Does your HMO require a licence from the local council? Learn more about HMO licensing requirements.
HMO Licensing – All You Need to Know
Operating an HMO is usually a profitable investment for investors, landlords and developers. HMOs are easier to manage than most other types of commercial properties and require much less capital injection. However, it will typically only remain profitable so long as it’s carried out with proper clearances and licences from the relevant authorities and failure to do so can result into heavy fines and even criminal prosecution. So, it’s best to know beforehand what the HMO licensing norms are.
Mandatory Licensing for HMOs
This is the broadest and most widely applied licensing requirement for HMOs in the UK. Mandatory licensing requirements apply for all HMOs across the UK, regardless of the local council directives.
A mandatory licence from the local council is required for all Large HMOs. In other words, an HMO is required to obtain the mandatory licence if, as things stand:
- It houses five or more tenants making up for two or more households.
Please be aware, new regulations are now in place since 1st October 2018 which amended the requirements to remove the previous number of storeys element, therefore any HMO with five or more tenants now requires mandatory licensing.
For more information regarding HMO classification, please visit HMO Requirements
A home-share project having a 1-storey structure that houses 8 tenants forming 3 households must obtain the mandatory licence from the local council, regardless of the location in the country.
Additional Licensing for HMOs
Additional licensing operates above and beyond mandatory licensing for HMOs. This is a matter handled solely by the local council and is subject to frequent policy shifts. If and when enforced by a local council, it becomes mandatory for all qualifying HMOs operating under its jurisdiction to obtain relevant additional licensing.
A ‘Small HMO’ having a 2-storey structure and housing 4 unrelated tenants forming 2 households IS now required to obtain the mandatory licence.
Selective Licensing for HMOs
Just like additional licensing, selective licensing is subject to the policies decided by the local council. A local council has the authority to issue directives to make mandatory for all HMOs within a given ward (or other area parameters) to have the selective licence.
A borough council can issue directives making it mandatory for all commercial housing projects in a particular area to have the selective licence. This would mean that all HMOs – Small and Large – will be required to obtain the said licence.
HMO Licensing Exemptions
There are quite a few use types that have been granted exemption from licensing at the national level. These HMOs aren’t usually required to have any sort of licensing, so long as their use class is cleared by the local council as exempt.
Typical examples of HMOs exempt from licensing are:
- Unoccupied HMOs
- HMOs built, managed and operated by government authorities or public service bodies like military or police housing projects
- HMOs that are rented out on a short-term basis (holiday lets, resident aggregator services like Airbnb etc.)
HMO Licensing Tenure
Every HMO licence issued by a local council has a certain period of validity at the end of which it must be renewed. This period is subject to the policies set by the concerned local council. While some local councils have a ‘rolling validity’ scheme, most others have a fixed tenure of 1 to 5 years for HMO licences.
HMO Licensing Fees
As HMO licences are granted by local councils, HMO licensing fees vary from one part of the UK to another. These fees are set and collected by the concerned local council, and are usually subject to the number of rented out/habitable rooms, number of tenants, number of households and the number of storeys the structure has.
For example, the Oxford City Council charges £1,499 for the initial application by a new operator for a one-year HMO licence. The same licence can be renewed for another year for £191 if there are no breaches of confidence during the first year of operation.
Please note this is just a representative example to illustrate the tentative costs involved in obtaining and maintaining an HMO licence.
Things to Keep in Mind
Successful granting of an HMO licence hinges upon a number of parameters. Some of the most important among these are:
- The operator/manager of the HMO (landlord, developer or caretaker) must be ‘fit and proper’ (having no criminal record, past instances of irregularities in maintaining properties).
- The rental property must comply with standard safety codes in regard with planning, fire, evacuation, size etc.
This subject is discussed in greater detail here
What if You Fail to Get a Licence?
If your HMO project is deemed to require an HMO licence and you fail to get it, the best way forward is to seek advice the local council about what needs to be improved. Operating an HMO without a necessary licence is a criminal offence that can lead to hefty monetary penalties and/or criminal liability.
Even if you are certain that your HMO project isn’t subject to any licensing requirements, you’re advised to consult with the local council to confirm the same.
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