HMOs (houses in multiple occupation) can produce strong income, but they are the most regulated type of rental property in England. Two separate systems apply: planning, which controls whether a property can be used as an HMO at all, and licensing, which controls how it is run. A deal can fail on either one.
This guide covers England. It is general information, not legal or planning advice. Always confirm the position with the local council for the exact address.
What counts as an HMO
A property is generally an HMO if at least three people from more than one household live there and share facilities like a kitchen or bathroom. A "household" is a family or a couple; unrelated sharers are separate households.
For planning, there are two categories:
- Small HMO (use class C4): 3–6 unrelated people sharing.
- Large HMO (sui generis): 7 or more people sharing. This always needs planning permission.
Planning and Article 4 directions
Normally, converting a family home (class C3) into a small HMO (class C4) is "permitted development", so no planning application is needed.
An Article 4 direction removes that right in a defined area. Inside an Article 4 area, you need planning permission to convert a house into even a small HMO, and councils often refuse where there are already many HMOs nearby. Many university cities, including Birmingham, Leeds, Manchester, Nottingham, Coventry, Brighton and Bristol, use Article 4 directions for HMOs across some or all of their area.
What to check
- Is the property inside an Article 4 area? Check the council's planning maps.
- If it's already an HMO, was it lawfully established? Ask for planning permission or a Certificate of Lawfulness, not just a statement that "it has always been an HMO".
- If the deal relies on converting the property, has planning permission been granted, or is it just assumed?
- For 7+ occupants, is there sui generis planning permission?
An HMO without the right planning status can face enforcement action, which may mean reducing the number of occupants or returning it to a family home — taking most of the value out of the deal.
HMO licensing
There are three types of licensing to check.
Mandatory HMO licensing
Required across England for any HMO with five or more people forming two or more households. There is no minimum number of storeys.
Additional licensing
Councils can extend licensing to smaller HMOs (for example three or four people) in all or part of their area.
Selective licensing
Councils can require a licence for ordinary single lets in designated areas. If a property is in a selective licensing area, even a non-HMO needs a licence.
What a licence involves
- A fee, which varies a lot between councils
- A licence holder and manager who are "fit and proper persons"
- Minimum bedroom sizes: 6.51m² for one adult and 10.22m² for two adults, with rooms under 4.64m² not allowed as bedrooms
- Enough kitchens, bathrooms and toilets for the number of occupants
- Fire safety measures such as fire doors, alarms and escape routes
- Gas safety certificates, electrical safety reports (EICRs) and smoke and carbon monoxide alarms
- Licence conditions, including a maximum number of occupants
Licences usually last up to five years and don't automatically transfer to a new owner, so a buyer needs to apply for their own.
What happens if it's wrong
Running a licensable property without a licence is a criminal offence. Councils can issue large civil penalties, and tenants can apply for rent repayment orders to get rent back. Unlicensed properties also face restrictions on regaining possession, and lenders and insurers may refuse cover.
Extra checks for rent-to-rent HMOs
- Who will hold the licence — the owner or the operator — and does the council agree?
- Does the owner's mortgage and insurance allow HMO use and subletting?
- Is the licence in place for the number of rooms the deal's figures assume?
- Who pays for any compliance work the council requires?
Questions to ask the sourcer
- Is the property in an Article 4 area, and what is its lawful planning use?
- Which licences apply, and can I see the current licence and conditions?
- Do the room sizes and facilities meet the council's standards for the number of occupants?
- Are the room rents based on evidence from similar licensed HMOs nearby?
Browse HMO investment opportunities, read the checks to make before committing to an HMO deal, and see local rules on our city pages.