A Landlords Guide to HMOs

Updated July 2023

Definition of HMO

Meanings

HMO stands for “House in Multiple Occupation”.

This is a legal and officially defined term, with the expression having precise meanings at both local and national government levels.

Do note though that there is some scope under legislation for the term to be interpreted differently between local authorities. It’s also important to bear in mind that there may (or will) be legal differences depending upon whether you’re in Wales, England, Scotland or Northern Ireland.

The position outlined in this guide is therefore a generally applicable summary. It may be necessary to check specific points of detail with your own local authority.

To begin understanding its meaning and usage or whether it applies to you, it’s necessary to think about your let accommodation in a number of different ways:

• how many people are in the accommodation;
• the number of letting units the property is divided into;
• whether the letting units share all or some facilities with other units or the property’s owners;
• the “scale” of the property in total – comprising several of the above factors plus how many floors it occupies.

Characteristics of the HMO

As at the time of writing, the Government website defines a house in multiple occupation (HMO) if both of the following apply:

• at least 3 tenants live there, forming more than 1 household
• you share toilet, bathroom or kitchen facilities with other tenants

Your home is a large HMO if both of the following apply:

• at least 5 tenants live there, forming more than 1 household
• you share toilet, bathroom or kitchen facilities with other tenants

A household is either a single person or members of the same family who live together. A family includes people who are:

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

What is a bedsit? How bedsits differ

Sometimes, confusion arises when landlords confuse bedsits and HMO’s.

A bedsit is defined by the government as typically a single room in a property, which is let out. The tenant usually shares all or the majority of their facilities (WC, bathroom, kitchen etc.) with other people in the property.

Once you have three or more bedrooms let out as bedsits, then typically your property will meet the criteria of being an HMO. This applies even if you are resident in the property too.

It is important that you understand these differences, so you can ensure that you either get bedsit insurance or HMO insurance.

Why this matters

This isn’t just definitions for the sake of it.

As a landlord, you will have very significantly different legal and landlord insurance obligations based upon whether you are a landlord providing bedsit, HMO or large HMO accommodation.

These are covered in later sections of this guide.

Why HMO’s are popular

HMO’s are popular and seemingly becoming more so. That applies to both tenants and landlords.

From the viewpoint of landlords, the advantages may be numerous:

• separate tenancies reduce risk to the income stream. If one tenant departs and there is a slight delay finding another, there is still income from the remaining lets in the property;
• with larger single tenancy properties which are, by definition, likely to demand higher rents, it can be more difficult to find tenants. Keeping the rental price low for smaller sub-units of a larger property, can increase the overall income for the property concerned and increase overall occupancy percentages;
• particularly in university towns but also in major centres of commerce and industry, (e.g. students or business people seeking Monday-Friday accommodation);
• some landlords prefer having more tenants in their properties because it can increase things such as security, due to the property being unoccupied for less time during the day or week. It can also increase flexibility in terms of gaining access to the property (complying with legal requirements to protect tenants’ privacy and rights in the process);
• in certain situations, HMO’s can make it easier to obtain property financing, as lenders may appreciate the more diverse and secure income stream projections associated with that.

The attractions and advantages for tenants are also clear. They might include:

• in times of rising mortgage deposit requirements, people are looking increasingly for rented accommodation. Smaller, compact and therefore affordable units, are in high demand and are for many, financially appealing – students being a good example;
• some tenants may welcome the more communal and reassuring presence of other tenants in the property. That can be far more comforting for many tenants than say a simple bedsit arrangement in a property shared with the owner alone. 

HMO room sizing

This is frequently a thorny issue in conceptual terms.

Who is involved?

There are a number of different parties and processes here, all of which might need to be taken into account in a given set of HMO circumstances. Those parties might include:

• national government (or devolved national government) through legislation.
• your local authority;
• local emergency services (e.g. fire safety officers).

The provisions of the legislation provide an approximate reference point in stating that an occupied room must provide a minimum of 6.5sq metres of space per adult. Children between 1-10 years old count as just over half an adult and require 4.64sq metres. For two adults, the minimum room size must be at least 10.22sq metres.

Who has authority?

Unfortunately, this position has historically been something of a minefield of legal interpretation and once again, the position becomes even more complicated depending on which country of the UK you live in as well as your particular local authority.

In what follows, for simplicity, we’ll be speaking about the typical (though not universal) position as it exists in England and Wales.

Broadly speaking:

• the local council, even if licencing, does not have a legal right to state what is or is not the minimum space requirements. However, it does have a right to issue strong guidelines and recommendations and refuse a licence application for properties which it believes are not in compliance. While appeals are possible, they are time consuming and this is best avoided if at all possible;
• the council’s guidelines will usually be based upon housing act legislation. This takes into account the number of occupants per room and available space. However, a council may choose to take into
• account other space available to tenants in the shape of, for example, communal rest and recreation areas;
• the legislation gives statements on minimum occupancy levels too.

