HMO licence

An HMO licence is the formal permission granted by a local housing authority to operate a House in Multiple Occupation that meets the licensing threshold under the Housing Act 2004. A licence is personal to the named holder, specific to the property, and valid for a maximum of five years. It cannot be transferred to a new owner if the property is sold, the incoming landlord must apply for a new licence before letting commences.

A property only requires a licence if it meets the legal definition of an HMO, typically three or more people from two or more households sharing facilities such as a kitchen, bathroom, or toilet. Whether a licence is mandatory, subject to additional local licensing, or not required at all depends on the type of HMO and the policy of the local council.

Mandatory licensing

Mandatory HMO licensing applies nationally across England and Wales to any HMO occupied by five or more people forming two or more households where at least one tenant pays rent, as set out in the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018. The storey threshold that previously applied was removed on 1 October 2018, so a single-storey or two-storey property with five qualifying occupants requires a mandatory licence in the same way as a larger building. A separate licence is required for each individual HMO; one licence cannot cover multiple properties.

Additional licensing

Local authorities have the power under Part 2 of the Housing Act 2004 to introduce additional licensing schemes that extend licensing obligations to smaller HMOs, typically those with three or four occupants from two or more households, either across their whole area or within designated zones. Additional licensing is distinct from selective licensing, which applies to all private rented properties in a designated area regardless of whether they are HMOs. Whether your HMO with three or four tenants requires a licence depends entirely on whether your council operates an additional licensing scheme. Always check directly with the local housing authority before letting.

The fit and proper person test

Before granting a licence, the council must be satisfied that the proposed licence holder and any named manager are fit and proper persons. This means no unspent criminal convictions for fraud, violence, sexual offences, or unlawful discrimination, no previous breach of landlord laws or codes of practice, and no evidence of previous serious housing mismanagement. The test applies each time a licence is granted or renewed. A managing agent can hold the licence on a landlord's behalf, but the agent is also subject to the fit and proper test.

What a licence covers

Once granted, a licence sets out the maximum permitted number of occupants, confirms the named licence holder and manager, and attaches conditions covering fire safety standards, amenities, waste management, and property maintenance. Licence conditions for room sizes must comply with HMO minimum room size standards introduced under the 2018 Order. The council can also attach additional conditions specific to the property, for example, requiring remedial works or imposing restrictions on the use of certain rooms. Conditions can be appealed to the First-tier Tribunal (Property Chamber) if the landlord disagrees with them.

How much does an HMO licence cost?

Licence fees are set by individual councils and vary considerably across England and Wales, typically ranging from £500 to £1,500 for a five-year mandatory licence depending on the authority, the size of the property, and the number of occupants. Some councils offer discounts for landlords who hold accreditation from a recognised landlord body such as the NRLA or who have previously demonstrated compliance. The fee is non-refundable if the application is refused. Use the August HMO calculator to model licensing costs alongside other HMO running costs when assessing net yield.

Consequences of operating without a licence

Certain HMOs must be licensed by law (mandatory licensing) and councils can extend licensing to more HMOs in their area (additional licensing). To check whether a property at a specific postcode is subject to a licensing scheme, use the selective licensing checker or the broader postcode property checker.

Letting or managing a licensable HMO without a licence is a criminal offence under the Housing Act 2004. A conviction can result in an unlimited fine and a criminal record that will affect any future fit and proper person assessment. Local authorities can also impose a civil penalty of up to £30,000 per breach without prosecution. In addition, tenants may apply to the First-tier Tribunal for a rent repayment order of up to 24 months' rent paid during the unlicensed period, the maximum was doubled by the Renters' Rights Act 2025, which came into force on 1 May 2026. An unlicensed HMO can also complicate remortgaging and restrict a landlord's ability to use certain possession grounds.

From working with self-managing landlords across the UK, we find that licence renewal is one of the compliance tasks most likely to be missed, particularly where landlords manage more than one property across different local authority areas. August's compliance checklist includes HMO licence renewal reminders alongside gas safety, EICR, and fire risk assessment tracking, so nothing expires without notice.

For a full walkthrough of the application process, what councils assess, and how to prepare, see our mandatory HMO licensing guide.

Frequently asked questions

Do I need an HMO licence for 3 tenants? 

Not under the national mandatory scheme, which applies only where five or more people from two or more households share the property. However, many local councils operate additional licensing schemes that cover HMOs with three or four tenants. You must check with your local housing authority, as operating without a required additional licence carries the same penalties as operating without a mandatory one.

How long does an HMO licence last? 

A maximum of five years, as set by the Housing Act 2004. Councils can grant a shorter licence, sometimes as little as one year, where there are concerns about the property or the licence holder. A licence must be renewed before it expires; if it lapses, the landlord is immediately operating an unlicensed HMO and is liable to the penalties described above.

Can an HMO licence be transferred to a new owner? 

No. An HMO licence is personal to the named holder and cannot be transferred. If the property is sold or the licence holder changes, the incoming landlord must apply for a new licence. The new owner should apply as soon as the property is in their control; there is no grace period under the Housing Act 2004.

What is the difference between mandatory and additional HMO licensing? 

Mandatory licensing is a national requirement applying to all HMOs with five or more occupants from two or more households. Additional licensing is a discretionary local scheme that councils can introduce to cover smaller HMOs, typically those with three or four tenants, either across their whole area or in specific zones. Both are distinct from selective licensing, which applies to all private rented properties in designated areas regardless of size or HMO status.