How Much is a HMO Licence? Costs and Requirements

Landlords Property Market

Posted in Dec 04 , 2024

Owning a House in Multiple Occupation (HMO) can be lucrative for landlords, especially in high-demand areas. However, obtaining the necessary HMO licence is a legal requirement in the UK to ensure the property meets safety and management standards. In this blog, we’ll explore the costs of an HMO licence, the requirements landlords must meet, and why staying compliant is crucial for your rental business.

What Is an HMO Licence?

An HMO licence is mandatory for properties rented to three or more unrelated tenants who share facilities like a kitchen or bathroom. These licences are part of the UK government’s effort to regulate shared housing and ensure landlords provide safe, habitable homes.

The Housing Act 2004 mandates that certain HMOs must be licensed, especially larger ones with five or more occupants forming two or more households. Local councils enforce these regulations, and failure to comply can result in fines of up to £30,000 or prosecution.

How Much Does an HMO Licence Cost?

The cost of an HMO licence varies depending on your local council. Fees generally range between £500 and £1,500, with some councils charging additional renewal fees. The fees are based on the house's number of rooms/units. Here are a few examples:

Borough of Croydon: A standard flat fee of £272 is charged for each habitable room, up to a maximum of £5,435. This includes a fee for habitable rooms not currently used as bedrooms, such as living and dining rooms. A habitable room does not include kitchens, bathrooms, or kitchen diners.
London Borough of Merton: The HMO licence fee is structured into two parts. Part A (application fee) is £862.01, and Part B (enforcement fee) is £701.19, making the total for a single unit £1,563.20. For properties with multiple units, additional fees of approximately £220–£200 per unit apply depending on the property size.
London borough of Wandsworth: A new licence for a five-person shared house costs £1,450, with additional fees for properties with more units. Renewals are slightly cheaper.
London Borough of Lewisham: Fees start at £500 for small properties and can increase to over £1,250 for larger HMOs. Discounts are available for early applications or accredited landlords.
Borough of Kingston upon Thames: Licensing fees begin at £1,150 for single-unit properties. Additional costs may apply depending on property inspections and the number of units.
Birmingham City Council: The cost of obtaining a new HMO licence in Birmingham is £1,150. This fee typically covers administrative expenses for processing the licence and enforcement activities.
Manchester City Council: Landlords in Manchester are charged £900 for a new HMO licence. Discounts may be available for early applications or landlords managing multiple properties.

Councils may also offer discounts for accredited landlords as part of schemes like the National Residential Landlords Association (NRLA) or similar local programs. Cribs Estates has a long-term affiliation with NRLA, which is why most landlords prefer to use Cribs Estates for their property management services.

Tip: Check your local council’s website for exact pricing, as costs are regularly updated.

What Does the HMO Licence Cover?

When you apply for an HMO licence, councils assess whether the property and landlord meet specific standards. These include:

Property Safety Standards:

Fire safety: Proper smoke alarms, fire doors, and escape routes.
Gas and electrical safety certificates.
Adequate room sizes (e.g., at least 6.51m² for a single adult).

Management Standards:

Sufficient waste disposal facilities.
Maintenance of communal areas.
Compliance with hygiene and repair standards.

Fit and Proper Landlord Test: Councils assess landlords' track records, ensuring they haven’t violated housing laws or committed fraud.

Meet these requirements to ensure your application is not denied or your existing licence is revoked.

How Long Does the Licence Last?

HMO licences typically last five years, although some councils issue licences for shorter periods. Landlords must renew their licence before it expires to avoid penalties. Renewal often involves additional inspections and updated documentation.

How the Licensing Process Works

Application: Submit an online application to your local council, providing the required documents, such as gas safety certificates and a floor plan.
Inspection: Councils often inspect the property to ensure it meets standards.
Approval or Rejection: You’ll receive a decision within 6-12 weeks. If rejected, landlords may need to make property improvements before reapplying.

Government’s Role in HMO Licensing

The UK government introduced stricter HMO licensing regulations in 2018, including mandatory minimum room sizes and extending licensing to more properties. These measures aim to improve housing quality and reduce overcrowding.

In Croydon, for instance, selective licensing schemes have been implemented to improve housing conditions borough-wide. Additionally, councils like Lambeth and Camden actively inspect unlicensed properties to identify rogue landlords.

To stay updated on HMO legislation, visit the UK Government’s official housing site.

Why Does HMO Licensing Matter for Landlords?

Avoid Fines and Legal Action: Licensing ensures you stay on the right side of the law.
Attract Quality Tenants: A licensed HMO is more likely to attract responsible tenants.
Enhance Property Value: Complying with safety standards often increases the property’s long-term value.

Moreover, a well-managed and compliant HMO often yields higher rental income compared to standard single-let properties.

How Cribs Estates Can Help

Navigating HMO licensing requirements can be challenging, but Cribs Estates is here to support landlords in every step of the process. Based in Wimbledon, our experienced team specialises in property management and HMO compliance. We offer:

Guidance on local licensing requirements.
Assistance with property inspections and documentation.
Comprehensive property management services, ensuring your HMO remains compliant and profitable.

If you’re a landlord looking to invest in an HMO or need help managing one, contact Cribs Estates today for expert advice tailored to your needs.

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