions
- Owner living in the property with up to 2 lodgers.
- Properties managed by the local housing authority, registered social landlord, fire & rescue authority, police or health body.
- Some student accommodations managed by the educational establishment
- Property used for religious gatherings of the community.
Can I Live In My Own HMO?
So, this is a tricky one.
The regulation allows you to have up to 2 lodgers in your property without classifying it as an HMO.
The Rent-A-Room relief even lets you earn up to £7,500 per year without paying tax on the income.
If you have more than 2 tenants the property may be classified as an HMO.
The situation also gets more complex if there’s a lender involved.
Each may have its own terms and conditions, especially when it comes to you living in your HMO.
When classed as an HMO, the property attracts other regulations.
Like planning permission, fire regulations, HMO fire doors and so on.
If you’re considering this route, please speak to our HMO Team, we’ll be happy to take a look at your specific case and give feedback.
Conclusion
I hope this guide helped answer an important question you may have — — do I need a HMO licence?
We talked about 2 main types of licensing — mandatory and selective licensing.
Selective licensing applies to 3–4 bed HMOs while larger HMOs (5 bed +) attract mandatory licensing.
We also learnt that it could cost between £500 — £2,000 for an HMO licence (normally valid for 5 years).
It could take up to a month to get approved.
We saw how the application process works and how to check for existing HMO licences.
We also learnt about refusals and exemptions.
It’s important to work with an expert who understands your end goal so everything can be planned to cut surprises.
If you’d like to talk to an architect that’s helped 100s of HMO landlords through the process from deal analysis to HMO licencing, please get in touch.
We’d love to help you.
