Do I Need an HMO Licence?
If you rent out a property in England to more than one household, there is a good chance you need a licence. Whether it is a mandatory HMO licence, an additional HMO licence, or a selective licence depends on the number of occupants, how they live together, and where in England the property is located. This guide sets out clearly when a licence is required, how the three regimes work, what happens if you get it wrong, and how to check your specific position. It is written for landlords, letting agents and property professionals who want a clear answer to a question that is often surprisingly complicated in practice.
Quick answer
You need a mandatory HMO licence if your property is occupied by 5 or more people who form 2 or more separate households and share basic amenities such as a kitchen, bathroom or toilet.
Even if you fall below this threshold, you may still need a licence under an additional or selective licensing scheme designated by your local council. There are around 220,000 licensed HMOs in England, and over 70 councils operate additional licensing schemes for smaller HMOs.
The three licensing regimes at a glance
There are three distinct property licensing regimes in England, all set out in the Housing Act 2004. A single property can, in theory, be subject to any of them, though in practice one regime usually applies. Understanding which one applies to your property is the first step to knowing whether you need a licence.
What is an HMO?
A House in Multiple Occupation (HMO) is defined in sections 254 to 259 of the Housing Act 2004. There are three statutory tests, and a property is an HMO if it meets any one of them. The most common is the Standard Test.
The Standard Test (section 254(2))
A property is an HMO under the Standard Test if all of the following apply:
It consists of one or more units of living accommodation that are not self-contained flats
It is occupied by persons who do not form a single household
It is their only or main residence
Rent is payable
The occupants share basic amenities (kitchen, bathroom, WC) or such amenities are lacking
The Self-Contained Flat Test (section 254(3))
A self-contained flat is an HMO if it is occupied by persons who do not form a single household and it is their main residence. This applies to flats within larger buildings where multiple unrelated occupants share the flat.
The Converted Building Test (section 254(4))
A converted building is an HMO if it contains one or more units that are not entirely self-contained flats, and it is occupied by persons who do not form a single household. This test is most commonly relevant for older buildings converted into bedsits.
If your property is occupied by multiple unrelated occupants who share a kitchen or bathroom, it is almost certainly an HMO under the Standard Test. The critical question is not whether it is an HMO but whether it requires a licence which depends on the number of occupants and where the property is located.
What counts as a household?
The definition of a "household" is fundamental to HMO status. Section 258 of the Housing Act 2004 provides that persons form a single household if they are members of the same family. The definition of "family" is broad but specific:
Spouses, civil partners, and cohabiting couples (including same-sex couples).
Parents, grandparents and their descendants (children, grandchildren, etc.).
Siblings, aunts, uncles, nieces, nephews, and first cousins.
Step-relations and half-blood relations are treated the same as full-blood relations.
A domestic employee (nanny, carer, au pair) living with a family also counts as part of that household. Everyone else is treated as a separate household.
This means:
A family of five renting a property is one household - not an HMO
Three unrelated friends sharing a property are three households - an HMO
A couple sharing with one unrelated flatmate is two households - an HMO
A couple with children and a lodger is two households - an HMO if numbers require
Many landlords assume that a property is not an HMO if the tenants are all friends who chose to live together. That is incorrect. The legal test is whether they form a single household under section 258, not whether they know each other or how they came to live together. Friends who are not related are always separate households, no matter how long they have lived together.
Mandatory HMO licensing
Mandatory HMO licensing is the national licensing scheme set by the Housing Act 2004 and the HMO Licensing (Prescribed Description) (England) Order 2018. It applies to every property in England that meets the mandatory threshold, regardless of the local council or postcode.
When does mandatory licensing apply?
You must hold a mandatory HMO licence if all of the following apply:
The property is occupied by 5 or more people.
Forming 2 or more separate households.
Sharing basic amenities (kitchen, bathroom, or WC).
The property is used as the occupants' only or main residence.
Rent is payable.
The property is not exempt under Schedule 14 (see below).
Children of any age count towards the occupancy total. This has been the rule since October 2018, when the previous three-storey minimum was removed.
What does the licence cover?
A mandatory HMO licence typically covers:
Maximum number of occupants and households
Minimum bedroom sizes (statutory minimums: 6.51m² for one adult, 10.22m² for two adults sharing, 4.64m² for a child under 10)
Provision of amenities appropriate to the number of occupants
Fire safety measures (smoke alarms, fire doors, escape routes)
Annual gas safety certificates
Five-yearly electrical safety inspections (EICR)
Waste storage and disposal arrangements
Fit and proper person requirements for the licence holder
Cost and duration
Mandatory HMO licence fees are set by each local authority and range from approximately £500 to £2,500. Fees are usually split into two parts: an application fee (payable on submission) and a licence fee (payable on grant). Licences are valid for up to 5 years and are not transferable, so if you sell an HMO, the buyer must apply for a new licence in their own name.
Additional HMO licensing
Additional HMO licensing is a local scheme designated by an individual council under Part 2 of the Housing Act 2004. It extends licensing requirements to smaller HMOs that fall below the mandatory threshold, typically those with 3 or 4 occupants forming 2 or more households.
