HMO licencing and planning can be complicated, especially if you are unfamiliar with the correct processes. We discuss the basics of what your property needs to be classified as an HMO and how to obtain the correct licencing.
A house in multiple occupation (HMO) is classed as a property housing three or more unrelated tenants sharing amenities. Due to this ‘sharing nature’, landlords will have to consider more factors before investing in this type of property than perhaps for a standard buy to let.
Many lenders will view HMOs as a more complex property type, meaning the vast majority will expect to see landlords with at least one year’s experience in the ‘vanilla’ buy to let market before purchasing this property type. Understanding what HMOs are and how to finance them properly is crucial to a successful investment, as there are many benefits to be had from these properties. However, it’s important to note that with these benefits comes more to be aware of, such as the correct licencing for your property.
What licence do I need for an HMO?
There are two different types of licences that you may need for an HMO, a mandatory licence and an additional licence.
A mandatory licence is imperative for any property with five or more unrelated tenants, also known as a ‘large HMO’.
On the other hand, an additional licence covers properties occupied by three or more people.
The licence you will need will depend on the property and its local authority, so you must speak to them in advance to ensure that you go about your investment correctly. You will need a separate licence for each HMO you run. If you rent out an unlicensed HMO where a licence is required, you could face an unlimited fine.
How will my HMO property be assessed?
In order to obtain your HMO licence, certain aspects of the property will be taken into consideration. These include the property’s overall condition and if it complies with regulations, room sizes, storage facilities, and cooking and washing facilities.
When looking at room sizes, the average minimum room size for a single-occupant room is 6.52 square meters and 10.22 sq. meters for double occupancy.
There will also need to be at least one sink for up to five people and two for more than six occupants, and each tenant will need access to their own cupboard for personal belongings. These are a few of the things you are responsible for as the landlord.
A ‘fit and proper person test’ may also be carried out for you as the landlord applying for the HMO licence, and it is usually preferred then that the licence is in the individual’s name.
Will I need planning permission to licence my HMO?
Your HMO may also need planning permission, depending on the classification of the property.
A Class C3 property is a residential property housing an individual, a couple or a family. A Class C4 property is a shared dwelling occupied by three-six unrelated individuals sharing amenities.
These two classifications can typically be easily interchanged between a residential and HMO property without too much hassle and is usually a permitted development right. However, you will need to check this with the local authority to ensure that you have the correct planning permission in place.
‘Sui Generis’ is a term used to categorise those buildings that do not fit into a specific use for planning permission. For example, a seven-bedroom HMO is not the size of a standard family home, so it is not easily converted back to a residential property with a new change of use. Check what planning permission you need with your local authority before looking into any change of use.
Will the Local Authority accept my application for an HMO licence?
It’s important to note that there is an Article 4 Direction that the council can use in order to restrict permitted development rights. This acts as a way for the council to control the local area and the level of HMOs in relation to residential property. They may want, for example, to lower the amount of student accommodation in the area, and deny the request to convert a standard home into an HMO. As such, even if the property has permitted development rights, if it’s located within an article 4 area, you can still be turned down to change the use of your property.
Another thing to note is if you have a Class C4 HMO with the appropriate licence in place rented out to your tenants for years, and decide to rent the property out to a family as a standard buy to let, then the property retains its HMO licence if it’s still valid. However, the property loses its planning use straight away, so you will need to apply for this again if you decide to convert the property back to an HMO.
To summarise, there are a lot of factors you will need to consider when you are looking to invest in an HMO property. It’s crucial that you have the correct documents in place to protect you from fines and to ensure that you create a safe and reliable home for your tenants. If you don’t set up your HMO and its licence correctly, you run the risk of not being able to let out a property again.
Always check with the local council when making your property Investment decision to be sure you have the correct practices in place, and visit the Government website for confirmation.
Speak to an expert
For help with financing your next HMO investment, get in touch with our expert brokers on 0345 345 6788, or by submitting an enquiry here.
