HMO licence types and conditions

The Housing Act 2004 requires mandatory licensing of certain houses in multiple occupation (HMOs).

Mandatory licensing is required where the HMO is occupied by five or more persons living in two or more separate households. Children of any age contribute to the number of occupants.[1]

Mandatory licensing includes HMOs that meet the:

• standard test

• converted building test

• self-contained flat test (unless it is a purpose built flat within a block comprising three self-contained flats or more)

Where a building (or part of a building) does not meet one of the above tests but is subject to an HMO declaration, it is not subject to mandatory licensing.

Before 30 September 2018 only HMOs comprising three or more stories were subject to mandatory licensing.[2] Where a property was already subject to additional or selective licensing before 30 September 2018, this remains valid until the end of the licence.[3]

Exemptions

Some buildings that meet the definition of an HMO are exempt from the licensing provisions and management regulations.

There are also temporary exceptions to the mandatory licensing regime.

The Housing Act 2004 also provides for licensing to be extended by a local authority to include HMOs not covered by mandatory licensing.

For example, a local authority could extend licensing to include all HMOs in a specific area, or the whole district.

Additional licensing can be introduced where the local authority believes that a significant proportion of HMOs are poorly managed and giving rise to problems for residents or the general public.[4] The use of additional licensing has to be consistent with the local authority's housing strategy and should be co-ordinated with the authority's approach on homelessness, empty properties and antisocial behaviour.[5]

The local authority must consult those who are likely to be affected. This includes people who live, work or operate businesses in adjoining local authority areas where they will be affected.[6]

Decisions to designate an area as subject to additional licensing must be approved by the Secretary of State, unless they fall under general approval.[7] A general approval was issued in 2010 to enable local authorities to make such designations without the Government's approval, provided there is a minimum 10-week consultation period.[8] A general listening and engagement exercise does not constitute consultation for this purpose. The 10-week period does not commence until the local authority produces a draft proposal identifying what is to be designated and its consequences.[9]

Additional licensing can come into force no earlier than three months after the designation has been approved or it falls under the general approval.[10] It lasts for as long as set out in the designation, up to a maximum of five years, and its operation must be reviewed from time to time.[11] The local authority can revoke the designation at any time, and must publish notice of this decision.

The local authority attaches conditions to a HMO licence. Breach of these conditions can be an offence.[12] The conditions are similar whether imposed as part of a mandatory or an additional licensing scheme.[13]

The conditions are to ensure that HMOs are of the appropriate standard and fit for purpose given the particular number of households or persons in occupation, address anti-social behaviour, and prevent overcrowding.

Local authorities should try to deal with hazards in HMOs by taking action under Housing Health and Safety Rating System (HHSRS) rather than by applying licence conditions.

Where a hazard could be mitigated or averted by provision of equipment, local authorities are not prevented from imposing licence conditions requiring its installation, even where action under HHSRS could achieve the same result.[14]

The following conditions must be attached to all HMO licences:[15]

• a gas safety certificate must be presented annually to the authority if there is a gas supply

• electrical appliances and furniture supplied by the landlord must be maintained in a safe condition

• smoke alarms must be provided for each storey of the property containing living accommodation and kept in working order[16])

• the landlord must provide the authority, on demand, with declaration as to the safety of electrical appliances and furniture in the property and the condition and positioning of smoke and carbon monoxide alarms[17]

• the landlord must provide each occupant with a written statement of the terms of occupancy

For licenses granted after 1 October 2022, a carbon monoxide alarm must be installed in every room used as living accommodation in which there is a fixed combustion appliance other than a gas cooker, and kept in working order.[18] For licences granted before this date, carbon monoxide alarms were required to be installed in rooms with a solid fuel burning combustion appliance.

The license holder must also:[19]

• ensure that every electrical installation in the house is in proper working order and safe for continued use

• supply the local authority with a declaration confirming the safety of the electrical installation if the authority requests one

For HMO licences granted on or after 1 October 2018, minimum size requirements should be included for all rooms used as 'sleeping accommodation'.[20] A room is used as sleeping accommodation if it is 'normally used as a bedroom, whether or not it is also used for other purposes'[21]

The particular minimum sizes specified in the licence are a matter for the local authority to decide. However, they cannot be smaller than:[22]

• 6.51 square metres for a room used by one person aged 10 or over

• 10.22 square metres for a room used by two persons aged 10 years or over

• 4.64 square metres for a room used by one person aged under 10 years

There should also be conditions that the licence holder ensure that no room is used by more than number of persons specified in the licence and notifies the authority of any rooms smaller than 4.64 square metres.[23]

Where the local authority has a scheme for storing and disposal of household waste generated by HMOs, there should be a condition requiring the licence holder to comply with that scheme.[24] Such a scheme might state, for example, that there must be a communal area for bins or that tenancy agreements should include requirements that tenants dispose of rubbish properly.

