If you are the landlord of a House in Multiple Occupation (HMO) then you may require a licence.
But when do you need an HMO licence? Where do you get it from? And, how much will it cost?
Read on to find out the answers to these questions and more!
What Is An HMO?
Firstly, let’s define exactly what an HMO is.
HMO stands for ‘House in Multiple Occupation’. But, that rather simplistic definition almost makes it sounds like any property with more than one person living there is an HMO.
According to the official Government website, a property is classed as an HMO if at least three tenants live there, forming more than one household – AND – the toilet, bathroom, or kitchen facilities are shared between the tenants.
So, if your property has at least three separate tenants and they are sharing some facilities, the property may be classed as an HMO. They key thing is whether the tenants are classed as forming more than one household.
A household is either a single person or members of the same family who live together. A family includes people who are:
- married or living together – including people in same-sex relationships
- relatives or half-relatives, for example, grandparents, aunts, uncles, siblings
- step-parents and step-children
Examples of HMO Properties
Houses in multiple occupations can come in many different forms. Most commonly they will be normal houses that have been divided up into separate rentable rooms but with some rooms being shared among residents.
However, they can also be houses that have been split into multiple bedsits, hostels, or even B&B’s that aren’t just used for holidays.
Therefore, if you think your property may class as an HMO, it is always best to check with your local council to ensure you are complying with any applicable regulations.
When Do You Need An HMO Licence?
Not every HMO automatically requires a licence.
In fact, only those classified as a ‘Large HMO’ require a licence.
A home is classified as a ‘Large’ HMO if the following BOTH apply:
- at least 5 tenants live there, forming more than 1 household
- occupants share toilet, bathroom or kitchen facilities with other tenants
So, even if you have an HMO, if any of the above statements do not apply, you don’t need a licence.
However, if both apply – that’s when you need an HMO licence.
Note that previously the property also needed to be at least 3 storeys high to require a licence. However, this was removed in October 2018 and only the two criteria listed above now matter.
For clarity, a ‘household’ is classed as either a single person or members of the same family who live together.
How Much Is An HMO Licence?
If you have realised your HMO is classed as a large HMO and therefore requires a licence, you’re probably wondering how much it will be to obtain one.
The exact cost of an HMO licence varies depending on where in the country you are.
For example, Norwich City Council currently charge £637 for a five-year licence. Oxford City Council currently charge £420 for a one-year licence and £197 for renewals.
Some councils, such as Leeds City Council, charge between £675 and £1,350 based on the number of occupants in the property.
So, as you can see, there is no definitive answer to the question ‘how much is an HMO licence?’
You’ll need to contact your local council to find out exactly how much you’ll pay. Expect to pay an average of around £500-£700, though.
How Long Does An HMO Licence Last?
The amount of time your HMO licence will last also depends on your local council.
Some grant licences only for a year at a time, others, such as Norwich City Council, issue five-year licences.
It is, once again, something you should check when making inquiries with your local council.
If you have yet to buy the property or have yet to convert it to an HMO, you would be advised to find out the cost and length of licence in advance. This way you can factor the costs into your yield calculations.
Where Can You Get An HMO Licence From?
As we mentioned earlier, it is the local council that will issue you with an HMO licence.
While some councils will allow you to apply online via their webiste, the majority still require a paper form to be completed.
Once the form is submitted, along with payment, the council will usually contact you to arrange an inspection date.
During the inspection, the officer will check a number of things such as fire safety standards are being observed, that the property size is suitable for use as an HMO, and whether the property has been maintained to a good enough standard.
If granted, the HMO licence will state the maximum number of people permitted to live at the property at any one time. This then becomes a condition of your licence along with continuing to maintain the same standard of living.
What Happens If your Property Is Refused An HMO?
In most cases, a property that has been refused an HMO licence will be provided with details of any remedial action that needs to be taken before an HMO licence can be considered for re-issue.
However, if you fail to bring the property up to a good enough standard, or you fail the fit and proper person criteria, you may be issued with an Interim Management Order (IMO).
If this happens, the management of the property will be transferred to the Local Authority for a period that can be up to twelve months.
Eventually, an HMO can be subject to a Final Management Order (FMO) which can last for up to five years with further renewals possible. However, it is possible to appeal such a decision.
So, hopefully, that helps to answer the question of when do you need an HMO licence.
Remember, if you want to learn more about houses in multiple occupation, make sure you check out our post on ‘What Is An HMO Property?‘
Are There Special Regulations For HMOs?
Yes, regardless of whether your HMO requires a licence or not, there are building regulations and fire regulations that your property must comply with.
The duties of the property manager include the following:
- To provide all occupiers with the manager’s name, address and telephone number, this information must be clearly displayed within in the property
- To ensure that all fire escapes are clear of any obstacles and that they are kept in good order, to ensure that all fire safety measures are maintained in good working order and that adequate fire safety measures are in place with regards to the design, structural conditions and number of occupiers in the HMO
- The manager must maintain adequate water supply and drainage to the dwelling
- They must also not unreasonably cause the electric and gas supply to be interrupted
- The manager must ensure that every fixed electrical installation is inspected and tested by a suitably qualified person, at intervals not exceeding five years
- Plus, they must provide the electrical and gas inspection certificates within seven days of receiving a request in writing from the local housing authority
- To ensure that all common parts of the HMO are maintained in good decorative order and a safe and working condition. This includes out-buildings, boundaries, and gardens
- The manager must ensure each unit of living accommodation and its contents are clean before occupiers move in and are maintained in good repair and clean working order throughout the occupation by the tenant
- The manager must provide adequate facilities to dispose of all waste produced by the property
Of course, many of these regulations apply to any type of rentable accommodation, not just HMOs. If you require more detailed information on dealing with HMOs as a landlord, we recommend using the guide on the Rent Round website.
Should You Convert A House Into An HMO?
As you can see, there are a number of additional considerations you will need to make before deciding whether to convert a property into an HMO.
Not only will you end up spending more money turning a normal house into shared accommodation, you’ll also have to be familiar with the regulations that go with it. You may even have extra paperwork to complete if you need an HMO licence.
However, if you do decide to go ahead and convert a house into an HMO, you’ll be rewarded for the extra effort with increased yields and greater profits when managed correctly. That is why HMOs are so popular with investors.