Everything Landlords Need to Know about HMO Licences

HMO stands for ‘homes in multiple occupations’. Landlords must know whether their property meets one of the criterion for an HMO, and know what legal obligations this serves.

Here, the property experts at AST Assistance outline everything landlords need to know about HMO licences, including how a building qualifies, how a licence works, how much a licence costs, any exemptions to a licence, and the penalties for not complying with a the regulations.

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What qualifies as an HMO?

Under the Housing Act of 2004, a building, or a portion of it, must fit into one of the following categories in order to be classified as an HMO:

  • The "standard test" or "self-contained flat test" - a building or apartment where three or more individuals from more than one household share a basic utility, such as a bathroom, toilet, or kitchen.
  • The "converted building test" - a building that has been converted but does not wholly consist of self-contained apartments.
  • A building that the local council has designated as an HMO.
  • A converted apartment building where less than two-thirds of the flats are owner-occupied. This is known as a section 257 HMO.

To determine which category your property belongs to, visit the England Shelter website. You may find out that your building qualifies as a small or a large HMO, for which you may have different duties and responsibilities.

The following situations indicate a large HMO:

  • It is rented to at least five individuals from different households.
  • Some or all tenants share bathrooms, a kitchen, or other amenities.
  • Rent is paid by at least one renter (or their employer pays it for them).

Large HMOs must all have licences. Smaller HMOs may not usually require a licence, however it is advisable to confirm this with your local council. 

Licensing houses that do not meet the HMO criteria

Councils have the power to delegate an HMO licensing to a building that does not otherwise meet the criteria. This can include buildings in locations such as student residences near universities, as well as buildings that have been converted into independent apartments.

If a council implements a selective licencing scheme, all properties within the defined area - regardless of whether they are HMOs - must get a licence. When there is an issue with substandard housing and poorly run private rentals, allocating HMOs is often a council’s recourse to increase housing standards in that area.

How much is an HMO licence?

The cost will vary depending on where the property is located, as councils are free to set their own fees for mandatory HMO licenses. HMO licence fees should not be excessively high since they only serve to cover the costs associated with running the licencing scheme.

If your request for an HMO licence is denied, your application fee will be reimbursed.

How long does an HMO licence last?

HMO licences are typically awarded for five years, but they can be shorter. Keep in mind that each property requires a separate HMO licence, which must be renewed before it expires.

You must ensure that you remember to renew your licence or face financial penalties. Seeking the help of tenancy experts to manage your portfolio will guarantee that you never miss a deadline with any licencing related to your property.

Fines for not having an HMO licence

Failure to apply for a licence can result in fines of up to £20,000 you as landlord. If you violate the terms of the HMO regulations, you may also be subject to additional fines.

If you believe that you received unfair punishment for not having an HMO licence or failing to comply with HMO requirements, you may appeal the decision through the Residential Property Tribunal Service.

Exemptions to HMO exemptions

As a landlord of a current HMO property, you can ask your local council to be exempt from HMO licencing requirements if you can demonstrate the building is no longer being used as an HMO or will soon cease to meet the necessary criteria.

The council will want evidence that you are making the necessary preparations to convert the property back into a single residence, such as a planning application for required renovations. The council will also be satisfied that you are no longer engaged in the HMO industry if you sell the property and enter into a contract for sale with a buyer.

Exemptions from HMOs usually last three months. The council is not required to grant your request to extend the exemption for another three months.

If the council denies your exemption request, they must provide you a written reason. After that, you can challenge the judgement by presenting your case to a residential property tribunal.

How to apply for an HMO licence

You can download the application form for an HMO licence on the gov.uk website. You may then be redirected to your your local council’s website.

To prepare for your application, you should have copies of any necessary papers to submit. These include:

  • Gas Safety Certificates
  • Electrical safety certificate
  • A floorplan

You may also be asked to submit PAT certifications, fire alarm and maintenance records, as well as a copy of the tenancy agreement. 

You do not need to inform your tenants about applying for an HMO licence.

Several checks must be completed before an HMO licence may be issued. Throughout the five-year period, the council has the right to inspect the property at any time. These checks are carried out to make sure there are no violations of health and safety.

Receive tailored help with your HMO application and management

Approaching an HMO application can seem daunting, but it is vital that you follow the steps for it carefully - and once approved, you must know your legal obligations as the landlord, or face legal and financial penalties. 

Seeking help from tenancy experts, such as the specialists at AST Assistance, we will ensure you manage your property with full compliance, taking the stress away from you. Get in touch with our friendly team today by calling 01706 619954, emailing info@ast-assistance.com, or filling out our contact form here and we will get back at a convenient time. 

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