HMO (House in Multiple Occupation)
Definition of a House in Multiple Occupation
For many years, the question of whether a rental property is a House in Multiple Occupation (HMO) has been the subject of varying interpretation across the country and the courts. It has resulted in widespread confusion for landlords and an inconsistent application of housing standards.
The Housing Act 2004 and associated regulations have sought to clarify the situation with a new definition of which properties will be considered to be in ‘multiple occupation’.
From now on if a landlord lets a property which is one of the following types, it is classified as a House in Multiple Occupation (HMO):
An entire house or flat which is let to 3 or more tenants who form 2 or more households and who share a kitchen, bathroom or toilet.
A house which has been converted entirely into bedsits or other non-self-contained accommodation and which is let to 3 or more tenants who form two or more households and who share kitchen, bathroom or toilet facilities.
A converted house which contains one or more flats which are not wholly self contained (i.e. the flat does not contain within it a kitchen, bathroom and toilet) and which is occupied by 3 or more tenants who form two or more households.
A building which is converted entirely into self-contained flats if the conversion did not meet the standards of the 1991 Building Regulations and more than one-third of the flats are let on short-term tenancies.
- In order to be an House in Multiple Occupation (HMO) the property must be used as the tenants’ only or main residence and it should be used solely or mainly to house tenants. Properties let to students and migrant workers will be treated as their only or main residence and the same will apply to properties which are used as domestic refuges.
Do landlords need a licence for a House in Mulitiple Occupation?
Not all House in Multiple Occupation (HMOs) as defined about will need a licence. However, from 6th April 2006 you will need to apply for a one if it falls within the scope of one of the following schemes:
- Mandatory Licensing
- Discretionary ‘Additional’ Licensing
- Transitional Licensing Schemes (TLS)
- Discretionary ‘Selective’ Licensing
Mandatory Licensing of HMO’s
All House in Multiple Occupation (HMO) comprising three or more storeys which have five or more occupants (forming two or more households) will require a licence. The only exception relates to buildings converted into fully self contained flats. When counting the storeys of a building, a landlord must include loft conversions and basements with a ‘habitable use’ (including basements used as an integral part of the House in Multiple Occupation (HMO) such as utility rooms).
For further information on Mandatory Licensing go to the Government website
More information about the other Licensing schemes can be obtained from your local authority.
Discretionary ‘Additional’ Licensing of HMOs
Discretionary ‘Additional’ Licensing is where a local authority can choose to make an additional licensing scheme that may apply to House in Multiple Occupation (HMO) which do not fall within the mandatory licensing criteria detailed above.
Additional licensing schemes may apply to such categories of House in Multiple Occupation (HMO) as the local authority considers appropriate, but before making such a scheme it must identify specific antisocial behaviour or management problems with those House in Multiple Occupation (HMO). Such schemes require the consent of the Government and may be in force for a maximum period of five years.
Transitional Licensing Schemes (TLS)
Transitional Licensing Schemes (TLS) are transitional licensing schemes that can be adopted by local authorities that already have House in Multiple Occupation (HMO) Registration Control Schemes in effect. Under a TL, House in Multiple Occupation (HMO) Registration Schemes will be allowed to continue for a further 3 years.
Discretionary ‘Selective’ Licensing of HMOs
Discretionary ‘Selective’ Licensing is where a local authority can choose to licence all privately rented property (whether House in Multiple Occupation (HMO) or not) in areas where specific problems have been identified, such as areas of low demand and/ or antisocial behaviour.
Who is responsible for applying for the HMO licence?
The person responsible for applying for a licence is the person having control of, or the person managing the property i.e. the landlord who lets the property and collects the rent.
Where do landlords get the licence?
Landlords apply to their Local Authority to obtain a licence. A landlord submits an application form and then pays an application fee. It then may be necessary for the rental property to be inspected before the HMO licence is issued. In granting the Licence both the suitability of the applicant and the configuration and condition of the rental property will be considered.
As part of the inspection aspects such as: the properties layout, room sizes, accommodation standards and fire safety will all be assessed against the Local Authorities House in Multiple Occupation (HMO) standards. It may be as a result of the assessment that the inspector will request changes to the HMO property before a licence is issued.
HMO licensing charges are supposed to reflect the costs involved in administering the licensing scheme and these fees can vary widely between local authorities. Research (Dec 06) carried out by www.landlordlaw.co.uk indicate that the cost of the licence fee can be as little as £140, as is the case with Cornish Local Authorities, right up to a breathtaking £1100 to licence a House in Multiple Occupation (HMO) in Newcastle. It can be argued that some Local Authorities are using the HMO licensing legislation as a creeping a general landlord licence through the back door.
These licence costs may pale into insignificance compared to the costs of upgrading the property to ensure that it complies with the Local Authorities House in Multiple Occupation (HMO) standards. With extensive structural alterations to meet landlord fire safety regulations or the installation of fire alarm systems costing thousands, or even tens of thousands in more extreme cases.
What happens to a HMO landlord if they are not licenced?
It is an offence for a landlord to operate an House in Multiple Occupation (HMO) without a licence. Non compliance with any expected licence on a HMO is an offence that carries various penalties and actions, including a maximum fine of £20,000.
Buying an HMO
If your are looking to buying an HMO we have some useful advice on investing in this niche part of the buy-to-let market.
Insuring an HMO
Houses in Multiple Occupation offer very different risks for landlord insurers and in this respect they do require specialist HMO landlord insurance cover. This is because the risks of multiple occupation are considered higher because of fire risks and more intensive occupation, together with the nature of the tenants. Part of these additional risks are due to higher levels of incidences of fire damage associated with these types of property. A landlord should therefore ensure that they adhere to the rules on signage for tenants smoking in an HMO.