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.

Shared on social media

Comments

Latest Blogs

How Do You Calculate Property Yield? Guide for UK Investors

If you are planning to invest in property in the UK, you must understand how to calculate property yield. Many first-time investors feel overwhelmed by percentages and formulas for getting the yield, but calculating does not have to be complicated. With a straightforward approach, you can assess your potential returns whilst ensuring your investment decisions remain practical. What is Property Yield? Property yield is the percentage return you receive on your investment from rental income. It gives you the idea of your property’s earning potential relative to its value, allowing you to compare different properties or areas quickly. A higher yield often means better cash flow, but it is also important to consider factors such as maintenance costs, location demand, and long-term growth. Yield is a core metric for UK investors when building a property portfolio, providing clarity on whether a property is likely to meet their financial goals. Why Property Yield Matters for Investors Calculating property yield allows you to assess whether a rental property will deliver a satisfactory return. It helps you compare investment opportunities across different locations, property types, and market conditions. Yield calculations can also guide your decisions on rent pricing, potential maintenance needed, and even your exit strategy. In a competitive UK property market, knowing your yield helps you invest with confidence whilst avoiding purchases that may underperform. How to Calculate Property Yield: Step-by-Step There are two primary ways to calculate yield on a rental property: gross yield and net yield. Step 1: Calculating Gross Yield Gross yield is the simplest form of yield calculation. It shows your annual rental income as a percentage of the property’s purchase price. Formula:Annual Rental Income ÷ Property Purchase Price × 100 Example:If you purchase a property for £200,000 and expect to receive £12,000 in rent annually: £12,000 ÷ £200,000 = 0.060.06 × 100 = 6% Your gross yield is 6%. Gross yield is helpful for quick comparisons between properties, but it does not account for running costs, repairs, or void periods. Step 2: Calculating Net Yield Net yield gives you a clearer picture of your actual return after expenses, showing your rental income minus costs as a percentage of the property’s purchase price. Formula:(Annual Rental Income – Annual Expenses) ÷ Property Purchase Price × 100 The expenses may include letting agent fees, maintenance, insurance, ground rent, service charges, and an allowance for void periods. Example:Using the same £200,000 property with £12,000 annual rent and annual expenses of £2,000: (£12,000 – £2,000) = £10,000£10,000 ÷ £200,000 = 0.050.05 × 100 = 5% Your net yield is 5%. Whilst the net yield will always be lower than the gross yield, it offers a more accurate view of your property’s actual return. What is a Good Yield in the UK? A “good” yield varies by region, property type, and your investment strategy. In many UK areas, yields of 5-8% are considered healthy, whilst yields above 8% may be found in some high-demand rental markets or HMOs(Houses in Multiple Occupation). However, a high yield should not be your only focus. It is wise to balance yield with property condition, tenant demand, and long-term capital growth potential to ensure your investment remains sustainable. Factors That Affect Property Yield Your property yield can fluctuate based on several factors: Location: Rental demand and local market trends can impact achievable rent. Property Type: Flats, HMOs, and houses can yield differently based on tenant demand. Condition: A well-maintained property may command higher rent, improving yield. Management Costs: Letting agent fees and maintenance can reduce your net yield. Void Periods: Empty months lower your annual income, reducing your yield. Frequently Asked Questions About Calculating Property Yield 1. Do I need to calculate yield before buying a rental property?Yes, calculating yield helps you understand whether a property meets your investment goals before you commit financially. 2. Is gross or net yield more important?Gross yield is useful for quick comparisons, but net yield offers a clearer picture of your real return after expenses. 3. Does property yield guarantee profit?No, yield is only one part of property investment. You must also consider maintenance, tenant management, and potential capital growth. 4. Can yield change over time?Yes, yield can change due to rent increases, property value changes, or varying expenses. How Cribs Estate Can Help You Our team helps investors analyse potential purchases by calculating accurate gross and net yields, taking into account real market rental figures and local demand. We can guide you in comparing properties to find investments aligned with your goals, ensuring you understand what return you can realistically expect. Whether you are expanding your portfolio or looking for your first buy-to-let property, Cribs Estate provides clear advice and property management support so you can invest with confidence whilst maximising your returns.

How Do I Obtain An Energy Performance Certificate?

