If you rent out your property to a group of unrelated tenants it is not the same as renting a property out to a family or a young couple.
If you’re letting out property to students or professionals who aren’t related to one another, the property may be classed as a house in multiple occupation (HMO).
In this case, you’ll need to comply with additional regulations and may need a licence from your local council. Failing to follow these regulations could mean substantial fines
What is an HMO?
An HMO is normally a property in which unrelated tenants share facilities such as a toilet, bathroom, hand basin or kitchen.
A property may be classed as an HMO if any of the following applies:
• Three or more unrelated tenants form more than one household
• Tenants have separate rental agreements
• The property is a bedsit/hostel
• Students live at the property
• The building was converted into self-contained flats and doesn’t meet 1991 Building Regulations.
Bear in mind, this list is not exhaustive. You must always check with your local council to see if your property counts as an HMO.
It is important to note that under Section 257 of the Housing Act 2004, a property may be classed as a HMO if it is part of a building that has been converted into self-contained flats and meets the following criteria:
• The building does not meet the standards required by the Buildings Regulations 1991.
• At least a third of flats are let out on short tenancies.
Before setting up an HMO
Before you create a HMO, it’s essential to ensure you’re fully aware of your responsibilities.
Contact the Environmental Health Department to check HMO regulations in your area. The Council should be able to tell you whether you’ll need a licence and provide you with details on how the property should be managed.
The Council may also put you in touch with a fire officer who can explain your obligations regarding fire safety.
Do you need a licence?
Whether you need a licence to operate an HMO depends on the type of property, how it is occupied and your Council’s specific rules.
According to current legislation, there are two types of HMO licensing – mandatory and additional.
Landlords who run certain types of property are required to apply for a mandatory HMO licence.
However, Councils also have the authority to impose additional requirements. Under this system, you may need to apply for a licence even if your property doesn’t meet the mandatory requirements.
You should contact your council to check for any additional licensing requirements in the area.
How licences work
HMO licences last for a maximum of five years and you must renew the licence before it runs out.
Before the Council grants a licence, it will probably want to inspect your property to make sure there are not any serious health and safety hazards.