HMO Rules & Regulations: A Simple Guide For Landlords
Owning a house in multiple occupation or HMO can be a financially rewarding type of property investment. But the laws that regulate HMOs are complex – and becoming more complex all the time. Here’s a straightforward guide to help landlords understand the rules and regulations more easily.
When is a rental property an HMO?
A rental property is considered to be a house in multiple occupation if it is let to three or more people who are not from the same household and who share some amenities.
HMOs are divided into what are known as small HMOs and large HMOs. A large HMO is a property rented to five or more people from more than one household who share some amenities. An HMO which houses fewer people is a small HMO.
While this is in some ways an unusual way of classifying HMOs (and it doesn’t necessarily have anything to do with the physical size or layout of the property) it is important from a licensing point of view – which will be explained later.
HMO licensing – what is it for?
In the past, some HMOs had a poor reputation for the standard of accommodation they provided. The HMO licensing system exists to maintain and improve the standard of accommodation provided in shared houses.
A secondary function of the HMO licensing system is that it also regulates the amount of shared housing in any given area.
When HMOs need to be licensed – and when they don’t
If an HMO is classified as a large HMO then it will always need a mandatory HMO licence.
If a property is a small HMO it may or may not need a licence. This will depend on the local authority and if they have introduced additional licensing in that area.
It is important to check if additional licensing operates in any area where you operate or are planning to set up an HMO.
Additional HMO Licensing explained
Housing law allows local authorities to choose whether or not to introduce additional HMO licensing schemes in their area.
If there is an additional licensing scheme in place it means small HMOs which do not normally need a licence must be licensed in addition to large HMOs which do require one.
Selective Licensing explained
Housing law allows local authorities to introduce a selective licensing scheme in their area if they wish to do so. Selective licensing means that all rented property in a given area must have a licence whether it is an HMO or not.
In a selective licensing area all sizes of HMOs will need an HMO licence (rather than a selective licence).
HMOs, planning permission, and Article 4 directions explained
If you are considering setting up a new HMO you need to know what planning permission is needed to create one.
If you want to convert an ordinary house (which is in planning category C3) into an HMO for up to 6 people (which is in planning category C4) you do not normally need planning permission to do this. You can do so under what is known as a permitted development right.
However, if the local authority has made what is known as an Article 4 direction for the area this withdraws the permitted development right to turn a C3 house into a C4 HMO. This means you will need to apply for planning permission. Whether this is granted will depend on the local authority’s HMO policy for the area.
Larger HMOs (which for the purposes of planning permission means those which accommodate more than 6 people) always need planning permission. They are in a planning category known as sui generis.
Article 4 can also be used to control the conversion of commercial buildings into HMOs without planning permission.
Applying for an HMO Licence – a quick guide
HMO licensing is handled by the HMO licensing department of the local authority for the area in which the property is located. It may be possible to apply online or, alternatively, use a paper form.
While HMO licensing law is set by national government the way that licensing is implemented varies slightly from local authority to local authority.
Here’s a quick guide to applying for an HMO licence:
You will need to provide detailed information about the property.
This will include information about the type of property, its size, the number of letting rooms, and details of other rooms such as kitchens, bathrooms, and communal areas.
You will need to measure the rooms and provide a floor plan.
You will need to provide details of fire alarm systems, other safety precautions, and relevant risk assessments.
You will need to provide gas and electricity safety certificates.
You will need to provide information about the ownership and management of the property.
You will need to state who owns the property, who will hold the HMO licence, and how it will be run and managed. You will need to appoint a house manager.
The licence holder and manager must be what are known as fit and proper persons and checks are carried out to regulate this.
Under the Management of Houses in Multiple Occupation (England) Regulations 2006 the house manager has various legal responsibilities. These include ensuring that the HMO is kept safe, that all services and amenities are kept in good working order, and that the house is kept clean and tidy.
You will need to pay the relevant HMO licensing fee
The fee depends on the local authority area and on the size of the HMO.
Once your application has been validated the local authority may inspect your HMO before granting the licence, or they may carry out a compliance inspection at a later date.
If your application complies with the relevant rules and regulations they will issue an HMO licence. This lasts for up to five years and is then renewable.
When granting an HMO licence local authorities can attach specific conditions to it if they feel it is warranted.
Other things you need to know about when running an HMO
Here are some of the other important things you need to know about when running an HMO and when applying for an HMO licence.
