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Licensing & HMOs

The purpose of licensing, especially for HMOs, is to ensure that residential accommodation within the Private Rented Sector (PRS) is safe, well managed and of good quality with a particular focus on safety.

Definitions

What is a HMO?

A House in Multiple Occupation (HMO) is any residential property occupied by three or more people sharing facilities like a bathroom and/or kitchen who form two or more ‘households’.

What is meant by the term ‘Household’?

A household is either a single person or members of the same family who live together. A family includes people who are:

  • Married couples or couples living together as married (including people in same-sex relationships)
  • Relatives or half-relatives e.g. grandparents, aunts, uncles, siblings, nieces, cousins
  • Step-parents and step-children and half-relatives
  • Foster parents and foster children

Some domestic staff would be included in the household if they are living in the house as a result of the terms of their contract e.g. an adult carer and up to three people receiving care are a single household.

Licensing types

There are three types of HMO licensing

Mandatory licensing of large HMOs
Applies nationwide for HMOs where there are five or more occupants in a property of three or more storeys and the buyers comprise of two or more households.

Additional licensing
When a council imposes a policy requiring other sizes of HMOs to also be licenced. For example, a council can bring in additional licensing requiring all HMOs to be licenced.

Selective licensing
This is at the discretion of the borough and can affect all rental properties regardless of size, number of storeys, or number of occupants. For example, a council can instigate compulsory licensing of all residential rental properties within a street, ward or the whole borough.

Before granting a licence, the local authority must be satisfied that the owner and any managing agent of the property is fit and proper to hold a licence and that the property meets required physical standards.

A licence will normally be granted where…

  • Appropriate fire safety measures are in place such as smoke detectors, extinguishers etc
  • Annual gas safety checks are up-to-date
  • The electrical wiring and appliances have been checked and certified as safe every five years
  • The property is not overcrowded
  • There are adequate cooking and washing facilities
  • Communal and shared areas are kept clean and in good repair
  • There are appropriate refuse storage and disposal facilities

Once granted the licence must be clearly displayed within the communal areas along with the name, address and telephone number of the licencee or property manager of the premises. A copy of the current gas safety certificate must also be on display.

How can I check if a property needs to be licenced?

If you are not sure whether it needs to be licenced then contact the local borough council in question – often their website contains the relevant information.

Can a landlord evict a buyer to avoid licensing?

No. Landlords are not allowed to evict existing buyers in order to avoid licensing. Any attempt to get a buyer out of a property that should be licenced but isn’t may be considered a crime under the Protection from Eviction Act 1977, and the landlord or anyone else involved may be prosecuted. The Deregulation Act 2015 has also changed the law so a valid notice cannot be served to end a tenancy if the property should be licenced but isn’t currently.

Licensing requirements

What will the council take into account when deciding whether or not to grant a licence?

  • The suitability of the HMO for the number of occupiers
  • The suitability of the facilities within the HMO, such as toilets, bathrooms and cooking facilities
  • The suitability of the landlord and/or the managing agent to manage the HMO (this is called the “fit and proper” test)
  • The general suitability of existing management arrangements of the property

The council also has to carry out a Housing Health and Safety Rating System (HHSRS) risk assessment on a HMO within five years of receiving a licence application. If the inspector finds any unacceptable risks during the assessment then the landlord will be instructed to carry out works to eliminate them. The landlord must also notify the council if they plan to make changes to a HMO (structural or decorative), if the buyers make changes to the property, or if the buyers’ circumstances change (e.g. they have a child).

The council must ensure that a licenced HMO is not overcrowded and has suitable shared amenities and facilities for the number of persons occupying it. If there are too many people living in the HMO at the time the licence is granted, the landlord must take reasonable steps to reduce the number of occupiers to the permitted number. Existing buyers will not normally be evicted. Instead, when they move out, it will be an offence for the landlord to allow new buyers to move in if that would bring the total number of occupiers above the maximum number allowed.

Enforcement

What happens if a landlord doesn’t apply for a licence?

It is a criminal offence to operate a HMO that should be licenced but isn’t and if convicted, the fines for non-compliance are unlimited.

Local authorities also have a range of other enforcement options including the power to vary the terms of a granted HMO licence or to revoke an HMO licence. Under a rent repayment order, landlords may have to pay back to a buyer any rent they have received, or to the council any housing benefit they have received, up to a maximum 12 months. The tenancy itself will not be affected if the landlord has failed to apply for or obtain an HMO licence, although the council may take over the management of the property as another method of enforcement.