Under the Housing Act 2004 a HMO is defined as a dwelling which is occupied by two or more un related tenants who are not members of the same family and do not live as a cohabiting couple.
By default three people making two or more households is a HMO. This includes a house that has been converted entirely into bedsits or other non-self contained accommodation, which is let with shared kitchen, bathroom or toilet facilities.
A building that was converted entirely into self contained flats which does not meet the standards of the 1991 building regulations and at least a third of the flats are let out is also classed as a HMO.
Mandatory licensing of a HMO is only required when the following criteria is relevant:
1. Three or more storeys
2. With 5 or more occupants
3. Comprising 2 or more households.
If your property is located above a shop or is an apartment that makes up three or more storeys then it is classed as a three-storey property. With a property that has been converted it is advisable to check the building regulations.
The Housing Act 2004 also implemented two further licensing schemes. These are Selective Licensing and Additional Licensing.
With Additional Licensing the individual Local Authority/Council may apply to Central Government to increase the scope of licensing. If granted this would be know as Additional Licensing.
An LA may decide to apply for Additional Licensing if the area they govern has specific housing conditions or uses that is determined to be causing social issues, over crowding or compromising tenants safety. For example if a LA had a high proportion of 2 storey standard dwellings occupied as HMO’s throughout the area they governed that were causing issue of some form they could apply for an Additional Licence that if granted would require landlords of all two storey properties with 3 or more unrelated occupants to apply for a HMO Licence.
An LA would apply for Selective Licensing to deal with very localised issues. For instance it could relate to specific roads or part of those roads. These powers will only be granted if there is a proven need for the additional powers to be given.
Before LA’s apply for either Additional or Selective Licensing they would have to consult with tenants and landlords and prove to Central Government that there is a case for such licensing.
Landlords who do not conform to the rules governing the safety and good management of their properties risk prosecution and a fine up to £20,000. Recent cases have also seen guilty landlords being ordered to repay rental income for the last year and be barred from holding a future license.
Demand for smaller letting units is growing due to inflation and the day-to-day cost of living increasing. It is imperative that as a landlord you are aware of the implications of letting your property as a HMO and if it requires licensing.