Houses in Multiple Occupation can offer strong rental demand and attractive yields, but they also carry additional legal and management responsibilities.
One of the most common mistakes landlords make is assuming that obtaining planning permission means the property is fully compliant as an HMO.
It does not.
Planning permission and HMO licensing are separate systems, and a property may need to satisfy both.
What is an HMO?
In broad terms, a property may be an HMO where at least three people from more than one household live together and share facilities such as a kitchen, bathroom or toilet.
A “household” usually means either one person or members of the same family living together.
That means many shared houses occupied by unrelated tenants will fall within the HMO definition.
When is an HMO licence mandatory?
In England, mandatory HMO licensing generally applies where a property is occupied by:
- five or more people;
- forming two or more households; and
- sharing facilities such as a kitchen, bathroom or toilet.
The number of storeys is no longer the deciding factor.
Landlords should not assume that a smaller two-storey property falls outside mandatory licensing simply because it is not a traditional large HMO.
Smaller HMOs can still need a licence
This is another area where landlords can easily be caught out.
Local authorities can introduce additional licensing schemes covering HMOs that fall below the mandatory licensing threshold.
That means a property occupied by three or four unrelated people could still require a licence depending on the local authority area.
Before creating or buying an HMO, landlords should therefore check the licensing rules applying to the exact property address.
Planning permission is a different question
Planning law looks at how a property is being used.
Licensing looks at whether an HMO is suitable, properly managed and compliant with the relevant housing standards.
A landlord may therefore have:
- the correct planning use but no HMO licence;
- an HMO licence but a separate planning issue; or
- a requirement to deal with both.
Neither system should be treated as a substitute for the other.
Article 4 Directions can matter
In many areas, changing a house from ordinary residential use to a small HMO may normally fall within permitted development rights.
However, some councils use Article 4 Directions to remove those rights in particular locations.
Where an Article 4 Direction applies, planning permission may be needed for a change that could otherwise have taken place without a full planning application.
This is especially relevant when buying an existing shared house.
Do not assume that because tenants are already living there, the planning position must be correct.
HMO licensing looks beyond paperwork
Obtaining a licence is not simply a registration exercise.
The council will consider whether the property is suitable for the number of occupants and whether the person managing it is fit and proper.
Licence conditions can also cover matters such as:
- fire precautions;
- smoke alarms;
- electrical safety;
- gas safety;
- waste arrangements;
- kitchen and bathroom facilities;
- room occupancy; and
- property management.
Local standards may vary, so landlords should check the requirements of the relevant council.
Room sizes matter
Mandatory HMO licensing includes minimum sleeping-room size requirements.
However, landlords should not treat the national minimum as a guarantee that every room will automatically be acceptable.
Councils can impose occupancy restrictions and may have other standards relating to amenities, layout and space.
A room that physically fits a bed is not necessarily suitable as lawful sleeping accommodation.
Fire safety deserves particular attention
HMOs can present greater fire risks because several unrelated people may occupy different rooms and share escape routes.
Landlords may therefore need more extensive precautions than would normally be expected in a single-family rental property.
Depending on the building, requirements may include appropriate:
- smoke detection;
- fire doors;
- protected escape routes;
- emergency lighting;
- fire-resistant construction; and
- management procedures.
Fire safety should be considered before tenants move in, not after a licensing inspection identifies deficiencies.
What happens if an HMO should be licensed but is not?
Operating an HMO without a required licence can have serious consequences.
Potential outcomes can include:
- prosecution or significant financial penalties;
- rent repayment orders;
- restrictions affecting possession proceedings; and
- enforcement action requiring the property to be brought into compliance.
For landlords buying an existing HMO, checking the licence position should therefore form part of the due-diligence process.
What should landlords check?
Before letting an HMO, ask:
- Is the property legally an HMO?
- Does mandatory licensing apply?
- Is there an additional licensing scheme locally?
- Is the existing or proposed planning use lawful?
- Does an Article 4 Direction apply?
- Are room sizes and amenities adequate?
- Are fire and safety precautions sufficient?
- Is the licence current and are all conditions being followed?
If several properties are involved, carry out the exercise separately for each address.
How does the position differ elsewhere in the UK?
The rules above relate to England.
Wales has its own HMO licensing and housing framework alongside Rent Smart Wales.
Scotland operates a separate HMO licensing system through local authorities.
Northern Ireland also has its own HMO licensing legislation and council-based procedures.
Landlords should therefore never assume that an HMO compliant in one UK nation automatically satisfies the rules in another.
Licensing and planning are two separate boxes to tick
The safest approach is to treat planning and licensing as distinct compliance questions.
Having planning permission does not remove the need for an HMO licence, and holding an HMO licence does not automatically resolve the planning position.
Check both before investing, converting or letting.
NetRent’s Landlord Legal Updates will continue to explain important legal and regulatory issues affecting landlords, letting agents and tenants across the UK.
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Important information
NetRent does not provide legal advice. The articles represent our understanding of rental property law and are for general information only.