If you are preparing to sell or let your property in the UK, you will need an Energy Performance Certificate (EPC) before marketing your home. Many homeowners and landlords are unsure how to obtain this certificate, especially if it is their first time selling or managing a tenancy. But if you are aware beforehand, it will help you stay compliant whilst ensuring your property is ready for the market without unnecessary delays.What is an Energy Performance Certificate?An Energy Performance Certificate rates your property’s energy efficiency on a scale from A to G, with A being the most efficient. It shows potential buyers or tenants how much they might spend on energy and offers suggestions for improvements that could make the property cheaper to run. An EPC is required in the UK whenever you sell, build, or let out a property, ensuring transparency and compliance with legal requirements.Who Can Issue an EPC in the UK?Only accredited domestic energy assessors can issue an EPC. These assessors are qualified to inspect your property, checking your heating systems, insulation, and windows before calculating your property’s rating. Using a registered assessor ensures your EPC is valid and can be listed on the official Government EPC register, where it will be accessible during your sale or letting process.Steps to Obtain an Energy Performance CertificateObtaining an EPC in the UK is a clear process when you follow these straightforward steps:1. Find an Accredited Energy AssessorSearch for a qualified assessor using the UK Government EPC Register. Enter your postcode to find local professionals who are licensed to carry out the assessment and issue your certificate.2. Book Your EPC AssessmentOnce you have chosen an assessor, arrange a convenient date for them to visit your property. They will let you know what access they require during the inspection and answer any questions you may have about the visit.3. Have Your Property InspectedDuring the assessment, the assessor will review your boiler, radiators,loft insulation, windows, and lighting. They will measure your rooms and note down the materials and systems in your property to calculate its energy efficiency. The inspection usually takes around 30 minutes to one hour, depending on your property’s size and layout.4. Receive Your EPCAfter the assessment, you will receive your EPC within a few days, often by email. The certificate will display your current rating and suggested improvements to help you raise your property’s energy efficiency if needed. An EPC remains valid for ten years, allowing you to market your property for sale or rent during this period without requiring a new assessment unless you wish to update your rating after making improvements.Why You Need an EPC Before Marketing Your PropertyIt is a legal requirement to have a valid EPC before advertising your property for sale or letting in the UK. Estate agents will ask for the EPC when listing your property, and potential buyers or tenants often request to see it during viewings. A good EPC rating can improve your property’s appeal, making it more attractive to energy-conscious buyers or tenants, whilst helping you avoid fines that could disrupt your sale or letting plans.Costs of Obtaining an EPC in the UKThe price of an EPC assessment varies across the UK, generally costing between £50 and £120. This fee is a one-off payment to the assessor for visiting your property and producing the certificate. Given the potential penalties for marketing a property without an EPC, this cost is a necessary investment to keep your sale or letting on track.What If Your EPC Rating is Low?No need to worry if your EPC rating is low, because the report will provide a clear list of the recommendations needed to improve the rating. It may include tasks like adding loft insulation or even adding energy-efficient lights. If you’re a landlord, it is compulsory to match the rating E or go above to stay legally under the Minimum Energy Efficiency Standards (MEES). Upgrading your property will ensure it’s competitive in the market as well. Frequently Asked Questions About Obtaining an EPC?1. Do I need an EPC if I am letting out a single room?If the tenant is using just a single part of the property, you will still need to get an EPC. In this case, check with a reliable estate agent like Cribs Estate to make a better decision. 2. Can I use an EPC I obtained years ago?The validity of an EPC is ten years, so you can use it for this period. Or else you can update it once the improvements are complete. 3. What happens if I market my property without an EPC?Marketing the EPC without legal authorization can result in hefty penalties of up to £5,000, as well as delay your sale and letting process. 4. Can I check if I already have an EPC?Yes, you can visit the UK EPC registry, or you can ask an estate agent like Cribs Estates to do it for your property and check the validity of the certificate. How Cribs Estate Can Help YouAt Cribs Estate, we understand that handling property compliance can feel overwhelming, especially when preparing your home for sale or letting. We work alongside trusted, accredited assessors to help you obtain your Energy Performance Certificate swiftly, ensuring you are compliant and ready to market your property without delays. Our experienced team will guide you through the process, assist in arranging your assessment, and help you understand any recommended improvements to enhance your EPC rating.

