A property in which a minimum of three or more people live and share facilities, such as a sitting room and kitchen, is known as a House of Multiple Occupation (HMO) here in the UK.
Larger HMOs, ie those with a minimum of five people, will always require a mandatory HMO licence. Smaller HMOs may also need to be licensed, depending on which local authority the property sits. Many rented properties in London, for instance, require listing under selective licensing conditions, often to ensure decent standards for tenants.
Throughout the UK, a number of cities, especially those with universities, run similar selective licensing schemes. This is an attempt to restrict the amount of rented accommodation in a particular residential location so that it is also attractive to families (who tend to stick around for longer than students).
There are occasions where converted blocks of flats will also require an HMO licence. This is the case if the building contains self-contained flats where at least one third of the flats are rented out and the building itself doesn’t meet building standard conditions. This is known as a section 257 HMO.
All councils hold a list of registered and licensed HMOs in their area as a matter of public record so it’s easy for tenants, or anyone for that matter, to check if your HMO is run legally.
Cost of a HMO license
Just as councils have the option to impose selective licensing in particular areas, they also have discretion over how much to charge for an HMO licence. As a result, it varies, depending on which local authority area the property sits. In Manchester, for instance, a mandatory HMO licence costs £985, while a selective license is £650. In Birmingham, you’ll pay £1,150 for a mandatory licence. For a licence in Wandsworth, London it is £1,358.
How long do HMO licenses last?
A typical HMO licence is for five years; some are for three years. It’s important to renew before the licence runs out. Running an unlicensed HMO can result in a minimum £20,000 penalty, together with other financial penalties, such as having to give your tenants 12 months back rent. There is also the prospect of being banned for life from running an HMO.
How to apply
Your local authority website should have a link you can click to apply for a licence. You will have to pay upfront and also supply copies of your gas and electricity safety certificates, as well as a property plan. Other details you may be asked, depending on the authority, include copies of your fire alarm and testing records as well as PAT certificates.
Can I transfer my HMO license?
It’s not possible to transfer an HMO licence to another person or even another property you own. Each property must have its own licence. The original licence was granted in the first place because the council deemed the applicant to be a fit and proper person to run such an establishment.
How Sourced Franchise can Help
Here at Sourced, our goal is to help you scale your own HMO with comprehensive training and HMO specialists to guide you all the way. Our growing network of experts can help you not only with the HMO license, but also with the safety checks and legal documents. But more than that, we have a due diligence process, designed to find you your ideal property, based on your financial goals. To get started, get in touch or download our Sourced Network prospectus today.