HMO Licensing Rules: A Landlord’s Guide

Shilpa Mathuradas

If you let a property to a group of sharers, the question of whether it needs a licence is rarely as simple as counting heads. The statutory definition of a house in multiple occupation is broader than most landlords expect, and a property can fall inside it without anyone intending to run an HMO.

Getting it wrong is expensive. Letting a licensable HMO without a licence is a criminal offence, and the financial consequences increased sharply on 1 May 2026 when the Renters’ Rights Act 2025 came into force.

This guide explains which properties need a mandatory licence, the conditions attached to one, how long it lasts, and what a local authority or tenant can do if you let without one.

What counts as a house in multiple occupation?

A property is an HMO if it meets one of three tests set out in section 254 of the Housing Act 2004. The tests overlap, and it is enough to satisfy any one of them.

The standard test

This applies to a building, or part of a building, made up of living accommodation that is not a self-contained flat. The occupiers must live there as their only or main residence, form more than one household, and at least one of them must pay rent.

The defining feature is shared amenities. The test is met where the occupiers share a toilet, personal washing facilities or cooking facilities, or where the accommodation lacks those facilities altogether.

The self-contained flat test

A single self-contained flat can itself be an HMO. The same conditions as the standard test apply, so a flat occupied by several unrelated sharers who share the kitchen or bathroom within that flat can qualify.

The converted building test

This covers a building converted after it was originally built, containing units that are not self-contained flats. Occupiers must live there as their main residence and at least one must pay rent.

Note the difference. The converted building test does not require shared or missing amenities. A conversion can therefore be an HMO even where each occupier has their own facilities, which catches a good deal of older London housing stock that was divided up decades ago.

When does an HMO need a mandatory licence?

Not every HMO needs a licence. Mandatory licensing applies to the description prescribed by the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018.

An HMO must be licensed where it:

• is occupied by five or more persons
• is occupied by persons living in two or more separate households, and
• meets the standard test, the self-contained flat test or the converted building test

There is no storey requirement. Before October 2018 mandatory licensing reached only HMOs of three or more storeys, which allowed smaller and single storey properties to sit outside the scheme. That threshold was removed, so a two storey house let to five sharers is licensable in the same way as a large converted building.

The purpose-built flat exception

There is one carve-out worth knowing. A purpose-built flat situated in a block comprising three or more self-contained flats falls outside the prescribed description. A flat in a purpose-built block of that size therefore does not require a mandatory licence, even where it is shared by five or more people from separate households.

The exception is narrow. It turns on the flat being purpose-built rather than converted, and on the size of the block. A converted flat in the same street will usually be treated differently.

What about smaller properties?

A property with three or four occupiers is often still an HMO under section 254, even though it sits outside mandatory licensing.

Local authorities can extend licensing to those smaller properties through additional licensing, and can apply selective licensing to all privately rented homes in a designated area regardless of whether they are HMOs. Schemes vary between boroughs, run for fixed periods, and are renewed or replaced at different times.

The practical consequence is that a landlord with a portfolio across several boroughs can hold properties subject to different regimes. Always check the position with the local housing authority for the area the property sits in, and check again when a scheme is due to be renewed.

What conditions apply to a mandatory licence?

Every mandatory licence carries conditions set by the Licensing of Houses in Multiple Occupation (Mandatory Conditions of Tenancies) (England) Regulations 2018. The room size rules are the ones landlords most often fall foul of.

• A room used as sleeping accommodation by one person aged over 10 must be at least 6.51m²
• A room used as sleeping accommodation by two persons aged over 10 must be at least 10.22m²
• A room used as sleeping accommodation by one person aged under 10 must be at least 4.64m²
• A room of less than 4.64m² cannot be used as sleeping accommodation at all
• When calculating usable floor area, any part of a room where the ceiling height is below 1.5m is left out of account

The licence must also specify which rooms may be used for sleeping and how many people may occupy each of them. Separate conditions cover the provision of suitable refuse storage and disposal facilities.

Measure before you let. A room that is large enough on a floor plan can fall below the threshold once sloping ceilings are excluded, and loft rooms are a common problem.

How long does an HMO licence last?

A licence lasts for a maximum of five years and must be renewed before it expires. A licence is granted for the specific property and the specific licence holder, so it does not simply pass to a buyer on a sale.

The licence holder, or the manager named on it, must satisfy the local authority that they are a fit and proper person.

What happens if you let an unlicensed HMO?

The consequences changed materially on 1 May 2026. Guidance published before that date understates them, so treat older articles with caution.

Criminal prosecution

Having control of or managing a licensable HMO without a licence is an offence under section 72 of the Housing Act 2004. Conviction carries an unlimited fine.

Civil penalties

A local housing authority can impose a financial penalty as an alternative to prosecution. The maximum was increased to £40,000 with effect from 1 May 2026 by regulations made under section 249A of the Housing Act 2004. Many published guides still quote the previous £30,000 figure.

Rent repayment orders

A tenant or the local authority can apply to the First-tier Tribunal for a rent repayment order requiring the landlord to repay rent already paid.

The Renters’ Rights Act 2025 doubled the exposure. From 1 May 2026 an order can cover up to two years of rent rather than twelve months, and a tenant has two years from the date of the offence in which to apply. On a London HMO let at several thousand pounds a month, that is a substantial sum.

The change landlords most often miss

Until 1 May 2026, section 75 of the Housing Act 2004 prevented a landlord from serving a section 21 notice while an HMO remained unlicensed. That provision was repealed by the Renters’ Rights Act 2025.

This is not the relief it might appear. Section 21 itself has been abolished, so possession now runs through section 8 of the Housing Act 1988 and its statutory grounds. The licensing consequence has simply moved: the pressure now sits in the financial penalties and rent repayment orders above rather than in a block on possession. For the wider picture, see our guide to evicting a tenant under the new regime.

How we can help

Our property litigation solicitors advise landlords, tenants and managing agents on HMO licensing, including whether a property falls within the statutory definition, applications and conditions, and defending prosecutions, civil penalties and rent repayment order applications.

We also advise on the wider consequences of the Renters’ Rights Act 2025 for landlord and tenant relationships, including possession, breach of a tenancy agreement and disrepair.

Call us on 020 7485 8811 or fill in the contact form below.