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Tessa’s Ten Top Tips on HMOs

  1. HMO stands for ‘House in Multiple Occupation’. Usually, this means a house or flat occupied by three or more people forming two or more households who share facilities such as a kitchen or bathroom. There are exemptions, including an owner’s home with up to two lodgers, and special rules for certain converted blocks of flats.
  2. It is not possible for a property with only two occupiers to be an HMO.  However  there are many HMOs with three occupiers.  For example a flat rented to three nurses.
  3. A ‘household’ is basically a family unit – people related by blood such as a person’s children or siblings.  Two people living together as a couple count as one ‘household’ (including same sex couples) and households can also include employees who live with the family such as live in nannies and au pairs.  It has nothing to do with  eating arrangements or the type of tenancy agreement signed.
  4. All HMO properties need to comply with the HMO Management Regulations.  Some HMOs (but not all) will also need to obtain an HMO license from their Local Authority.
  5. From 1 October 2018, all HMO properties in England with five or more occupiers will need to obtain a license.  From that date, the old ‘three stories’ rule no longer applies in England, although it does still apply in Wales.  So, in England, a landlord of a bungalow with five unrelated tenants will need a licence.  But not if it is in Wales (unless there is additional or selective licensing).
  6. Any type of occupation type can be an HMO.  So they can be tenancies, residential licenses, Welsh occupation contracts, and also properties where people take in lodgers.
  7. A resident owner can normally accommodate up to two individual lodgers, alongside their own household, without creating an HMO. This exemption does not apply to a tenant who takes in lodgers. Their arrangements can create an HMO and trigger licensing requirements, including additional licensing for smaller HMOs. Landlords should therefore check the position carefully before allowing tenants to take in lodgers.
  8.  In some areas, councils have introduced additional licensing requirements.  So landlords should always check this and not assume that they do not need any license (some selective license schemes apply even if the property is not an HMO).  On Landlord Law we have a Local Authority Directory to help you get answers on this.
  9. Operating an HMO without a required licence is a criminal offence and can lead to prosecution and a court fine. In England, the council can instead impose a civil penalty of up to £40,000, and you also risk a rent repayment order for up to two years’ rent. Wales has separate rent repayment rules, with applications made to the Residential Property Tribunal rather than the First-tier Tribunal.
  10. Landlords of licensable HMOs which do not have an HMO license  may experience problems recovering possession.

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