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Licensing of Houses in Multiple Occupation

The 2004 Housing Act, introduces compulsory licensing of Houses in Multiple Occupation (HMOs) on 6 April 2006.

What is an HMO?

HMO stands for House in Multiple Occupation, which means a building, or part of a building, such as a flat, that:

  • is occupied by more than one household (glossary item) and where more than one household shares – or lacks – an amenity, such as a bathroom, toilet or cooking facilities
  • is occupied by more than one household and which is a converted building – but not entirely self-contained flats (whether or not some amenities are shared or lacking)
  • is converted self-contained flats, but does not meet as a minimum standard the requirements of the 1991 Building Regulation, and at least one third of the flats are privately rented
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Why does the government want HMOs to be licensed?

Larger HMOs, such as bedsits and shared houses, often have poorer physical and management standards than other privately rented properties. There is a significant risk of dying or being injured in a fire in such properties. The fatality rate in HMO’s of three or more storeys is around four times higher than that for one or two storey HMO’s. The people who live in HMOs are amongst the most vulnerable and disadvantaged members of society. As HMOs are the only housing option for many people, the government recognises that it is vital that they are properly regulated.

Licensing is intended to make sure that:

  • landlords of HMOs are fit and proper people, or employ managers who are
  • each HMO is suitable for occupation by the number of people allowed under the licence
  • the standard of management of the HMO is adequate
  • high risk HMOs can be identified and targeted for improvement.
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Do all HMOs have to be licensed?

No. Under the new Housing Act 2004 there are three types of licensing:

  1. Compulsory (required by law) licensing of HMOs for properties that are:
    • three or more storeys (glossary item) high and
    • occupied by five or more person and
    • those persons form two or more households
  2. Additional licensing of HMOs
    A discretionary power that Councils may decide to apply to a particular type of HMO, for example, two-storey properties occupied by three or more students or asylum seekers.
  3. Selective licensing of other residential accommodation
    Properties that are not subject to HMO licensing could be covered under a selective licensing scheme. This is where the Council may declare that certain areas, for example, where there is low demand for housing and/or antisocial behaviour, are appropriate for selective licensing. This licensing would cover all forms of private rented housing, including HMOs.

The Royal Borough of Kensington and Chelsea intends to license properties that fall under compulsory licensing only. The Council may introduce the other types of licensing later.

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HMO’s exempt from licensing

These include those:

  • Buildings, or parts of buildings, occupied by no more than two households each of which comprise a single person (that is. two person flat shares')
  • Buildings occupied by a resident landlord with up to two tenants
  • Managed or owned by a public body (such as the police or the NHS) or an LHA or a Registered Social Landlord
  • Where the residential accommodation is ancillary to the principal use of the building, for example religious establishments, conference centres and such like
  • Student halls of residence, where the education establishment has signed up to an Approved Code of Practice
  • Buildings regulated otherwise than under the Act, such as care homes, bail hostels etc, and the description of which are specified in regulations
  • Buildings entirely occupied by freeholders or long leaseholders
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What criteria must an HMO meet for it to be licensed?

Anyone who owns or manages an HMO that must be licensed has to apply to the Council for a licence. The Council must give a licence if it is satisfied that:

  • the HMO is reasonably suitable for occupation by the number of people allowed under the licence
  • the proposed licence holder is a fit and proper person
  • the proposed licence holder is the most appropriate person to hold the licence
  • the proposed manager, if there is one, is a ‘fit and proper person’
  • the proposed management arrangements are satisfactory
  • the person involved in the management of the HMO is competent
  • the financial structures for the management are suitable.
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What does a ‘fit and proper person’ mean?

The Council will carry out checks to make sure that the person applying for the licence is a fit and proper person. In deciding whether someone is fit and proper the Council must take into account:

  • any previous convictions relating to violence, sexual offences, drugs and fraud
  • whether the proposed licence holder has broken any laws relating to housing or landlord and tenant issues
  • whether the person has been found guilty of unlawful discrimination
  • whether the person has previously managed HMOs that have broken any approved code of practice.
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What is meant by ‘reasonably suitable for occupation’ for a number of people?

For an HMO to be reasonable suitable for occupation for a relevant number of people the Council will be using prescribed the standards the Government has recently produced in draft form. The draft guidance prescribe standards covering:

  • Number, type and quality of bathrooms, toilets, washbasins and showers
  • Number, type and quality of food storage, preparation and cooking facilities
  • Fire precautions
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Are there conditions attached to the licence?

There will be a number of conditions attached to licences, some of which are set out in the Act and some of which will be prescribed by the Council in individual cases. Those conditions that will apply to all licences are:

  • Licence holders will be required to produce to the Council annually for our inspection an in date gas safety certificate (gas safety inspections are required yearly)
  • Licence holders will be required to keep electrical appliances and furniture made available by them in a safe condition
  • Licence holders will be required to ensure that smoke alarms are installed in the HMO and are kept in proper working order and make declarations to this effect to the Council
  • Licence holders will be required to supply to occupiers of the HMO a written statement of terms on which they occupy the house and make declarations to this effect to the Council
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How long does the licence last?

Licences can be granted for up to five years. The Council may grant licences for shorter periods in certain circumstances such as if works are required at the property.

How much will it cost?

Landlords will have to pay a fee to cover the administration costs of the licence procedure. The Council is currently working on fee structure which will be available soon. The fee structure will also set out any discounts that may available.

