Houses in Multiple Occupation (HMOs) are an important part of London’s private rental market, providing shared accommodation for a wide range of tenants, from young professionals and students to people relocating for work.
For landlords, HMOs can offer a different approach to letting a property compared to a traditional buy-to-let. However, they also come with additional legal responsibilities, licensing requirements and management obligations that should be fully understood before taking on this type of investment.
Whether you’re considering purchasing an HMO, converting an existing property or simply looking to understand the regulations, this guide outlines some of the key considerations.
A House in Multiple Occupation (HMO) is generally a property occupied by three or more people who are not from the same household and who share facilities such as a kitchen, bathroom or toilet.
Typical examples include:
HMOs are particularly common across London, where demand for shared accommodation remains high due to employment opportunities, universities and excellent transport links.
One area that often causes confusion for landlords is property licensing.
While many people simply refer to an “HMO licence”, there are actually several different licensing schemes that may apply depending on the type of property you own, the number of occupants and the area in which it is located.
The three main licensing schemes landlords should be familiar with are Mandatory HMO Licensing, Additional HMO Licensing and Selective Licensing. Although they are all administered by local authorities, they each serve different purposes and have different legal requirements.
Understanding which scheme applies to your property is an important part of remaining compliant and avoiding unnecessary penalties.
Mandatory HMO Licensing applies across England and is set out in national legislation.
In most cases, a property will require a Mandatory HMO Licence if:
If your property meets these criteria, you will normally need to obtain a Mandatory HMO Licence from the local authority before the property is occupied.
The licensing process is designed to ensure larger shared properties meet appropriate standards for safety, management and tenant welfare.
Additional HMO Licensing is different from Mandatory HMO Licensing.
Local authorities have the power to introduce Additional Licensing schemes where they believe smaller HMOs also require greater regulation.
For example, a property occupied by three or four unrelated tenants sharing facilities may not require a Mandatory HMO Licence under national rules, but it could still require an Additional HMO Licence if the local council has introduced an Additional Licensing scheme.
These schemes vary between councils and often apply only within specific areas or boroughs. As a result, landlords should never assume that licensing requirements are the same across London or elsewhere in England.
If you’re investing in or managing a smaller HMO, checking whether Additional Licensing applies should always form part of your due diligence.
Selective Licensing is a completely separate licensing scheme and is often confused with HMO licensing.
Unlike Mandatory or Additional HMO Licensing, Selective Licensing does not specifically relate to Houses in Multiple Occupation.
Instead, it allows local authorities to require licences for privately rented properties within designated areas, regardless of whether they are HMOs.
For example, a single-family buy-to-let property occupied by one household may still require a Selective Licence if it is located within a designated licensing area.
Councils typically introduce Selective Licensing schemes in areas where they want to improve housing standards, reduce anti-social behaviour or encourage higher standards of property management within the private rented sector.
This means landlords who do not own HMOs should not assume licensing requirements do not apply to them.
Because licensing schemes differ between local authorities, landlords should always check the specific requirements that apply to the area where their property is located.
Before purchasing, converting or letting a property, it is sensible to confirm:
Taking the time to understand the relevant licensing requirements before tenants move in can help avoid delays, financial penalties and unnecessary compliance issues.
If your property requires a licence, it should be in place before the property is occupied.
Failing to obtain the correct licence can result in significant financial penalties and may affect a landlord’s ability to regain possession of the property using certain legal routes.
Licensing also provides reassurance that a property meets the standards expected by the local authority and helps promote safe, well-managed living conditions for tenants.
HMOs are subject to additional safety requirements because multiple households are living within the same property.
Depending on the size and layout of the building, landlords may need to provide:
Smoke alarms and carbon monoxide alarms must also comply with current legal requirements.
The exact requirements can vary depending on the property and the conditions attached to any HMO licence.
Many local authorities specify minimum room sizes for bedrooms within HMOs to help ensure tenants have suitable living accommodation.
During the licensing process, councils may also assess whether communal areas provide enough space for the number of occupants and whether kitchen and bathroom facilities are adequate.
These standards are intended to prevent overcrowding and ensure properties remain suitable for shared living.
Managing an HMO often involves a greater level of ongoing involvement than a traditional rental property.
As well as maintaining the property itself, landlords are usually responsible for ensuring shared areas remain safe, clean and in good repair.
This may include:
Good communication with tenants is also important, particularly where several households are sharing communal facilities.
Planning permission and property licensing are two entirely separate legal requirements, and landlords should not assume that complying with one automatically satisfies the other.
In some locations, changing a property from a single dwelling into an HMO may require planning permission, particularly where an Article 4 Direction has been introduced by the local authority.
Article 4 Directions remove certain permitted development rights and are commonly used in areas where councils wish to manage the concentration of HMOs.
It is therefore possible for a landlord to need planning permission, a Mandatory HMO Licence, an Additional HMO Licence, a Selective Licence, or a combination of these depending on the property’s location, size and intended use.
Before purchasing a property with the intention of operating it as an HMO, landlords should always check both the planning position and the relevant licensing requirements.
Although HMOs require more active management, they remain a popular option for many landlords.
Some of the reasons include:
As with any investment, landlords should carefully consider the additional responsibilities alongside the potential financial return.
For landlords who are new to HMOs, there are a few common issues that are worth avoiding.
These include:
Taking advice at an early stage can often help avoid unnecessary costs and delays.
At Alex & Matteo Estate Agents, we work with landlords across Rotherhithe, Canada Water, Bermondsey, Surrey Quays, Deptford, New Cross and Peckham, providing advice on a wide range of residential lettings.
Whether you’re considering purchasing an investment property, exploring the potential for shared accommodation or simply want to understand your responsibilities as a landlord, our experienced team can offer practical guidance based on the local market.
We can also advise on property management services, helping landlords navigate the day-to-day responsibilities of letting property while remaining compliant with current legislation.
HMOs continue to play an important role in meeting London’s housing demand and can provide a valuable source of accommodation for many tenants.
For landlords, however, they bring additional legal obligations, licensing requirements and management responsibilities that differ from those associated with a standard buy-to-let property.
Understanding the differences between Mandatory HMO Licensing, Additional HMO Licensing and Selective Licensing, alongside planning requirements, safety standards and local council regulations, can help ensure your property remains compliant from the outset.
If you’re thinking about investing in an HMO or would like advice on letting property in South East London, the team at Alex & Matteo Estate Agents is always happy to discuss your options and provide guidance based on your individual circumstances.
