Managing a property can be a complicated task, whether you are a landlord, a housing agent or even a tenant who simply wants to make sure that everything is being done to standard. As such, knowing about what licences are necessary for your property is essential, particularly if you want to avoid serious financial penalties down the line.
Houses in multiple occupation (HMOs) offer a prime example of just how grey property law can be. An HMO is usually defined as a property rented by three or more people who are not from a single household (family) but still share bathroom, toilet and kitchen facilities. Depending on the size of an HMO, it may require a ‘HMO licence’, but exactly when this is necessary can vary considerably between different locales. With the potential for additional rules and varying fees, it is important to know exactly what the requirements are before attempting to rent out an HMO of any kind.
Typically, applying for an HMO licence is a task for a landlord, though an agent can often act on their behalf. Typically this will be either a property manager or local estate agent, the latter of which will usually have valuable experience in navigating local property law.
A ‘house in multiple occupation’ is usually defined as a property which is rented by at least three people who are not from the same household (usually referred to as a ‘family’). While their bedrooms or bedsits are kept separated, they will usually share bathroom, toilet and kitchen facilities. This kind of arrangement is also referred to as a ‘house share’, and can provide an ideal arrangement for individual renters.
An important thing to note about HMOs is that not all of them require a ‘HMO licence’ (though they should all be registered with their respective local councils). When an HMO does need one, however, failing to attain it could lead to potentially unlimited fines for the landlord responsible.
Generally speaking the types of HMOs which require licences are:
Unfortunately, these rules are not set in stone. Local councils have a habit of introducing their own rules on which HMOs will require licences. This is aptly known as ‘additional licensing’.
A common example involves forcing HMOs of a smaller size to get licences. In other words, a property smaller than three storeys and rented to fewer than five people could still need one depending on where it is in the UK.
Ultimately the rules for when an HMO licence is necessary will be up to your local council, so it can be an excellent idea to contact them as soon as possible to get a definitive list. If you feel that a certain term is unfair, you can make an appeal to the First Tier Tribunal. However, you will still need a valid licence before renting the property out.
If you apply for a HMO licence, your council will need to conduct a Housing Health and Safety Rating System (HHSRS) risk assessment within five years. Keep in mind that if they find any potential hazards then you will be required to solve them. In some cases, a council can even carry out the necessary work and then bill the landlord for the costs.
An HMO licence is valid for five years and should be renewed before this time runs out. It is also important to remember that it is one licence per property, so depending on the number of homes you are renting out you may need to apply for several at once.
At this point it is also worth pointing out that not just any property can become an HMO large enough to warrant a licence. What we mean by this is that a property should fulfil certain standards before it can be rented to so many people. For example, to support five renters a house should have enough bedrooms and other facilities to support them.
The manager of the HMO should also be fit and proper for the job; that is to say, they should have no record of past breaches of landlord laws or code of practice and no previous criminal records.
Finally, a landlord for a HMO must ensure that it meets all of the appropriate health and safety standards. Fire alarms will need to be provided, along with fire blankets (particularly in the kitchen) and a fire alarm on each floor. All exits should be clear of obstructions, with fire exits clearly marked. Tenants should also have clear instructions on what to do in the event of a fire. To help prevent accidents, landlords should also carry out regular electrical and gas safety checks on appliances, flues and fittings which come with the property. Again, the standards imposed by local councils vary, so it will be important to check.