Tenant Background Screening in the UK: A Landlord’s Essential Guide

Tenant background screening has become a non-negotiable part of letting property in the UK. With rising rental arrears, strict laws, and the emotional cost of dealing with problematic tenants, landlords now recognise that a complete screening process is not just a precaution but a strategic way to protect their income and property.Yet, many landlords are still unsure about what tenant screening involves, what checks are legally compliant, and how to balance speed with thoroughness in finding a good tenant. If you are letting your property, here’s what you need to know to screen tenants effectively, legally, and without creating unnecessary delays in your letting process.Why tenant background screening is essential for UK landlordsScreening tenants goes beyond a quick reference check. It is about ensuring that your tenants can and will pay rent on time, take care of your property, and refrain from causing anti-social behaviour or legal issues.Bad tenants can cause missed rental payments, expensive legal processes, property damage, and even put you at risk with mortgage lenders or insurance providers if terms are breached. The right screening process helps you minimise these risks whilst ensuring you remain compliant with laws like the Right to Rent, GDPR, and anti-discrimination rules.What should a tenant background screening include?An effective UK tenant background screening should include several key checks to give you a rounded picture of who your potential tenant is:1. Credit check: This assesses the tenant’s financial history, checking for County Court Judgements (CCJs), bankruptcies, and other red flags indicating financial instability. It will also give you an affordability indicator to ensure the tenant’s income can support the rent without putting them under financial strain.2. Employment and income verification: Confirming stable employment or sufficient income is vital. You should request recent payslips, employment contracts, or accountant references for self-employed applicants.3. Previous landlord references: Past behaviour is a strong indicator of future actions. Contact previous landlords to confirm whether the tenant paid rent on time, took care of the property, and vacated without any issues.4. Identity and Right to Rent checks: It is a legal requirement in the UK to check a tenant’s immigration status before granting a tenancy. Ensure you verify their original documents and keep records in line with Home Office guidelines.5. Address and residency verification: Confirming the tenant’s current address and matching it to documents like utility bills or bank statements can add an extra layer of reassurance.How long does tenant screening take in the UK?Tenant screening should not unnecessarily delay your letting process.. A well-organised screening process can be completed within 48–72 hours if tenants provide documents promptly. Using a structured system allows you to filter serious applicants efficiently, avoiding drawn-out void periods whilst ensuring you do not rush into a tenancy that could cost you thousands in the future.Staying compliant whilst screening tenantsLandlords in the UK must ensure their screening process does not breach anti-discrimination laws. You must treat all prospective tenants equally, regardless of race, nationality, gender, or disability status. Under the GDPR, you must handle applicants’ data securely, collect only what is necessary, and inform them of how you use and store their data.It is also important to avoid making decisions based solely on automated credit scores. Credit checks should be part of a wider assessment, and you should always consider explaining your decision to applicants to avoid disputes.Using screening to protect your rental income and propertyTenant background screening is not about rejecting applicants for minor reasons; it is about mitigating genuine risks to your property and income. A tenant who passes all checks is more likely to pay on time, treat your property with respect, and communicate if financial difficulties arise, allowing you to work together rather than heading towards eviction.If you let your property without screening, you may face unpaid rent, legal costs for eviction, and a loss of months of rental income, as well as stress and potential property damage. Investing a small amount of time and money upfront in a professional screening process helps you protect your investment and peace of mind.How Cribs does tenant background screening for youAt Cribs, we understand that tenant background screening can feel overwhelming, especially if you manage your property alongside a busy life or portfolio growth plans. We have designed a screening system that verifies identity, conducts credit checks, employment checks, and previous landlord references in a streamlined, compliant process.We handle right-to-rent checks in line with UK Home Office requirements, ensuring you remain compliant whilst minimising delays in getting your property let. Our system provides clear, easy-to-read reports that help you make informed decisions without guesswork. We understand that each landlord’s priorities are different, which is why we offer flexible screening tailored to your needs, whether you let one property or manage a portfolio.Ready to protect your rental property with reliable tenant background screening? Contact Cribs today, and let us handle the checks so you can let your property be stress-free.

What Are Land Registry Fees When Buying a House in the UK?