Which councils operate additional licensing?
Over 70 councils across England operate additional licensing schemes. These are most common in areas with high concentrations of shared housing, including many London boroughs, university towns, and larger regional cities. The specific scope of each scheme varies:
Some schemes cover the entire local authority area
Some are restricted to specific wards or postcodes
Some catch all HMOs (any number of occupants)
Some catch only HMOs with 3 or 4 occupants (below the mandatory threshold)
Each additional licensing designation must be published by the council and typically runs for 5 years before requiring renewal.
How to check whether additional licensing applies to your property
Additional licensing is designation-specific, so the only reliable way to check is to look at your local council's website. Search for the council name followed by "additional HMO licensing" or "private rented sector licensing." Councils are required to publish:
The designation area (specific wards, postcodes or the whole borough)
The property types covered
The start and end dates of the designation
The application process and fees
If you are unsure whether additional licensing applies, contact the council's licensing team directly. Getting the wrong answer here can be an expensive mistake.
Selective licensing
Selective licensing is a separate regime under Part 3 of the Housing Act 2004. Unlike mandatory and additional HMO licensing, selective licensing is not limited to HMOs. It can apply to any privately rented property in a designated area, including single family lets and self-contained flats let to one tenant.
When does selective licensing apply?
Selective licensing applies where all of the following are true:
The council has designated the area under section 80 of the Housing Act 2004
Your property is within the designated area
The property is privately rented
The property is not exempt (holiday lets, HMOs already licensed under other schemes, and certain other categories are excluded)
Why councils use selective licensing
Councils can only designate a selective licensing area if certain statutory conditions are met, typically including one or more of:
Significant low housing demand
Persistent problem of anti-social behaviour
Poor property conditions
High levels of migration or deprivation
High crime rates
If a proposed selective licensing designation covers more than 20% of the council's area or 20% of its privately rented housing, the council must obtain approval from the Secretary of State before it can take effect.
How to check whether your property is in a selective licensing area
As with additional licensing, the only reliable check is the council's website. Search the council's name plus "selective licensing" and look for:
A designation document listing the areas covered (often by ward, street or postcode).
A start and end date for the designation.
Any exemptions (holiday lets, student accommodation, etc.).
Application details and fees.
Statutory exemptions
Certain buildings that would otherwise meet the definition of an HMO are exempt from mandatory licensing under Schedule 14 of the Housing Act 2004. The main exemptions are:
Buildings managed by a local housing authority, registered social landlord, police, or fire and rescue authority.
Buildings occupied principally for the purposes of a religious community (e.g monasteries, convents).
Owner-occupied properties with no more than 2 lodgers (i.e the owner + 2 unrelated occupants).
Buildings occupied by students of specified educational institutions (where the institution is the manager).
Certain buildings already regulated under other statutory schemes.
These exemptions apply to mandatory licensing only. Local additional or selective licensing schemes may still apply to exempt properties depending on the specific designation.
What happens if you don't licence?
Operating a property that requires a licence without one is a criminal offence under section 72 of the Housing Act 2004 (or section 95 for selective licensing). The consequences are significant and were increased substantially in 2026:
Recent changes: the Renters' Rights Act 2025 and the PRS Database
Two significant changes in 2026 affect the wider enforcement landscape for HMO licensing:
The Renters' Rights Act 2025
From 1 May 2026, the Renters' Rights Act 2025 introduced several changes relevant to unlicensed properties:
Civil penalties for licensing offences uprated from £30,000 to £40,000 per offence.
Rent Repayment Orders extended to allow tenants to reclaim up to 24 months' rent (up from 12 months).
Section 21 evictions abolished, meaning landlords must use Section 8 grounds under the new tenancy regime.
New civil penalties introduced for related offences (rental discrimination, rental bidding, database non-registration).
The Private Rented Sector Database
The Renters' Rights Act 2025 also establishes a new national Private Rented Sector Database, expected to become operational in phases from late 2026. Landlords will be required to register their details and properties on the database. Non-registration will attract civil penalties, and non-registration cannot be cured retrospectively without exposure to penalty. The exact commencement dates for database registration were still being finalised at the time of writing, so landlords should check GOV.UK for the current position before making decisions.
How Surrey Property Licensing can help
At Surrey Property Licensing we work with landlords, letting agents and property professionals across England on HMO licensing matters. Our services include:
Independent advice on whether your property requires a licence and which regime applies.
Full HMO and selective licence application preparation and submission.
Pre-inspection compliance reviews to identify and remedy issues before council inspection.
Advice on licence conditions and how to meet them cost-effectively.
Representation and expert support in enforcement action, including responding to Notices of Intent and Improvement Notices.
Our background in local authority environmental health and housing enforcement means we understand how councils reach their decisions and what a good application looks like. If you are unsure whether your property needs a licence, or if you need help with a licence application, or enforcement matter, please contact us for a free initial conversation.
