HMOs 101: what landlords need to know before letting

Being a landlord can often be a balancing act between earning more money and taking on more responsibilities. More tenants can bring more complications - like wondering whether you need a house in multiple occupation (HMO) licence? Wonder no longer, as we answer some of your biggest questions about managing an HMO.

What is an HMO?

A house in multiple occupation (HMO) - sometimes called a ‘house share’ - is a property that is let out to at least three people from different ‘households’ who share certain communal spaces (like bathrooms or kitchens). A household consists of either a single person, a couple, or members of the same family who live together.

You may need a licence to let out an HMO and should be aware that different rules apply for HMOs in England and Wales, Scotland and Northern Ireland, and there may also be some variations in how a household is defined and what constitutes a family member.

A ‘large HMO’ is a property that is let out to five or more people from more than one household who share communal spaces. You must have a licence to let out a large HMO in England and Wales.

Do I need an HMO licence for fewer than five tenants? 

The answer is: it depends! If you let to one or two households (for example, a family of three would only be one household, or a couple living with a friend would be two households), you shouldn’t need an HMO licence. However, some councils now require selective licences from all properties in a specific area - no matter how many tenants they have. You can find more information about selective licensing on the government’s website.

If there are three or four households renting from you, you may need an HMO licence. For example, any property in Scotland or Northern Ireland with three or more households must have a licence. Some councils in England and Wales also require a licence.

As HMOs are regulated by local authorities, it is always best to double check the rules with the property’s local council.

How do you get an HMO licence?

As a landlord, it is your responsibility to get licences for any HMOs you let out. Each HMO needs its own licence. These are valid for five years in England, Wales and Northern Ireland and three years in Scotland.

You’ll need to apply for a licence through the property’s local authority. If you’re not sure which council the property falls under, you can search the property’s postcode on the government’s website.

You’ll need to complete an application form from the local council and will need to supply evidence that the property meets living standards for the number of tenants, such as:

• floor plans
• gas certificate
• Fire Safety Risk Assessment document

Check with the local council for a full list of documents you’ll need to provide in your application. You may also need to prove you are fit to manage the property (e.g. have no criminal record).

Many councils charge an application fee, based on the number of tenants in your HMO - which is why it’s a good idea to figure out whether you need a licence before applying.

You can read more about the safety certificates landlords need to have in our blog.

What expenses can you claim for your HMO properties?

As usual, you’ll want to keep track of any expenses that you pay for the exclusive purpose of letting out and looking after your HMO.

Some allowable expenses you might be able to claim include:

• certain repairs and property maintenance
• cleaning between tenancies
• buildings insurance
• ground rents
• agent fees

You may also be able to claim tax relief on Council Tax and water rates, if you pay these on behalf of your tenants. However, if they are responsible for paying this, you won’t be able to claim anything.

It’s important to note, you can’t claim mortgage repayments, or any other finance costs, as an allowable expense. You may receive a tax credit instead, for up to 20% of your mortgage interest payments. 

Do you need your neighbours’ permission to apply for an HMO licence?

No, most HMO licence applications will not need your neighbours’ permission. In England and Wales, the council will do a Housing health and safety rating system (HHSRS) risk assessment within five years of a property becoming an HMO - if there are any risks found, the landlord will have to take appropriate actions to fix these.

However, in some circumstances you will need to get planning permission along with a licence for your HMO, depending on the property and the number of people living in it. For example, if you are planning to let your property to seven or more households, you will likely need planning permission. When a planning application has been submitted, the property’s neighbours can submit any objections.

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