HMO Property Guide | Everything You Need to Know About Houses in Multiple Occupation
Are you considering becoming an HMO landlord? Houses in Multiple Occupation (HMOs) can be a highly rewarding investment strategy, offering stronger rental yields and a consistent income stream compared to traditional single-let properties. However, with these opportunities come added responsibilities, stricter legal requirements, and a greater need for careful management.
This guide will walk you through everything you need to know about HMOs, from what qualifies as one to the benefits and challenges of running an HMO, the licensing rules you’ll need to follow, and the financial aspects to consider before leaping. Whether you’re a first-time landlord exploring your options or an experienced investor looking to expand your portfolio, understanding how HMOs work is essential for long-term success.
By the end, you’ll have a clear picture of the opportunities and obligations that come with being an HMO landlord, helping you decide if this is the right path for your property journey.
What is an HMO?
An HMO (House in Multiple Occupation) is a property rented out by three or more people who are not from the same household (i.e. not a family) but share common facilities like the kitchen, bathroom, or living area.
HMO Criteria at a Glance
| HMO Requirement | Explanation |
|---|---|
| Number of tenants | At least 3 people living in the property |
| Household structure | Tenants from more than one household |
| Shared facilities | Kitchen, bathroom, or toilet shared |
| Large HMO | 5+ tenants + shared facilities + 3+ storeys (prior to 2018) |
| Mandatory licensing | Required if 5+ tenants share facilities, regardless of storeys (post-2018 rules) |
Why You Need an HMO Licence
If your property meets the HMO criteria, especially 5 or more tenants, you are legally required to obtain an HMO licence from your local council.
Benefits of Licensing:
Complies with housing law (avoids prosecution)
Increases tenant trust
Often adds value to the property
Required for legal operation
What Happens Without One?
| Offence | Penalty |
|---|---|
| Operating an unlicensed HMO | Unlimited fines |
| Breach of licence conditions | Up to £30,000 per offence |
| Rent repayment orders | Tenants can reclaim up to 12 months’ rent |
Licensing Process Explained
| Step | Details |
|---|---|
| 1. Application | Apply via your local council website |
| 2. Fees | Vary by council, often between £500 – £1,000+ |
| 3. Safety checks | Fire, gas, and electrical safety certificates required |
| 4. Fit and proper test | Council assesses landlord suitability |
| 5. Inspection | Property may be inspected for standards |
🔎 Note: Licences usually last for 5 years. Keep track of expiry dates and renew in advance.
HMO Fire Safety Requirements
Fire safety in HMOs is far more stringent than in standard buy-to-lets.
Key Fire Safety Measures:
| Requirement | Details |
|---|---|
| Fire doors | In every bedroom and kitchen |
| Fire alarms | Interlinked smoke alarms in all rooms + heat detectors in kitchens |
| Emergency lighting | Required in communal areas |
| Fire blankets/extinguishers | Recommended in kitchen |
| Clear escape routes | Must be accessible and unobstructed |
Other Legal Compliance Responsibilities
| Requirement | Details |
|---|---|
| Gas Safety Certificate | Annual requirement |
| Electrical Installation Condition Report (EICR) | Every 5 years |
| Portable Appliance Testing (PAT) | For any electrical appliances provided |
| EPC Rating | Minimum rating of E required |
| Tenancy Deposits | Must be protected in a government-approved scheme |
| Right to Rent Checks | Required by law |
HMO Property Standards
HMO properties must meet specific minimum space and amenity standards, which differ between councils. Check your local authority for exact rules.
Common National Minimum Standards:
| Room Type | Minimum Size |
|---|---|
| Single bedroom | 6.51 sqm |
| Double bedroom | 10.2 sqm |
| Communal kitchen | Dependent on number of tenants |
| Bathrooms | Ratio of 1 per 4 tenants (recommended) |
Council Tax & Utility Bills
In most HMOs, the landlord pays for council tax, utilities, and broadband, then sets an inclusive rent for tenants.
| Bill Type | Who Pays? |
|---|---|
| Council Tax | Usually landlord |
| Gas & Electric | Usually landlord |
| Broadband | Usually landlord |
| TV Licence | Landlord (if a communal TV is provided) |
HMO Myth Busters
| Myth | Truth |
|---|---|
| “You only need a licence if there are 5+ tenants.” | False. Some local councils require licences for 3+ tenants under Additional Licensing schemes. |
| “Only landlords with large properties need to worry.” | False. Even small properties with 3 unrelated tenants may fall under HMO rules. |
| “I can ignore council inspections.” | False. Councils can legally inspect your property and fine you for breaches. |
| “All HMOs are student lets.” | False. HMOs include young professionals, contractors, and other sharers. |
What to Watch Out For – Common Mistakes by HMO Landlords
Not applying for a licence in time
Inadequate fire safety precautions
Overcrowding rooms
Missing maintenance deadlines (e.g. gas certificates)
Not keeping proper records
Relying on assumptions over local council rules
Additional Types of HMO Licensing
| Licence Type | Description |
|---|---|
| Mandatory Licensing | Applies to HMOs with 5+ tenants |
| Additional Licensing | Council-defined for properties with 3+ tenants (check locally) |
| Selective Licensing | May apply to all rented properties in a specific area |
Checklist for HMO Landlords
✔ Apply for an HMO licence if required
✔ Ensure your property meets space and amenity standards
✔ Install appropriate fire safety measures
✔ Provide annual Gas Safety Certificate
✔ Get an EICR every 5 years
✔ Protect all tenant deposits
✔ Conduct Right to Rent checks
✔ Pay relevant bills (or clearly state who does)
✔ Maintain communal areas
✔ Keep records and stay compliant with your local authority
Managing an HMO can be highly profitable, but it comes with added complexity. Licensing, fire safety, legal compliance, and property standards are all non-negotiable. But with the right structure, it can offer consistent, long-term returns. Remember, it’s always advisable to speak with an experienced mortgage broker.
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