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When do you need HMO License?

I often read and see so many questions on various social media platforms and discussion boards in regards to what property actually qualifies as an HMO.

 Well, on its own, the definition is very straightforward.

Photo by Chengming Wang

A house of multiple occupation is any property where rooms are rented to more than 3 people who are not from the same household and who share the communal areas.

The main confusion about this becomes in regards to HMO licensing.

How many rooms can be rented before the property needs to be licensed?

 Each council has different criteria and there are 3 different property licensing types:

1.    Mandatory HMO license that applies to all of England. THis is required if you are renting your property to 5 or more sharers.

2.    Additional licensing that is implemented in many types of councils, but not in all of them. This is required for all HMO properties with 3 or more sharers.

3.    Selective licensing that again is implemented by some councils, but not by all. And this is required for all rental properties.

Photo by Cyntonn Photography

If you are renting your property to 5 or more people who are not from the same household, who share communal areas, such as kitchen, bathroom, toilet etc. and the property is their main residence, then you will require a Mandatory HMO license. This also applies if you are renting to a group of friends under one tenancy agreement.

For Example, if  you have a 3 bedroom property where in one room you have a couple (one household, two people) and in another you have another couple (one household, two people) and in third room you have a single tenant (one tenant, one person) then you will require a mandatory HMO license as it’s 5 people over three households.

Photo by Hutomo Abrianto

 Another example can be that if you rent a 3 bedroom property where you have a couple in one room and a single person in another room, and another single person in another room then you would not require a Mandatory HMO license as its 4 people, however you would need to check with the local council as they may have a requirement for Additional licensing or Selective licensing.

 Another very important aspect to consider is a planning permission.

If you are planning to rent to more than 6 sharers then you must apply for planning permission first.

Photo Leif Christoph Gottwald

If the local council has Article 4 direction  and you are planning to rent the property as HMO to more than 1 tenant then you must apply for planning permission first.

 This has to be checked on your local council website or you can confirm with the planning department as in London, most of the councils have implemented Article 4 direction now.

Photo by Tom Thain

The HMO property industry is highly regulated and understanding all the rules and regulations is essential if you are planning on having an HMO property.

By Ilva Pam

Founder & CEO at Prime Property Care