Where a landlord applies for an HMO licence after 1 October 2018 and it does not meet the room size conditions, they must be given a period of up to 18 months to comply with them – the exact length is a decision for the authority.[25] This is likely to mean making structural alterations or evicting tenants so that the size conditions are met. During this period, the licence cannot be revoked, no offence will be committed and no financial penalty can be imposed in respect of the breach.[26]

Local authorities can add discretionary conditions that relate to the management, use and occupation of the house, and its condition and contents.

Examples of possible discretionary conditions include requiring:[27]

• steps to be taken to prevent or reduce antisocial behaviour by occupiers or visitors

• facilities and equipment to be in good working order and meet the prescribed standards in section 65 Housing Act 2004 about the suitability of the house (for example, requiring adequate fire precautionary, heating, washing and kitchen facilities)[28]

• any repairs or works to be completed within a particular time

• the licence holder or manager to attend training courses on any code of practice approved under section 233 Housing Act 2004

Other conditions may restrict or prohibit the use of parts of the house. They may also restrict occupation to a particular class of occupiers, where the mode of occupation by that class has a bearing on the conditions required to make the property suitable.

This could include a condition restricting occupation to full-time students. However the Supreme Court held that a licence condition restricting occupation of a bedroom to only part of a year was irrational and therefore unenforceable.[29]

Authorities must take all reasonable steps to secure that applications are made to them for HMO licences where appropriate and should be actively seeking applications for HMOs meeting the mandatory licensing criteria.[30]

Local authorities have the power to set fees and the appropriate fee should accompany the application.[31] The fee that can be charged for applying for or renewing a licence is limited to the cost of processing the application. A fee which was based on the cost of running the scheme as a whole, including enforcement, was held to be unlawful.[32]

Initial and renewal applications for licences must contain information specified by regulations, but there are no prescribed forms.[33]

Where the application is submitted by a person other than the proposed licence holder (such as a managing agent), the applicant should serve a notice (or a copy of the application) on all 'relevant persons' that they have submitted the application. Relevant persons include the landlord, a leaseholder, a mortgagee, the proposed licence holder, and the proposed managing agent, but exclude a tenant with an unexpired fixed term of three years or fewer.

Initial applications

An application for a licence submitted for the first time must include the category of HMO and details of other licensed properties with the same license holder.

The licence application must also contain information on HMO, including the number of stories and rooms, number of households and people and details about certain safety precautions including fires escapes.[34]

When applying for a licence for a 'section 257 HMO', the application must include the following information about the HMO:[35]

• number of storeys and the levels they are on

• number of self contained flats, including how many of these self contained flats are subject to a lease of over 21 years, and

• in relation to the flats that are not owner-occupied, details about certain safety precautions, including fire safety, gas safety, and safety of any furniture provided

Renewal applications

Application for renewal of a licence submitted on or after 10 September 2012, must include only:[36]

• statement explaining the need to inform in writing all those with an interest in the property and details of all those who have been informed of the application

• contact details of applicant, proposed licence holder, manager, person having control and any other person who has agreed to be bound by the conditions in the licence, and

• address of property

Information about the licence holder

All applications must also include information about any person involved in the management of the property. This must include information about any:

• relevant unspent convictions or findings with respect to unlawful discrimination and details of any contravention of any enactment dealing with housing, public health or environmental health that led to an adverse judgment

• property that have been subject to a control order in the last five years or that has been subject to enforcement under Part 1 Housing Act 2004

• properties for which the applicant has a licence refused or revoked

• property that has been subject to an interim, Special Interim or Final Management Order

It is an offence knowingly or recklessly to provide misleading or false information.

In deciding whether to grant or refuse an application the local authority must assess the suitability of the property to serve as an HMO and the suitability of the manager and licence holder of the property.

The local authority must be satisfied that the:[37]

• house is reasonably suitable for occupation by no more than the maximum number in the application (or the number determined by the local authority) or can be made suitable

• proposed licence holder is a 'fit and proper person' and the most appropriate person to be granted a licence

• proposed manager is the person having control, or is an agent or employee of the person having control and is a 'fit and proper person'

• proposed management arrangements are satisfactory

Suitability of the property

Before granting a licence, the local authority must be satisfied that the property meets the prescribed standards to be suitable for occupation by the proposed number of people (either the number on the application or a number specified by the local authority), or that the property can be made suitable by the imposition of certain conditions in the licence.[38]

The prescribed standards relate to the:[39]

• number and suitability of the bathing and toilet facilities (where shared) and the provision of wash hand basins in individual rooms

• suitability of the kitchen facilities for the number of people sharing them, and

• provision of fire safety facilities and equipment

The local authority has the power to decide that a HMO it is not reasonably suitable for the proposed number of occupiers even if it meets the prescribed standards. It can issue guidance as to the standards it will normally expect to be met, for example in relation to bedroom size.

