Do I need an HMO licence for 4 tenants?

Your rental property might be bringing in bountiful profit but does your HMO need a licence? 

You might have landed on a sweet spot location for students or even found the ideal borough in London that has reliable tenants. However, you may have overlooked when the right time is to get your HMO licence.

We’re here to make sure licensing doesn’t trip you up once your rental property is up and running. 

What is a HMO?

Firstly let’s understand what a HMO is. A HMO, or ‘home of multiple occupancy’ means there are tenants who are not from the same family or ‘household’ living in the property. 

The fundamentals of knowing if you are running a HMO can be categorised by checking the below points.

A small HMO can be defined as: 

1. Having at least three people living there forming more than one household or family

1. The tenants, who are unrelated, share the toilet, kitchen and bathroom facilities with one another 

A large HMO can be defined by: 

1. Having at least five tenants living there forming more than one household 

1. Tenants sharing the facilities as stated above

Who is considered a household or family member? 

A ‘household’ or ‘family member’ can be defined by the list below and will help you identify who you have living at the property and if you need a licence. 

• Couples who are married or living together – including people in same-sex relationships
• Relatives or half-relatives, for example, grandparents, aunts, uncles and siblings
• Step-parents and step-children

When do I need a licence? 

You will need to get a licence for your HMO when the number of tenants is over five and they are not from the same household. You will be able to obtain a licence from your local council. 

What do the local council look for before they give you a HMO licence?

Your local council will come and inspect the property to make sure it adheres to standards deemed safe. Furthermore, the inspection will be looking for potential illegal activity such as trafficking, illegal immigrants and prostitution. As extreme as this may seem, large HMOs that are unlicensed are commonly found hosting such activity. 

The representative from the local council will also be looking at the fairness of how rent is established. They will be checking the amount of money asked for is deemed fair as set out by the latest Rental Reform 2022. They will make sure either a fair assured shorthold tenancy agreement is in place for the tenants. In addition, any deposit money must be held in a government protection scheme. 

Furthermore, they will make sure the landlord has all the appropriate certificates and fire safety checks. 

If you’d like to understand what checks and certificates you’ll need as a landlord, visit our Advice Centre and get in the know. 

Your responsibility as a landlord in a HMO

An experienced landlord may know their way around the repairs and safety of their rental property. But if you’re starting out, these are the things you should be keeping a close eye on. 

Checking the safety of your property 

Make sure you are fixing faulty electrical wires and problems with heating or pipes with immediacy. You should also be checking:

• Your tenants have enough rubbish bins
• The property is not overcrowded
• Electrics are checked every five years
• Gas safety checks are carried out annually
• Shared areas and facilities are clean and in good repair
• Fire safety measures are in place, including working smoke alarms and carbon monoxide alarms
• There are enough facilities for cooking and washing. You can PAT test your appliances for extra reassurance.

What are the minimum bedroom sizes in a HMO?

Making sure you’re not over-ambitious about a space is essential. If your box room is better suited to a study, keep it a study. Health and safety should always reign over profit.

Here are some hand measurements for you to check room sizes. These measurements may vary depending on your local council, so do check your local council’s website. Shelter advises the following:

• 4.64 square metres for a child under 10 years old
• 6.51 square metres for a person aged 10 or over
• 10.22 square metres for 2 people aged 10 or over

Who pays for Council tax in a HMO?

You might be eligible to pay for the council tax on your HMO if you have purpose-built the property for more than one household or if it’s lived in by two or more tenants or licensees. Again, make sure you check with your local council as this can vary.

Making sure your asset is protected with multiple occupants will certainly put your mind at ease. From landlord contents insurance to landlord building insurance, make sure you have a landlord insurance policy that covers you securely. 

Get in touch with CIA today and we’ll be happy to get your policy sorted.