It may be advantageous if a landlord or manager is a member of a professionally recognised body or accredited.

For further information on accreditation visit www.londonlandlords.org.uk.

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Will you be inspecting my property?

The Council can issue a licence without inspecting the property. The Council is proposing to visit the property to ensure that licensing conditions are being met.

However we are also required to satisfy ourselves as soon as is reasonably practicable after an application for a licence is made that the HMO is free from any serious hazards under the Housing Health and Safety Rating System (HHSRS) (glossary term). In effect this means that the Council will be carrying out two types inspections at some point during the lifetime of the licence. To ensure minimum disruption to the landlord, every effort will be made to combine the two inspections.

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When should I apply for a license?

Licensing of HMO comes into effect from 6 April 2006. Landlords will need to request an application pack from Environmental Services. A three month grace period, from April 2006 to June 2006, will be given to allow landlords sufficient time to apply. However if a landlord has not applied after that time, penalties will be introduced. Details on penalties will be available shortly.

Do I have to apply for a license for each property?

Yes. A HMO license will only be valid for one property at time. If you have more than one property than a license will be required for each of them. The Council is considering discounts for landlords with several properties.

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I have properties in different Local Authority areas do I have to apply to each of them?

Yes. Each local authority is responsible for determining and issuing a license in their area. This allows local authorities to take their local needs and policies into account when making their decision.

Can the Council refuse to license my property?

Yes, if the property does not meet the conditions set out above and the landlord or manager is not a fit and proper person.

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What will happen if the Council refuse to license my property?

If a landlord fails to bring an HMO up to the required standard, or fails to meet the fit and proper person criteria, the Council can issue an Interim Management Order (IMO), which allows it to step in and manage the property.

The owner keeps their rights as an owner. This order can last for a year until suitable permanent management arrangements can be made. If the IMO expires and there has been no improvement, then the Council can issue a Final Management Order. This can last up to five years and can be renewed.

Can I appeal?

You may appeal if the Council decides to:

  • refuse a licence
  • grant a licence with conditions
  • revoke a licence
  • vary a licence
  • refuse to vary a licence

You must appeal to the Residential Property Tribunal, normally within 28 days of the Councils decision. Details of how to appeal will be available to the landlord once the council has informed the landlord of its decision.

Further information on Residential Property Tribunal visit www.rpts.gov.uk

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Temporary exemption from licensing

If a landlord or person in control of a property intends to stop operating HMO or reduces the numbers of occupants and can give clear evidence then he or she can apply for a Temporary Exemption Notice.

This lasts maximum of three months and ensures that a property in the process of converted from an HMO does not need to be licensed. If the situation is not resolved, then a second Temporary Exemption Notice can be issued.

When this runs out the property must be licensed, become subject to an Interim Management Order, or cease to be an HMO.

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Are there any other penalties?

It is an offence if the landlord or person in control of the property:

  • fails to apply for a licence for a licensable property or
  • allows a property to be occupied by more people than are permitted the licence.

A fine of up to £20,000 may be imposed. In addition, breaking any of licence conditions can result in fines of up to £5,000 for each offence.

Can the tenant claim back rent on an unlicensed property?

Yes. A tenant living in a property that should have been licensed, but was not, can apply to the Residential Property Tribunal to claim back any rent the have paid during the unlicensed period (up to a limit of 12 months). The Council can also reclaim any housing benefit that has been paid during the time the property was without a licence.

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Check list : Is my property a HMO?

Checklist
It will be an HMO if it is one of the following:
A shared house lived in by people who belong to more than one family* and who share one or more facilities**.
A house in bedsits lived in by people who belong to more than one family* and who share one or more facilities**.
An individual flat lived in by people who belong to more than one family* and who share one or more facilities**.
A building of self-contained flats that do not meet 1991 Building Regulation standards.

Exemptions:
  • If it is occupied by only two people
  • If it is occupied by the owner (and their family if any) and one or two lodgers
  • If it is occupied by a religious community
  • If the occupiers have their main residence elsewhere***
  • If no rents are payable or other considerations are provided such as free staff accomadation
  • If the owner or manager is a public body
  • If the owner or manager is an educational institution
  • A building of self-contained flats if two thirds or more of the flats are owner-occupied
  • If the property is part of a guest house or hotel (unless an ‘HMO Declaration’ (glossary term) is made)
Which HMO’s require a license?
An HMO must have a licence if all three of the following apply:
  1. It is an HMO (see definition of HMO above)
  2. it is three storeys or more (includes basements)
  3. it is occupied by five or more people forming at least two households
Exemptions:
  • If the whole property is in self-contained flats

* Family – husband, wife, co-habitee, child, step-child, foster-child, grandchild, parent, step-parent, foster-parent,grandparent, brother, half-brother, sister, half-sister, aunt, uncle, niece, nephew, cousin.

** Facilities – basic amenities: wc; wash hand basin, shower, bath; cooking facilities.

*** Accommodation used by full-time students while they are studying is taken to be their main residence
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Contact us

If you have any queries regarding HMO licensing or would like to be kept informed of the requirements of the Housing Act 2004 and Council Policy please contact the Environmental Healthline.

Important: We are currently experiencing delays in responding due to the high number of enquiries received. Every effort will be made to respond to your enquiry within ten working days.

Useful websites

Below are some useful websites to visit for more information:

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