Are you one of the UK’s 2.6 million landlords? You may need an HMO licence if your property has shared facilities or houses multiple tenants.
Knowing the boundaries of when you’ll need an HMO licence can help you avoid thousands in fines, so make sure you’re compliant beforehand. Find out whether you need an HMO licence for your property and how to get on in this article. Discover:
- What is an HMO licence?
- When do landlords need an HMO licence?
- How to get an HMO licence for your property
- What are the HMO standards?
- What you’ll need to do once you’ve gotten your HMO licence
- How long do HMO licences last?
- Does a single HMO licence cover more than one property?
What is an HMO licence?
An HMO licence is a permit that allows landlords to let a property to multiple renters.
HMO stands for ‘House in Multiple Occupancy’ and is defined as a single property with three or more people living in it who aren’t from the same household and who share facilities like a kitchen and bathroom.
An HMO licence can cover a flat or house, as long as the rental property meets the required standards for renting. We discuss the application process and standards you’ll need to meet if you need one further below.
When do landlords need an HMO licence?
Landlords need an HMO licence if their property holds multiple ‘households’.
Examples of a single household include married/cohabiting couples or people who live with familial relationships like parent-child or more distant relations such as grandparents or uncles/aunts. In these circumstances, the tenants are the same household; the property isn’t considered an HMO and doesn’t require a licence.
In contrast, if three or more roommates or two couples rent a single property, the property is considered an HMO because there is more than one ‘household’, so you’ll need an HMO licence.
It may be a good idea for you to hold an HMO licence if your property has more than one bedroom, regardless of who your current tenants are. Firstly, it will allow you to advertise your property to more potential tenants if your previous ones move out on short notice. Secondly, it will ensure you’re legally covered if your current tenants’ situation changes (for example, if they have a child or invite a partner to live with them).
How to get an HMO licence for your property
HMO licences are available from your local council authority. You can find application information on your council’s website either by searching online or following the links below for where you live:
The initial application fee can vary between £35-£1,200 as the pricing framework differs across the UK: some local councils set fixed prices while others apply a per-tenant fee on the application. You’ll also need to pay fees for updating your licence terms (for example, you’re authorised for four people and a fifth person moves into your property).
What are the HMO licence standards?
The rules for HMO licencing slightly differ across the UK. In general, you’ll need to make sure the property has a gas and electrical safety certification (sometimes even if your property is completely electric), has adequate living space for the number of people living in the property (including washing and cooking facilities) and pay the associated application and renewal fee.
Find out more about the specific requirements, standards and application process on your council’s website using the links provided above.
What you’ll need to do once you’ve gotten your HMO licence
It’s vital you keep your property up to standard once you’ve had your licence granted. When it comes time to renew, you may find the work required to hold onto your licence is expensive. You can help minimise your long-term costs and maximise the value of your property by being proactive in addressing any problems as they present themselves. Follow the guidance on your council’s website to make sure your property always meets the standard in your area.
Beyond maintaining what’s already there, it’s important to keep your council updated with any changes to your property. For example, you should tell your council if :
- You or your tenants plan to make changes to your property (renovating a room, overall layout, or electrics/gas utilities)
- Your tenants’ circumstances change (for example, if they have a child or cohabitate with their partner)
Each of these may have an impact on the safety and quality of your property and so it’s crucial to check that the council approves of any proposed work.
How long do HMO licences last?
HMO licences issued in England, Wales, and Northern Ireland can last up to 5 years. In Scotland, this is slightly shorter at a maximum of 3 years.
You’ll need to make sure you have enough time to renew your licence before it runs out – this includes factoring in time to book the safety checks required in your area. Otherwise, you may be faced with large fines for letting an unlicensed HMO.
Does a single HMO licence cover more than one property?
No, landlords need to have an HMO licence for each HMO property they have. This is to ensure that each HMO property is safe and of adequate quality for multiple renters. However, you don’t need to get an HMO licence for properties that aren’t HMO’s
For example, if you have two flats in the city centre, a one-bedroom and a four-bedroom, you’ll only need to get an HMO licence for the four-bedroom property.
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As you’re setting as a landlord, you’ll need reliable accounting software to help you track your rental income, record your expenses and track your tax liabilities. If your property portfolio earns you more than £10,000 a year, you’ll also need Making Tax Digital software from April 2022.
Thousands of self-employed people across the UK use the Countingup app to save time on their financial admin. Countingup is the business current account and accounting software in one. It automates time-consuming bookkeeping and will help landlords stay tax-compliant under HMRC’s new rules.
Countingup comes with automatic expense categorisation, receipt capture tools and real-time cash flow insights. Together, you can confidently keep on top of your business, save yourself hours of accounting admin, and see tenant rent payments arrive in your account live.
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