HMO rules for landlords

Renting out a house in multiple occupation (HMO) comes with more rules than a standard buy to let. You need the right licence, the right safety checks, and the right insurance. Get any of these wrong, and you can face large fines.

This guide covers the rules and what you need to have in place. This is general guidance only, and rules can vary by local council. Always check with your local authority and speak to a qualified adviser.

What is an HMO?

An HMO is a property rented by three or more people from two or more separate households. They share at least one facility, such as a kitchen or bathroom. Common examples are student houses and bedsit properties.

A household is a couple, a family, or one person living alone. Three friends sharing a house are three separate households. A family of three counts as one household.

You can read more in our specialist lending terms glossary.

Pros and cons of HMOs

Pros of HMOs

• Higher rental yield. You charge rent per room, not per property. This usually means more income than a single tenancy let.
• Less void risk. If one tenant leaves, the others still pay rent. You’re less exposed to a total loss of income.
• Strong demand. HMOs are popular in cities and university towns where shared living is the norm.

Cons of HMOs

• More rules. HMOs are more tightly regulated than standard lets. You must meet more standards and keep more records.
• Higher costs. Licensing fees, insurance, and upkeep costs are all higher for HMOs.
• More management. More tenants mean more queries, more repairs, and more admin.

What are the HMO licensing rules?

There are two types of HMO licence. Which one you need depends on your property’s size and your local council.

1. Mandatory licences

You must have a mandatory HMO licence if your property is occupied by five or more people from two or more households and has at least three storeys.

This is a national rule. It applies across England. To get one, you must apply to your local council. Licences usually last five years.

Running an HMO without a licence when one is required can result in a fine of up to £30,000. You can also be required to repay up to 12 months’ rent to tenants.

2. Additional licences

Some councils require a licence for smaller HMOs too. This is called an additional licensing scheme. It’s set locally, not nationally.

Your council may require you to have a licence if you rent to three or four people. Always check with your local authority to find out what applies in your area.

HMO rules and requirements

As an HMO landlord, you must meet a range of safety and space standards. Here’s what each one covers.

HMO minimum room sizes

Since October 2018, all licensed HMOs in England must meet minimum room sizes. Rooms that are too small can’t be used as sleeping rooms.

HMO kitchen requirements

Your HMO must have enough kitchen space and facilities for the number of occupants. Your local council will set out what’s required. As a guide, most councils expect one cooker and adequate workspace per four to five tenants.

Kitchens must be in good repair. They must have hot and cold running water, a way to dispose of waste, and enough storage.

HMO amenities

There must be enough bathrooms and toilets for the number of tenants. Again, your local council sets the exact ratio. Most guidance suggests one bathroom per five occupants as a minimum.

You must also keep all shared areas clean and in good repair. This includes hallways, stairwells, and communal rooms.

HMO fire safety regulations

Fire safety is one of the most important areas for HMO landlords. You must have:

• Working smoke alarms on every floor
• A carbon monoxide alarm in any room with a gas appliance
• Fire doors on bedrooms and kitchen doors in larger HMOs
• Clear and safe escape routes
• A fire risk assessment carried out and kept on record

Your local council may have more detailed requirements. In larger HMOs, a full fire detection and alarm system may be needed.

HMO electrical safety regulations

All HMOs must have an Electrical Installation Condition Report (EICR). This checks that the wiring and sockets are safe. It must be carried out by a qualified electrician.

The EICR must be renewed every five years. You must give a copy to tenants and to your local council if they ask for one.

Any faults found must be fixed within 28 days, or sooner if the report states the issue is urgent.

HMO emergency lighting requirements

Larger HMOs may need emergency lighting in corridors and stairwells. Such lighting comes on when the main power fails, helping tenants find their way out safely.

Check with your local council if this applies to your property. It’s more commonly required in larger buildings or properties with converted layouts.

HMO gas safety regulations

If your HMO has gas, you must have an annual gas safety check. This must be done by a Gas Safe registered engineer.

You must give each tenant a copy of the gas safety certificate within 28 days of the check. You must keep records for at least two years.

Mortgages for HMO properties

You cannot use a standard buy to let mortgage for an HMO. Most buy to let lenders only cover properties with one tenancy. An HMO has multiple tenants and needs a specialist product.

HMO mortgages are assessed differently. Lenders look at the rental income from all rooms, not just one tenancy. They also check whether the property is licensed and meets the required standards.

Fewer lenders offer HMO mortgages than standard buy to let products. Rates can also be higher. Working with specialist mortgage brokers is the most effective way to find the right lender for your situation.

What HMO insurance do I need?

Standard landlord insurance doesn’t cover HMOs. You need a specialist policy built for this type of property.

HMO landlord insurance typically covers:

• Buildings insurance. Covers the structure of the property against fire, flood, and other damage.
• Contents insurance. Covers furniture, white goods, and other items you supply to tenants.
• Public liability. Covers you if a tenant or visitor is hurt on the property and makes a claim against you.
• Loss of rent. Covers your rental income if the property becomes uninhabitable due to damage.

Some policies also cover legal expenses and malicious damage by tenants. Shop around and compare what each policy includes. Make sure the insurer knows the property is an HMO or the policy may not be valid.

Final thoughts

HMOs can be profitable. But they come with real responsibilities. Licensing, safety checks, minimum standards, and the right insurance are all things you must get right from day one.

If you’re thinking about buying an HMO or need to remortgage one, Pepper Money works with specialist brokers who understand this market. You can find a broker through us today.