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If you have a residential property with numerous occupants, it may need to be licenced as a “house in multiple occupation” (HMO). A HMO is a property rented out by three or more people forming more than one household. A household is either a single person or members of the same family living together. It can include people who are married, in same-sex relationships, relatives or half-relatives and step-parents or step-children. For example, four unrelated people would make up four households and a property with two couples would make up two households. The second requirement for a HMO is that some or all tenants share basic amenities such as a toilet, a bathroom or a kitchen with other tenants.
Across the whole of England and Wales, HMOs with 5 or more unrelated persons from more than one household sharing facilities will require a mandatory licence. The exception to the mandatory rule is where there is an individual flat inside a purpose-built block of three or more self-contained flats.
Licensing for smaller HMOs depends on the local authority’s requirements. Aside from the mandatory licensing rules, additional rules can be set out by a local authority declaring an additional licensing scheme for all HMOs within a specified area of a town or city. For both mandatory and additional licensing schemes, renewal of a licence is required every five years, though some licences can be awarded for shorter periods of time.
If you own or lease a property which meets the HMO definition, and you receive rent either from the tenants or through an agent, you are the one who should apply for an HMO licence. Agents can apply for the licence on behalf of landlords.
You can obtain an application form from the local council responsible for the area the HMO is in. There is a processing fee which is sent along with the application, and you must include a set of relevant documents. These comprise at the very minimum the Gas Safety Certificate for the property, the Electrical Safety Certificate, and a plan of the property. You may also be asked to provide PAT certificates, fire alarm and maintenance records, and a sample tenancy agreement.
Statute requires you to notify various ‘relevant persons’ that you are making the application, and to notify the council of those persons’ details. Relevant persons include the landlord (if you are an agent); any other owner of the HMO if applicable; any person who is a long leaseholder; any mortgagee; the proposed managing agent; any person who has agreed to be bound by a licence if granted.
In order to grant a HMO licence, the local authority must be satisfied that the HMO is reasonably suitable for the number of households or persons permitted to occupy it under the licence, or that it can reasonably be made suitable by the imposition of conditions in the licence.
Whether the HMO is deemed “suitable” for occupation by a certain number of households will normally be determined by the standard of the amenities available, as per the Housing Act 2004. This includes: the number and suitability of bathing and toilet facilities (where shared); the provision of wash hand basins in individual rooms; the suitability of kitchen facilities for the number of people sharing them; the availability of laundry facilities; and the provision of fire safety facilities and equipment. Some examples of these features include an extractor fan in the kitchen and a fire blanket.
Local authorities also give regard to the suitability of the landlord and/or the managing agent to manage the HMO. They must be “fit and proper” to do so, bearing in mind any relevant convictions or behaviour that would indicate their unsuitability to manage this type of residential accommodation.
Local authorities can set their own guidance as to the standards it will expect to be met. The Upper Tribunal has stated that the size of the accommodation, for example, would be a relevant factor in any assessment. However, guidance does not have the same legal force as the standards set out in the 2004 Act.
Landlords who fail to apply for a HMO licence could face fines of up to £20,000. There are additional fines for failing to comply with licence conditions. Further, if the HMO is not adequately licensed you may not be able to evict tenants under a section 21 notice in the case of an Assured Shorthold Tenancy (AST) as it will not be valid where a HMO isn’t licensed as it should be.
Legislate’s AST agreements understand the differences between HMOs, bedsits and sole occupancy agreements. Users on Legislate are invited to create and negotiate contracts on their own terms, whilst being confident that their agreements are sensible and up to date. Read our tutorial to learn how to create your tenancy agreements in minutes with Legislate.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.
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