Do you need an HMO licence?

House in Multiple Occupation (HMO) is a commonly used term in property letting, but very few landlords understand what it really means and whether it applies to their rental property.

Here we tell you what an HMO is, whether you, as a landlord, rent out a property that is an HMO and, if it is, whether you need an HMO licence.

What is an HMO?

The term House in Multiple Occupation refers to a rental property which falls into one of the following criteria:

• A house which is split into bedsits
• A house, or flatshare, where each of your tenants has their own tenancy agreement
• Students who live in shared accommodation

HMO also refers to Bed & Breakfast accommodation and hostels which are not used just for holidays.

Do you need an HMO?

If you let out the following rental property, it will be an HMO:

1. An entire flat or house which you let to three or more tenants.
2. Bedsits which you let singly and where the tenants share facilities of a kitchen, bathroom and toilet.
3. Separate flats (which include studio flats) let singly where the tenants share some facilities.
4. A building which is entirely converted into flats which doesn’t meet the current regulations (the 1991 Building Regulations) and where a third of the flats are let on short-term tenancies.

For the rental property to be an HMO the tenants must use it as their only, or main, residence and the property should be used solely, or mainly, to accommodate tenants. If your property is let to students or migrant workers, it will be treated as their only, or main, residence. This also applies to domestic refuges.

Do you need an HMO licence?

You, as the landlord, must register your rental property as an HMO with your local authority if it has three (habitable) storeys or more and it is occupied by five or more people in two or more households.

A 'habitable storey' is any storey that is in residential occupation (even if it's self-contained). If you, and your family, are resident in the building, then where you live will be included as a storey. Basements and attics are considered a storey if they are occupied, or have been converted into accommodation, or are used in connection with the HMO's occupation.

The term 'household' is defined as members of the same family who live together and couples who cohabit (whether or not they are married, including same-sex couples). A group of friends who are sharing is not termed as a single household.

For example, three friends sharing together will be viewed as three households. If a couple are sharing with a third person, this will be considered to be two households. A family renting a property are one household.

For flats, or part of a property, to be viewed as self-contained, they must have a kitchen, bathroom and toilet, and only those living in the self-contained flat can use these facilities. If the tenants have to leave the flat to use any of these facilities, it's not a 'self-contained' flat.

Once you have notified your local authority, they will assess the property to see if there is enough space for all of the tenants and will check to see if you are managing the property properly. If they consider that you, and the property, meet these requirements, they will grant you an HMO licence.

But note that councils do have the right to introduce licensing for individual, smaller HMOs and they can ask all rental properties be licensed if they want to improve the local area. Therefore, whatever your circumstances, it's always wise to check with your local authority to find out their HMO rules.

The three questions you should ask yourself to find out if you need an HMO licence are:

1. Does your rental property have three or more storeys?
2. Do you let your property to five or more unrelated tenants?
3. Do your tenants share facilities?

If you answer 'yes' to all three questions, then you may need an HMO licence, but if you answer 'yes' to any of the questions, it's still wise to contact your council to find out if you need one.

There are exceptions to who needs an HMO licence and these are as follows:

• You are living in your property with up to two lodgers
• The rental property is a flatshare, which is let out to two unrelated tenants
• All occupants who live in the property are freeholders (or long leaseholders)
• The property is a bail hostel or a care home

Purpose-built blocks of flats are not considered to be HMOs, but if any of the individual flats are shared by more than two tenants in two or more households, they will be viewed as HMOs.

Fire safety

It's important that you find out if your premises is an HMO because an HMO landlord has additional responsibilities under the fire safety regulations. Under the Regulatory Reform (Fire Safety) Order 2005 (FSO) common areas of HMOs, blocks of flats and maisonettes must be assessed for fire risk.

As an HMO landlord, you must:

• Complete a fire risk assessment and consider the fire precautions in the common areas of the HMO property
• Consider escape routes which may include creating a fire barrier between the common areas and the living accommodation 
• Consider the need for a fire detection and warning system, emergency escape lighting and firefighting equipment and facilities
• Consider the need for signs and notices
• Consider recording, planning, informing, instructing and training which will require producing a fire action plan