If you’re investing in Houses in Multiple Occupation (HMOs), one of the most important things to understand is licensing. HMO licensing exists to ensure landlords meet safety, space, and management standards when letting shared accommodation. Failure to comply can result in fines, rent repayment orders, or even being banned from letting property. Getting it right is essential.

In the UK, there are three main types of HMO licensing:

Who it applies to:

• Properties occupied by 5 or more people forming 2 or more households (for example, unrelated tenants).
• Tenants share basic facilities such as a kitchen, bathroom, or toilet.

Key points:

• This is a national requirement, so it applies across England.
• There are strict rules around minimum room sizes, fire safety, and management standards.

A licence typically lasts up to 5 years although councils may grant shorter periods.

More detail:
Mandatory HMO licensing was introduced to raise the quality and safety of larger shared houses, which often present higher risks due to the number of occupants. The scheme ensures landlords meet clear standards such as providing adequate cooking and washing facilities, proper fire alarms, and safe escape routes. Councils will usually inspect the property before granting a licence and may set conditions to address any concerns. For investors, this means budgeting not only for the licence application fee but also for any required improvements to bring the property up to standard.

Who it applies to:

• Smaller HMOs that don’t fall under the mandatory scheme, for example properties with 3 or 4 tenants forming 2 or more households.

Key points:

• Not every council requires this. Local authorities can introduce additional licensing schemes to tackle poor standards in smaller HMOs.
• Rules and coverage vary by area. One city might require licences for all 3-bed HMOs, while another may not.

Landlords should always check with their local council before letting.

More detail:
Additional HMO licensing allows councils to extend regulation to smaller shared houses that still pose management challenges or safety risks. For example, student-heavy areas or towns with high demand for affordable shared housing often see more issues around overcrowding, waste, and disrepair.

By introducing additional licensing, councils can better monitor these properties, set minimum requirements, and ensure landlords are managing them responsibly. For landlords and investors, this adds another layer of compliance and cost, but it also helps maintain rental standards across the market, protecting both tenants and responsible landlords.

Who it applies to:

• Properties, including single lets, HMOs, or flats, in designated areas with issues such as low housing demand or antisocial behaviour.

Key points:

• Selective licensing is not HMO-specific. It can apply to all rented properties in a defined zone.
• Councils bring in these schemes to improve housing conditions and raise management standards.

This means a landlord could need both an HMO licence and a selective licence if their property falls under both rules.

More detail:
Local authorities and councils are adopting selective licensing as a way to both control the quality of rental stock available in an area and also ensure that landlords are taking responsibility for property management. By requiring all landlords in designated zones to obtain a licence, councils can enforce higher standards around property condition, tenancy management, and community impact. This approach is often used in areas where there have been persistent problems with poor-quality housing, irresponsible landlords, or antisocial behaviour linked to rental properties.

• Compliance: Helps protect landlords from fines and enforcement.
• Safety and Standards: Helps ensure properties are well-managed and safe for tenants.
• Marketability: A properly licensed HMO is more attractive to professional tenants and investors.