Avoiding the need for an HMO (House in Multiple Occupation) license while still renting property legally requires understanding and adhering to specific guidelines outlined by local councils and the UK government. However, avoiding an HMO license is only feasible if your property’s occupancy or layout does not meet the criteria that trigger licensing. Here are strategies that can help you avoid needing an HMO license while staying fully compliant with the law:
1. Limit the Number of Tenants
- Occupancy Rules: An HMO license is typically required when a property is rented to three or more tenants from two or more households who share facilities such as a kitchen, bathroom, or living space.
- Two-Tenant Limit: By limiting occupancy to no more than two unrelated individuals, the property may not qualify as an HMO, thus avoiding the need for an HMO license. Tenants living together as a single family (related by blood or marriage) or as a couple are usually considered one household.
2. Avoid Renting to Multiple Households
- Single Household: Renting to individuals who constitute a single household — either a family unit or a cohabiting couple — will generally not require an HMO license, even if the number of occupants is three or more.
- Friends and Shared Households: Renting to unrelated friends or individuals who live independently from each other can trigger HMO regulations. By renting to only one household, you may avoid HMO classification and the need for a license.
3. Rent as a Family Home
- Family Tenants: Renting the property to a single family — regardless of family size — typically exempts the property from HMO licensing. Families are considered a single household, and as long as the tenants are related, the property does not meet the multiple-household requirement of an HMO.
4. Let as a Self-Contained Flat or Studio Apartments
- Self-Contained Units: If each unit within a property has its own separate facilities (such as kitchen, bathroom, and entrance), they may not be classified as HMOs, depending on local council regulations. For instance:
- Converted Flats: Self-contained flats, each with independent facilities and entrances, may not require an HMO license.
- Studio Apartments: Studio apartments with full amenities are usually classified as separate dwellings.
- Note on “Section 257” HMOs: Some converted buildings with self-contained flats may still be considered HMOs under specific circumstances, such as if the building contains poorly converted flats that do not meet current building standards.
5. Limit the Number of Stories
- Avoid Larger HMOs: Many councils require mandatory licensing for HMOs with five or more occupants across three or more stories (including habitable basements and lofts). By renting out smaller properties or those with fewer stories and occupants, you may avoid the larger HMO classification and associated licensing.
6. Check for “Additional Licensing” Rules
- Additional Licensing: Some councils apply additional licensing to smaller HMOs that may not meet the standard criteria (e.g., three unrelated people in a two-story home). Check with your local council to understand additional licensing policies to determine if your property qualifies.
- Exemptions and Specific Local Rules: Local authorities may have exemptions for certain HMOs or additional criteria that impact whether a property needs a license. Always verify specific guidelines with the council where the property is located.
7. Choose Lodger Agreements
- Live-In Landlord (Lodgers): Renting rooms to up to two lodgers while living in the property yourself may exempt it from HMO licensing. Properties where the landlord is resident and rents out rooms to no more than two lodgers are generally not considered HMOs.
- Lodger Conditions: In this setup, the landlord and lodgers form a single household. This allows you to rent parts of the property without meeting the HMO requirements as long as the landlord is an occupant.
8. Confirm with Local Council
- Check HMO Exemptions: Some properties may qualify for HMO exemptions based on factors like the property type, occupants, or certain usage conditions. Contacting the council directly for guidance ensures that you are not unintentionally violating local regulations.
- Written Confirmation: To protect yourself legally, consider requesting written confirmation from the council regarding the property’s classification and exemption status based on your setup.
Potential Risks of Avoiding an HMO License
If your property does fall under HMO classification based on local laws, failing to obtain the necessary license can result in significant fines and legal consequences. These penalties may include fines up to £30,000, criminal charges, and Rent Repayment Orders, which can require you to return rent to tenants.
