Do you need a HMO Licence?
Posted on 22nd June 2022 at 15:53
HMO licensing schemes vary between cities and different parts of the UK. This article covers the Bristol area only.
There is a lot of confusion when it comes to the exact definition of HMO and different types of license, so it is important to start with explaining the differences.
What an HMO is - a property is categorised as a house in multiple occupation if two of the following conditions apply:
It is occupied by at least 3 tenants, forming more than 1 household. A household is a separate individual, cohabiting couple or a family. To give an example - 6 friends living together, even if they share the same Tenancy Agreement, form 6 households. A cohabiting couple and a friend would form 2 households. A couple is considered as a separate household.
The Tenants share facilities, such as kitchen, toilet and bathroom.
There are 3 types of license schemes:
Mandatory HMO License
You need a mandatory HMO License if you are renting a property that has:
1. Five or more people from two or more households shared cooking facilities, toilets or bathrooms
2. It applies to houses and flats on any numbers of storeys.
Additional HMO Licence
This type of license is valid in the areas of the city where additional HMO Licence scheme has been introduced. It applies to privately rented flats or houses, occupied by 3 or 4 unrelated people, forming 2 or more households and sharing some basic facilities.
Selective licensing applies to non-HMO properties in the areas where such licence has been declared.
Currently in Bristol there are a three Additional and Selective licence schemes:
A) Central Bristol - this scheme was implemented on the 8th of July 2019 and is valid till July 2024 (there is no information about the extension at this time, however we can speculate that this scheme will be replaced by the new one after 2024). It covers the following areas: Ashley, Bishopston & Ashley Down, Central, Clifton, Clifton Down, Cotham, Easton, Hotwells & Harbourside, Lawrence Hill, Redland, Southville and Windmill Hill electoral ward. The map showing the affected areas can be found under the link: https://bcc.maps.arcgis.com/apps/webappviewer/index.html?id=510f463f75af4644b78d43a46dbe2f87
B) Bedminster, Brislington West and Horfield - on the 6th of April a new licensing scheme has been introduced in those 3 areas mentioned above. In Bedminster and Brislington wards, additional and selective licensing will apply.
In Horfield ward, only an additional licence scheme was implemented. In effect most privately rented HMOs will need an additional licence, if not already covered by a mandatory licence scheme.
C) Eastville and St George - this selective and additional licensing scheme was introduced in 2016 and as of the time of writing Bristol City Council is not accepting any new applications for this scheme. The list of the streets covered by the scheme can be found under this link.
On top of the licensing schemes mentioned above, it is important to bear in mind the Article 4 Directions - the Article 4 imposes the restrictions on permitted development.
What impact does the Article 4 have on HMOs?
It means that in order to convert a property to a HMO, you need to submit a planning application for a change of use between a dwelling house (Use Class C3) and a small House In Multiple Occupation (Use Class C4). Here is the list of the areas covered by Article 4 in Bristol:
There are some costs associated with applying for the licence. They depend on the type of the licence. As of the moment of writing the following fees apply for the HMO licences in Bristol:
Standard Fee for a new HMO Mandatory HMO Licence:
Total of £1420
First payment of £468
Second payment of £952
The renewal fee (every 5 years) is £1100
First payment of £363
Second payment of £737
Additional charges apply for the properties that have more than 5 households. They come up to £50 per household to cover extra time for inspection and additional fire safety requirements.
Fees for Central Bristol additional licensing scheme:
Total of £1255
First payment of £414
Second payment of £841, payable upon successful application, before the license is issued
Fees for Bedminster, Brislington West and Horfield additional licensing scheme:
Total of £1300
First payment of £1000
Second payment of £300, payable upon successful application, before the license is issued
Bedminster and Brislington West selective licensing scheme:
Total of £799
First payment of £499
Second payment of £300, payable upon successful application, before the license is issued.
There are also some discounts, that you may qualify for. They don’t really make such a big difference to the fees, but they are a bit of encouragement to reduce some costs.
1. One is within a “Rent with confidence scheme”. In order to qualify for the £50 licence fee Rent with Confidence (RWC) discount, licence holders or managers of licensed properties must have the accredited level of membership with one of the RWC approved providers when you apply for a licence.
2. And the other one gives you either £150 discount or £150 refund if you provide the copies of safety and performance certificates such as gas safety certificate, EICR and EPC. They have to be provided within 3 months of the licence being issued.
The councils are really motivated to make sure that the Landlords licence their properties, where required. While the local authorities may not have the capacity to regularly check every house that fall into the licensing scheme, if they do discover unlicensed properties, they will use a number of measures to put the things right.
The failure to license your property may result in:
Financial penalties up to £30,000
Prosecution proceedings (if you are convicted, the Court may impose an unlimited fine)
You can lose the control over your property
You can be ordered to repay up to 12 month’s rent to the Council or to your Tenants
You can be restricted on how you terminate tenancies
The subject of constantly expanding licensing schemes might be frustrating for Landlords (mainly due to the restrictions and fees), but the idea behind it is to improve the renting experience for Tenants and minimise the risk of unwanted and dangerous situations.
The purpose of the licensing schemes is to make sure the properties are being properly managed, are safe for the Tenants, present a good quality of accommodation and also to reduce the occurrence of anti-social behaviours.
To conclude, I feel it’s important to emphasise that any potential Landlord and Property Investor have proper knowledge about the licensing schemes. All the factors need to be taken into consideration prior to purchasing a property. The points to bear in mind before you complete on a residential dwellings are:
Does it need a licence? If so, what type of licence and how much is it going to cost? Purchasing a property is already a very expensive business, so you need to make sure you are aware of any other additional costs, including the fact that mandatory HMOs are more expensive to refurbish, due to very strict fire safety and electrical regulations.
Is it in Article 4 area? If so, are you confident your planning application will be successful? Do you have a “plan B” in case you can’t convert the property into a HMO?
The density of the HMOs in the area - this can impact your chances of getting the planning application through as well as the competition between the houses will be quite high. Your property needs to stand out and present better quality to make the Tenants chose your house over the neighbouring property.
There is a very easy way to check whether your property needs a licence. If you want to find out more about it just contact me on email@example.com.
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