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Being a landlord can be a lucrative and rewarding experience, but it also comes with significant responsibilities. One crucial aspect of being a landlord is understanding and complying with the legal requirements surrounding Houses in Multiple Occupations (HMOs). Obtaining the appropriate HMO licence is essential if you are a landlord considering renting out a property to multiple tenants.
This blog will cover everything landlords need to know about HMO licensing to ensure a smooth and lawful rental process.
What is an HMO?
A House in Multiple Occupation (HMO) is a term commonly used in the context of rental properties and refers to residential properties that are let out to three or more tenants who are not from the same household. These properties typically share certain essential facilities, such as a kitchen, bathroom, or toilet, among the tenants. HMOs have gained popularity in recent years due to increasing housing costs, changing demographics, and the desire for more affordable accommodation options.
HMO Characteristics
Multiple Tenants, Separate Households
The defining characteristic of an HMO is that it accommodates multiple unrelated tenants who do not share familial ties. Each tenant usually has their tenancy agreement delineating their private living space within the larger HMO property.
Shared Facilities
One of the main distinctions of an HMO from other rental properties is the shared use of certain essential facilities. While individual tenants have private bedrooms, they commonly share communal spaces like the kitchen, bathroom, or toilet. This shared arrangement can foster a sense of community among the tenants but also requires careful management and maintenance.
Size and Layout
HMOs come in various shapes and sizes, from large houses converted into multiple rooms to purpose-built properties designed to accommodate several tenants. They can be converted terraced houses, detached homes, converted flats, or even larger buildings adapted to house multiple occupants.
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Types of HMOs
Large HMOs
These properties have at least five tenants forming two or more separate households. Additionally, large HMOs must meet a three-storey threshold, including basements and attics. Large HMOs typically require a mandatory licence from the local housing authority.
Additional and Selective Licensing HMOs
In some areas, local authorities have introduced additional licensing or selective licensing schemes, which may require an HMO licence for properties with fewer occupants or in specific neighbourhoods, regardless of the standard national criteria. This is to address local housing concerns and improve management standards.
Purpose-Built HMOs
These are properties intentionally designed and built to function as HMOs, offering individual rooms or self-contained units with shared communal areas. Purpose-built HMOs are becoming more prevalent due to their efficiency in catering to the demand for shared accommodation.
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When is an HMO licence required?
Understanding the circumstances for HMO licence requirements is paramount for landlords seeking to rent their properties to multiple tenants. The licensing requirement is critical to ensuring compliance with the law and the safety and well-being of the occupants. Let’s delve deeper into the scenarios that mandate an HMO licence and explore the nuances of each.
Occupancy by Five or More Tenants from Two or More Households:
Typically, an HMO licence becomes necessary when a property is occupied by five or more tenants who form two or more separate households. In this context, home refers to individuals who are either related by blood or marriage or live together as part of the same family unit. As soon as the number of tenants and households surpasses the specified threshold, the property is considered an HMO, and the landlord must apply for a license.
Three or More Storeys High, Including Basements and Attics:
An additional condition for requiring an HMO licence is the vertical aspect of the property. Suppose the property is at least three storeys high, including basements and attics, and is occupied by the defined number of tenants from multiple households. In that case, it falls under the HMO licensing criteria. The number of storeys refers to levels intended for residential use, and a mezzanine floor might also count as an additional storey.
Consequences of Operating Without an HMO Licence
Operating an HMO without the required licence is a serious offence and can lead to severe consequences. Penalties for non-compliance may include hefty fines, prosecution, and even potential imprisonment, depending on the severity of the violation. Moreover, landlords operating an unlicensed HMO may be forced to pay back rent to the tenants and need help serving eviction notices. These consequences highlight the significance of staying informed about HMO licensing requirements and fulfilling them diligently.
Applying for an HMO licence
Applying for a House in Multiple Occupation (HMO) licence is a vital process that landlords must navigate diligently to comply with legal requirements and ensure the safety and well-being of their tenants. Obtaining the necessary consent involves steps and considerations that may vary depending on the local regulations and the specific property. In this comprehensive guide, we will walk landlords through the process of applying for an HMO licence to streamline their application and achieve successful compliance.
- Check HMO Licensing Requirements
- Identify Whether Your Property is an HMO
- Contact Your Local Housing Authority
- Complete the Application Form
- Submit Supporting Documents
- Pay the Application Fee
- HMO Inspection
- Await the License Decision
- License Renewal
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