Buying your first house is always a nervous step for anyone, so understanding all the aspects involved is key to the right move. Oftentimes, buyers get confused about the land registry fees, but it’s not something to worry about if you have a reliable partner standing next to you. In this guide, we will walk you through what are land registry fees, and when you need to pay them whilst living in the UK. What Is the Land Registry Fee?The Land Registry fee is the cost you pay to register your ownership of a property with the HM Land Registry after you buy it. This process ensures your name is officially recorded as the legal owner of the property and protects your rights to it.You will usually pay this fee as part of the conveyancing process, and your solicitor will handle the registration on your behalf.Why Do You Need to Pay Land Registry Fees?Without registering your ownership, there is no legal proof that you own your new home, which could cause issues if you decide to sell or remortgage in the future. HM Land Registry keeps a central record of all property ownership in England and Wales, which helps prevent fraud and ensures clear legal ownership.How Much Are Land Registry Fees in the UK?The amount you pay depends on the price of the property you are buying and whether your solicitor registers it online or by post. Online registrations are usually cheaper.For example, if you are buying a property for £250,000, your Land Registry fee will usually be £150 if done online, or £330 if done by post.Here is a simple guide:Properties up to £80,000: £20 (online)£80,001 to £100,000: £40 (online)£100,001 to £200,000: £100 (online)£200,001 to £500,000: £150 (online)£500,001 to £1,000,000: £295 (online)Over £1,000,000: £500 (online)Your solicitor will confirm the exact fee based on your property price during your purchase.When Do You Pay the Land Registry Fee?You will pay this fee as part of your conveyancing costs, usually just before or immediately after you complete the purchase of your house. Your solicitor will submit the payment to the HM Land Registry whilst they register your ownership.Is the Land Registry Fee the Same as Stamp Duty?No, the Land Registry fee is separate from Stamp Duty Land Tax (SDLT). Stamp Duty is a tax you pay to HMRC when you buy a property over a certain price, whilst the Land Registry fee is a payment for officially recording your ownership.Many buyers get confused between the two, but it is important to budget for both to avoid unexpected costs during your purchase.Who Pays the Land Registry Fee?It is always the buyer who pays the Land Registry fee, not the seller. The seller’s solicitor will handle the transfer of ownership paperwork, but the buyer covers the cost of registering the new ownership details with HM Land Registry.If you are a first-time buyer, it is important to remember that even if you receive certain tax reliefs, you will still need to pay the Land Registry fee as part of your overall buying costs.What Happens If You Do Not Pay the Land Registry Fee?If the Land Registry fee is not paid, your solicitor cannot complete the registration of your ownership with HM Land Registry. This means you will not officially be recorded as the property’s legal owner, which can cause issues with selling the property, remortgaging, or proving ownership if disputes arise.It can also delay the process of receiving your official title deeds, which are important documents for your records and future transactions.How Can You Budget for Land Registry Fees?When planning your property purchase, it is important to consider all the costs you will need to pay beyond your deposit. Alongside your mortgage, solicitor’s fees, and Stamp Duty, the Land Registry fee is a key part of your moving budget.To budget efficiently:Ask your solicitor for a breakdown of fees at the start of the conveyancing process.Check the current HM Land Registry fee scale for your property’s price.Set aside this amount in advance to avoid stress during completion.Being aware of this fee in advance will help you avoid last-minute surprises and ensure a smoother transaction.How Cribs Estate Can Help YouAt Cribs Estate, we understand that buying a home is both exciting and stressful, especially when unexpected fees and legal steps arise. Our experienced team will guide you through the buying process clearly, ensuring you understand every cost, including Land Registry fees, so you can buy your home confidently.We work with trusted solicitors to handle your conveyancing efficiently, ensuring your property is registered correctly whilst keeping you informed at every step. Whether you are a first-time buyer or moving to your next home, Cribs Estate will support you to make your move smooth and stress-free.Contact Cribs Estate today to discuss your next property move, and let us help you feel confident about every part of the process.Read More: property management agency London

Property search

Residential Lettings

Residential Sales

HMO

Commercial Sales Commercial Lettings

Price

Min price

Max price

Number of Bedrooms

Min bedrooms

Max bedrooms

Find properties