A guide to houses of multiple occupancy HMOs

Houses of Multiple Occupation (HMOs)

This guide is for landlords and states the law as it is at August 2008. If you need specific legal advice, please contact us.

Does my property need a licence?

Part 2 of the Housing Act 2004 introduced licensing of properties which are either:

1. an HMO (see below for definition) which meets the following criteria:
(section 55(2)(a))
(a)three or more stories high – including any basements, attics or mezzanine floors which are used or adapted for living accommodation (except mezzanine floors exclusively used as access between floors);
(b) occupied by 5 or more people;

or

2. situated within an area in which a local housing authority has introduced extended licensing provisions (section 55(2)(b).

A licence is granted by the local housing authority and authorises the property to be occupied by a specified maximum number of people.

The act was aimed at introducing a minimum standard of accommodation and therefore mostly affects low rent properties or those subject to separate tenancies. Buildings divided into bedsits or student houses which meet the above criteria would almost certainly come under the provisions.

What is an HMO?

Unless the local housing authority has served a notice in accordance with the act, there are five general requirements for a property under Section 254(1):

1. There must be 3 or more residents who are from two or more households. A household is defined as one in which all persons form part of the same family (including spouses, siblings, grandparents/children, step or half relations) or if two people live together and are related to people who are married or in a civil partnership. Live in domestic servants, such as au pairs or chaffeurs, are regarded as belonging to their employer’s household – as are carers.
Eg: if two friends or three members of the same family lived together the property would not require a licence but if two members of the same family lived together with a friend, it would;
2. The property must be occupied as the tenants’ main residence. In the case of students in full time education, the property will be assumed to be their main residence;
3. The part of the building they occupy must be solely residential;
4. Rent must be payable by at least one tenant;
5. There must be at least one resident who is not a part of the household of someone with a legal interest in the Leasehold or Freehold of the property.

The property must also meet the conditions specific to one of the following:
 
(a) The “standard test”:
A whole or a part of a building is not a self-contained flat (see (b) below); and
two or more residents who are not part of the same household share a toilet, washing or cooking facilities (“basic amenities”) or the property lacks one of those things.
Eg: if the building is divided into bedsits which share bathroom facilities, unless each bedsit is rented by members of the same household, the property will need a licence.
This test would also catch student houses in which the bedrooms are let separately;

(b) The “self-contained flat test”
The property must be part of a building which is divided horizontally in which all of the three basic amenities are available for the exclusive use of the residents of that part; and
Two or more people who are not part of the same household share at least one of the basic amenities, or the unit of accommodation lacks one or more of them.
Eg: This means that if a flat is shared by at least 3 people, unless they are all part of the same household, the flat will need a licence.

(c) The “converted building test”
The property is a converted building (the building has been divided into more than one unit of accommodation since it was built); and
It consists of one or more units of accommodation which are not self-contained are self-contained flat or flats.

Under section 257 a building is also an HMO if the building has been converted to self-contained flats and the relevant building regulations standards were not and have not been met.

Penalties for non-compliance:

If a landlord or person who is in control of an HMO does not apply for a licence in respect of a property which requires one or if a landlord or person in control of an HMO allows more people than allowed by the licence to live in the property a fine of up to £20,000 may be imposed.
In addition any tenant living in a property which does not have the required licence may apply to the Residential Property Tribunal to claim back any rent paid (to a maximum of 12 months and only in respect of the period in which the property was unlicensed).

Who should I contact?

Licensing is carried out by the local housing authority.