The local authority cannot impose additional mandatory standards which would fetter its discretion when considering the merits of a particular application.[40]

Suitability of section 257 HMOs

For section 257 HMOs, the local authority must satisfied that the common parts of the HMO or any flat within the HMO (other than a flat let on a long lease) meet the prescribed standards.[41] The standards in the regulations relate to the same amenities as for standard HMOs, but the facilities must be adequate for exclusive use by an individual household rather than for shared use.[42]

If a house becomes a section 257 HMO as a result of conversion works carried out on the house after 1 October 2007, any flat within that HMO to which a long lease was granted after that date is treated by the local authority as having no such lease unless the local authority is satisfied that either the:[43]

• appropriate building standards have been met in relation to that flat

• lease has been granted by a person other than the freeholder or head lessor of the whole of the HMO

Suitability of persons (fit and proper persons)

In deciding whether a person is 'fit and proper' to be a licence holder or the manager of an HMO, the local authority must have regard to any evidence available that the person has:[44]

• committed any offences involving fraud, other dishonesty, violence, drugs, or any sexual offence that attracts notification requirements

• acted other than in accordance with any code of practice approved under section 233 of Housing Act 2004

• practised unlawful discrimination e.g. on grounds of sex, colour, race, ethnic or national origin or disability

• contravened any provision under housing or landlord and tenant law

• had a banning order made against them

To be taken into account, a wrongdoing must be relevant to the person's fitness to hold a licence and/or manage the property in question. When considering criminal offences, the local authority must only have regard to unspent convictions.

When dealing with an appeal against a local authority decision on the fitness of a landlord or manager to hold a licence for an HMO, the First-tier Tribunal must consider whether they were a 'fit and proper person' on the date on which the authority's decision was made, not whether they were fit and proper on the date of the appeal.[45]

Evidence can include that any person associated, or formerly associated, with the proposed licence holder or manager, has done any of the things listed above and it appears to the local authority that this is relevant to the question whether the proposed licence holder, or manager, is a fit and proper person.

The local authority must assume that unless there is evidence to the contrary that the person having control of the house is a more appropriate person to be the licence holder that a person without control of it.[46]

In relation to a section 257 HMO, when deciding if the proposed license holder is a 'fit and proper person' to be the license holder, the local authority must consider if that person has control of the HMO and the extent to which he has control over it. [47]

Suitability of management agreements

In deciding whether there are satisfactory management arrangements, the local authority must have regard to whether:[48]

• any person to be involved in the management of the HMO is sufficiently competent

• any person to be involved in the management (in addition to the manager) is a 'fit and proper person'

• management structures and funding arrangements are suitable

Applications should be processed within a reasonable amount of time. [49] The law specifies no fixed time limit, but it is recommended that straightforward applications should be dealt with between four and six weeks of receipt.

Before granting a licence the local authority must serve a notice, with a copy of the proposed licence, on the applicant and every relevant person and consider any representations made in the consultation period, which must be at least 14 days.[50] Where after considering the representations, the local authority modifies the proposed licence substantially, there is a further seven-day consultation period.

Similar notification provisions apply if it is proposed to refuse the application.

A licence comes into force on the specified date, relates to one HMO only and lasts for such period as the local authority determines but no longer than five years.[51]

An HMO licence is non-transferable. This means that if the property is sold, the new owner cannot rely on an existing licence to satisfy the licensing requirements.[52] If the new owner 'duly' applies for a licence, it may provide them with a defence to criminal charges.[53]

Appeals

Appeals against the decision should be made to the First-tier Tribunal (Property Chamber) within 28 days of the date of the notice of the decision.[54]

The Court of Appeal clarified the powers of the First-tier Tribunal's jurisdiction when dealing with an appeal against a local authority decision on the fitness of a landlord or manager to hold a licence for an HMO. The Court held that the tribunal must consider whether a landlord or manager was a 'fit and proper person' on the date on which the authority's decision was made, not whether they were fit and proper on the date of the appeal. It also held that an event occurred after the authority's licensing decision would not be relevant to the assessment of whether that decision was right or wrong at that time.[55]