In England and Wales, landlords of all large HMOs and some small HMOs must obtain an HMO licence in order to legally let out their property. But it’s not just landlords of HMOs who are on the licensing hook! In some areas, landlords of single-let properties also need to obtain a licence in order to rent out their property legally.
In this article, we’re getting into the nitty gritty to find out more about the three main types of property licence – mandatory HMO licences, additional HMO licences and selective licences – to help landlords understand what’s required for their property and make property management smoother and more compliant for everyone involved!
What is a mandatory HMO licence?
Houses in Multiple Occupation (HMOs), sometimes called house shares or shared accommodation, are properties that are rented by at least three people from more than one household who share facilities like a bathroom or kitchen.
In England and Wales, a mandatory HMO licence is required for all large HMOs. A property qualifies as a large HMO if it meets the following criteria:
- It’s shared by 5 or more people from more than one household.
- Tenants share essential facilities (e.g. bathroom, toilet or kitchen).
If a property meets these conditions, landlords are legally required to obtain a mandatory HMO licence from their local authority. Local authorities are responsible for issuing licences and inspecting properties to ensure compliance.
You can apply for a mandatory HMO licence for your Nottingham-based large HMO on the Nottingham City Council website.
What is an additional HMO licence?
While mandatory HMO licences are always required, local authorities also have the power to be more restrictive. This means that landlords of smaller HMOs (with fewer than five tenants from more than one household) could still need to obtain a licence.
Additional licensing schemes are put in place by local authorities based on housing needs and issues with HMOs in their area, such as:
- Poor housing standards
- Poor management practices
- Anti-social behaviour
- Impact on infrastructure and services (e.g. waste collection or parking)
Landlords should check with their local authority to see if an additional licensing scheme is operating in their area. If so, they will need to obtain an additional HMO licence for their small HMO.
You can check if your Nottingham-based small HMO needs an additional licence on the Nottingham City Council website.
What is a selective licence?
Though most single-let properties don’t need a licence, some local authorities have introduced selective licensing schemes to improve housing conditions and management standards across the board in their area.
These selective licensing schemes are very broad, covering all privately rented properties within the designated area, regardless of size or number of occupants.
Landlords should check with their local authority to see if a selective licensing scheme is operating in their area. If so, they will need to obtain a selective licence for their single-let property.
You can check if your Nottingham-based single-let property needs a selective licence on the Nottingham City Council website.
Selective licences are significantly cheaper than HMO licences and they don’t usually require a property inspection in order to be issued.
Why do landlords need a licence?
Licences are there to protect tenants. They help to guarantee that rental properties are safe, compliant and have the required amenities needed for the number of people living in the property.
Since HMO licences and selective licences are issued to a person (the landlord) and not a property, they also help to ensure that landlords are suitable to operate such properties. Before a licence is issued, landlords are subjected to certain checks, including:
- Criminal record checks
- Revoked licence checks
- Housing enforcement notice checks
What’s checked during an HMO licence inspection?
During licence inspections, HMOs are checked for the following:
- Room sizes and occupancy: Do rooms meet minimum size requirements? Is the property overcrowded?
- Fire safety: Are there working smoke alarms, fire extinguishers and clear escape routes?
- Facilities: Are there enough bathroom and kitchen facilities for the number of tenants living there (e.g. toilets, baths, showers, sinks, cookers, microwaves, worktops, sockets, cupboards, fridges, freezers)?
- Heating and ventilation: Are there adequate windows, extractor fans and heating facilities in each room?
- Gas and electrical safety: Are appliances safe, with valid gas and electrical safety certificates?
- Waste disposal: Is it easy to store and dispose of waste?
Additional conditions may be applied to a licence following inspection. These will be outlined on the licence when issued and must be complied with.
If significant changes are made to a property after a licence has been issued, landlords can apply for a licence variation rather than a new licence.
DASH Services: Amenities & Space in HMOs
DASH (Decent and Safe Homes) Services is a joint-working initiative with landlords, tenants and local authorities, which aims to improve housing conditions in the private rented sector.
They’ve put together a guide for landlords in the East Midlands which details the minimum standards adopted by the majority of local authorities in the region (including Derbyshire, Leicestershire, Lincolnshire, Northamptonshire and Nottinghamshire) about amenities and space requirements for HMOs.
You can read the guide here.
How to apply for an HMO or selective licence
To apply for a mandatory HMO licence, additional HMO licence or selective licence, follow these steps:
- Fill out the application form (hard copy or online). Application forms can usually be obtained from your local authority website.
- Submit your supporting documents. A list of which supporting documents are required can usually be found at the end of the application form.
- Pay the licence fee.
The local authority will then process your application and issue a draft licence. There’s a set period of time before the final licence is issued where representations can be made. Representations refer to formal comments, objections or feedback from interested parties (such as property owners, tenants, neighbours and other stakeholders who may be affected by the licensing decision).
After representations are considered, a final licence is either issued or refused. Copies of the licence are then sent to all interested parties, including landlords, tenants and property managers.
Most local authorities split the licence fee into two parts. This is because when an application is made and the fee paid in full, there are set time constraints for the local authority to issue the licence – and they don’t always have the resources available to meet this timeline! By taking a partial fee, the local authority has more time to process the application,
Remember: HMO and selective licences are issued to the landlord, not the property. This means that if a property is sold midway through a licence term, the new owner will need to apply for a new licence.
What is tacit permission?
In most cases, once an application for an HMO licence has been submitted and the fee paid either partially or in full, the owner has tacit permission to operate the property as a HMO, even if they haven’t submitted all of their supporting documents yet.
Tacit permission is particularly useful following a development because contractors don’t always release compliance certificates until the very end of a project. If licence applications couldn’t be made until all supporting documents were submitted, property owners would have significant void periods while waiting for theirs to be issued.
With tacit permission, landlords can start operating the property as a HMO before they receive their licence, but they must submit their supporting documents as soon as they can and should exercise caution! If the property is inspected and found to be noncompliant for something serious, they could have difficulty in relocating the tenants whilst retrospective work is done.
What happens if licence conditions are breached?
Recent legislation changes mean that local authorities can now issue fines for unlicensed properties and breaches of licence conditions, and revoke licences if properties are found to be unsatisfactory. Prior to this, they would need to prosecute and rely on the court system to take action, which could take months.
As a result of the changes, there’s been a rise in the number of fines issued to landlords and property management companies in England and Wales. One notable case occurred in London in 2021, where a property management company was fined £480,000 for operating an unlicensed 22-bed HMO that was found to be unsafe!
Partner with Purseglove for HMO management in Nottinghamshire
Managing HMOs can be a demanding and time-consuming task. That’s why we offer a 100% hands-free HMO management service. We handle all of the necessary responsibilities, including licensing compliance, to provide peace of mind to landlords – even if they reside on the other side of the world!
Get in touch to find out more.