Your legal obligations

You will be required to comply with national and devolved government laws plus local council regulations.

These are extensive and far too lengthy to detail here. What can be said is that your legal obligations will typically come under a number of general headings.

Services and facilities

You will be obliged to provide a range of basic services.

That obligation will usually include things such as water, electricity, heating facilities of one sort or another and of course, sanitary arrangements such as access to a bathroom and WC. You will be obliged to make sure that all these services and utilities, notably gas and electricity, are delivered safely (see below).

Tenants must also have access to waste disposal facilities.

Shared areas of the property must be kept clean and safe – this is your responsibility under law and you cannot delegate that to your tenants. It is reasonable to make a condition of their rental agreement that they play their part in helping to keep such areas clean and tidy as that applies to their use of them.

You could not though, make it a requirement that they cleaned (e.g.) mould off window sills etc.

The exterior of your property must also be kept clean and in good order.

Items and fixtures around your house must be kept in good working condition – examples include windows that can open/close easily, doors with working privacy locks and so on.

In addition, you may be required to show that you have full landlord insurance of a type that’s appropriate for your HMO- so HMO Insurance. That may be a legal requirement and also one underpinned by your buy to let mortgage agreement if you have funding outstanding on your property.

Safety

A considerable amount of legislation is dedicated to your obligations where safety (as opposed to convenience) is concerned. A very brief summation of those includes:

• water must be clean and safe for consumption (e.g. no lead pipes, open storage tanks etc.);
• all electrical appliances and your entire installation, must be subject to periodic safety inspections by a duly qualified electrician;
• all gas installations must be similarly checked;
• you must be able to provide evidence of such inspections upon demand and at only a few days’ notice;
• your property must be maintained in overall “safe” condition. For example, loose floorboards, raised nails or insecure handrails on stairs must be attended to with urgency. The conditions of your licencing may require a Health and Safety inspection beforehand;
• the HMO must contain fire-fighting and other fire safety facilities including emergency fire exits and lighting.

Of necessity, this has been a very brief overview. Your local authority should be able to provide you with locally relevant, specific and detailed advice and guidance on all of these subjects. 

Licencing

If your property is defined as a large HMO, then you will require licencing from your local authority (in England and Wales).

In cases where you have a standard HMO, then it’s still highly likely that you will need a local authority licence though that may vary slightly.

It would be unwise to start your business on the assumption that you do not need to apply for a local authority licence. Check with them to be sure and accurately describe your planned business to them.

Another point worth mentioning is that at the time of writing, further proposed changes to licencing are being considered and there are some test cases going through the courts. It really is essential that you get the very latest updated situation and requirements from your local council. Again, council requirements may also vary depending on where your HMO is situated.

The penalties for failing to meet these regulations can be heavy, so a little discovery and validation up front is VERY highly advisable.

Here is a summary of the position as it stands today, though individual elements of this have been touched on previously:

• if you’re a large HMO, licencing is required;
• it is also probably required by your local authority for any HMO;
• you may need to anticipate a background check on your suitability to operate as a landlord business;
• individual local authority licencing criteria will vary and possibly quite considerably, however, you can probably anticipate needing to demonstrate that you have completed all safety inspections and have the appropriate certificates;
• you may be required to show evidence that you are in position of valid landlord/HMO insurance cover;
• if you’re using a business manager or property manager, you may need to provide their details so that they can be checked against “fit and proper person” criteria.

Typically you will need to wait for confirmation of your licence before you commence letting. You will also require a licence per let unit.

HMO Insurance

As has been touched on previously, from a number of perspectives, having correct landlord/HMO insurance cover is essential.

However, it’s worth considering this from the point of view of your business rather than simply compliance with the requirements of others.

Landlord’s insurance can offer you financial protections against a range of risks to your property and its contents. It also might prove to be all that stands between you and financial ruin if, for example, one of your tenants successfully sues you for injury they’ve suffered in your property.

There are a few key points worth picking out on this subject:

• you must have landlord insurance that’s suitable for your business. Under no circumstances can you use owner-occupier cover, even if you are personally also resident in the property;
• the cover applicable to HMO’s is typically different to that associated with, for example, a property let individually as a whole. You will need to be specific about your property and business plans when discussing options with your insurance provider;
• if your property stands unoccupied for more than a specified number of consecutive days (typically 30-45) during say renovation, you will need to investigate unoccupied property insurance;
• it’s worth noting that it is becoming ever easier for tenants to sue landlords (for various things) and the tendency to litigate is becoming more pronounced. You should have appropriate legal cover included.

If you have any questions, you should contact us for a discussion as soon as possible.

At Cover4LetProperty, we have extensive experience in all aspects of landlord insurance, bedsit insurance and HMO cover. We would be only too happy to place that at your disposal for advice and guidance.

Please note that this guide is based on our understanding of current legislation. As legislation does change, we recommend you always seek professional advice if you are unsure of anything relating to your HMO.