Amenity Standards
HMOs must comply with what are known as minimum amenity standards. Minimum amenity standards are set by national laws but local authorities may apply higher standards and will vary from local authority to local authority.
Minimum amenity standards govern such things as minimum room sizes, natural light, and ventilation, the number of kitchens and bathrooms, and other amenities that must be provided.
For example, the national minimum space standard stipulates that a bedroom in an HMO with shared facilities must be at least 6.51 square metres in size.
Energy Performance Certificates (EPCs)
Under the Minimum Energy Efficiency Standards (MEES) regulations private rented property, including HMOs, must have an EPC rating of E or better. These standards came into force for new tenancies in April 2018 and in April 2020 for existing tenancies. This is likely to be lowered to C or better in 2025.
The EPC does not need to be provided to tenants who rent a room in an HMO, however.
Gas and Electrical Safety
HMOs require valid safety certificates for gas appliances and electrical installations in a similar way to other rented properties.
Gas appliances must be inspected and certified by a Gas Safe engineer every year. An HMO must also have smoke detectors and carbon monoxide detectors.
Electrical installations require an Electrical Installation Condition Report (EICR) conducted by a qualified electrician at least every five years.
Fire Risk Assessments (FRA)
Under The Regulatory Reform (Fire Safety) Order 2005 an HMO requires a valid fire risk assessment. This should be reviewed and updated periodically. It may need to be provided as part of an HMO licence application.
A fire risk assessment will identify any fire safety shortcomings and what remedial action is needed.
Further information about fire risk assessments for HMOs for be found here and you can also instruct us to carry out a fire risk assessment of your premises.
The Housing Health and Safety Rating System (HHSRS)
HMO landlords are most likely to come into contact with the Housing Health and Safety Rating System when the local authority conducts a compliance inspection of their HMO. Or, potentially, if someone complains about their property.
The HHSRS is a risk-based system. It considers 29 different hazards. Where an inspecting officer considers that a hazard exists a scoring system is used to determine the severity of the hazard. The resulting score will determine what, if any, action the authority might take to require the hazard to be rectified.
An HHSRS score places a property into a band ranging between A (most hazardous) to J (least hazardous). Local authorities have a legal obligation to take action where a property falls into bands A-C, and are able to take action for property falling into lower bands.
The courses of action open to a local authority following an inspection under HHSRS include issuing a hazard awareness notice, serving an improvement notice, making a prohibition order or taking emergency action themselves.
The HHSRS was first introduced in 2004 and a review has recently been completed as to how it may be updated in the future.
If you wish to commission your own HHSRS assessment you can appoint us, as independent experts, to conduct one for you.
HMO Licence problems – enforcement and compliance
Enforcement has two main aims: It operates to ensure that all properties which need an HMO licence are licensed and that licensed HMOs continue to meet the relevant standards. HMO licensing enforcement is the responsibility of the relevant local authority.
Different local authorities have different approaches to compliance. Some apply a lighter touch and are open to working with landlords to achieve compliance. Others have a much stricter approach to compliance.
Penalties for breaching HMO laws
Landlords (and others) who break HMO licensing law can be subject to a number of different penalties:
Criminal Penalties
Under the Housing Act 2004 and other laws landlords who break certain HMO laws can be prosecuted and receive a criminal conviction and unlimited fine.
Civil Penalties
Under the Housing and Planning Act 2016 local authorities can impose a civil penalty of up to £30,000 per offence on landlords who break certain HMO licensing laws. This may be offered as an alternative to prosecution under the Housing Act 2004.
Rent Repayment Orders
Where an HMO landlord has broken certain specific HMO laws their tenants may be able to apply to a tribunal for up to 12 months rent to be repaid to them.
A rent repayment order is a civil claim rather than a fine or penalty as such.
Banning Orders and the ‘rogue landlord’ database
The Housing and Planning Act 2016 allows local authorities to seek banning orders where landlords or property agents have been convicted of certain HMO offences. They are also permitted to enter details of landlords who are banned or who receive two or more civil penalties within 12 months onto a database of rogue landlords and property agents.
This penalty effectively makes it impossible to obtain a licence for, or run, an HMO.
How Surrey Property Licensing can help
HMO licensing and enforcement is a complex area but we have a professional and dedicated team that offers services that as property landlords you can tap into. We are here to help, assist, and advise you. We offer a free 20-minute initial consultation to assess your situation and decide how we can best meet your needs. To discuss your specific requirements or enquire, please call 01483 608975 or use our contact form and a member of the team will come back to you.
