What is an HMO (house in multiple occupation)?

A property is considered a “house in multiple occupation” (HMO) if it meets certain conditions set out in the Housing Act 2004. These conditions are divided into different tests, each with its own set of criteria.

Standard Test

If your property satisfies all the following criteria, it meets the standard test and is classified as an HMO:

It consists of one or more units of living accommodation that are not self-contained flats.
The occupants of the living accommodation do not form a single household.
The occupants use the accommodation as their main or only residence. If your tenants primarily reside in the property and consider it their main home, this condition is met.
The living accommodation is solely used for residential purposes.
Rent is paid or other consideration is provided for at least one person’s occupation. If your tenants pay rent or provide some form of consideration (such as services or work) in exchange for living in the property, this condition is fulfilled.
Two or more households share one or more basic amenities, or the accommodation lacks one or more basic amenities. For example, if multiple households share bathroom or kitchen facilities, or if the property lacks basic amenities such as a toilet or cooking facilities, it meets this condition.

Self Contained Flat Test

The criteria to meet the self-contained flat test are the same as the standard test, except that they apply to an individual flat that is in multiple occupation.

Converted Building Test (not self contained flats)

If your property is a converted building, it must meet the following conditions to be classified as an HMO:

It contains one or more units of living accommodation that are not self-contained flats.
The occupants of the living accommodation do not form a single household.
The occupants use the accommodation as their main or only residence. If the tenants primarily reside in the converted building and consider it their main home, this criterion is met.
The living accommodation is solely used for residential purposes. If the converted building is used exclusively for residential purposes and not for commercial activities, it fulfills this requirement.
Rent is paid or other consideration is provided for at least one person’s occupation. If the tenants pay rent or provide consideration for living in the converted building, this condition is fulfilled.

Definitions

Basic amenities: A toilet, personal washing facilities, or cooking facilities.

Converted building: means a building or part of a building consisting of living accommodation in which one or more units of such accommodation have been created since the building or part was constructed.

Self-contained flat:

A separate set of premises (whether or not on the same floor);
which forms part of a building;
either the whole or a material part of which lies above or below some other part of the building; and
in which all three basic amenities are available for the exclusive use of its occupants.

A household:

A single person
Members of the same family living together (parent, grandparent, child, grandchild, brother, sister, uncle, aunt, nephew, niece or cousin)
Cohabiting couples (whether or not of the opposite sex),
People who are living together as a couple

Only or main residence: The definition includes person’s residing in the property for the purpose of undertaking a full-time course of further or higher education, and refugees.

What is a Section 257 HMO?

Section 257 HMOs are properties which are defined as HMOs by section 257 of the Housing Action 2004. They do not require a licence under the national mandatory standards unless a local authority includes them in an Additional Licensing scheme.

The Housing Act 2004 defines a HMO in section 257 as:

A building or part of a building that has been converted into self-contained flats, and
if the building work carried out during the conversion did not comply with the appropriate building standards, and
if less than two-thirds of the self-contained flats are owner-occupied.

The term “appropriate building standards” refers to the building standards that applied at the time of the conversion. For converted blocks of flats completed before June 1st, 1992, or subject to regulation 20 of the Building Regulations 1991, the standards equivalent to those in effect on June 1st, 1992, apply. For other converted blocks of flats, the requirements imposed by regulations under section 1 of the Building Act 1984 apply.

In an Upper Tribunal, it was confirmed that it is the landlords’ responsibility to prove that the correct buildings regulations have been adhered to, rather than for the local authority to prove that they had not been.

A flat is considered “owner-occupied” if it is occupied by a person with a lease lasting more than 21 years, by a person who owns the freehold of the converted block of flats, or by a member of the household of such individuals.

The application of this section to a converted block of flats does not affect the status of any individual flat within the block as a house in multiple occupation which may also need their own licenses.

Many local authorities further exclude types of properties from the Section 257 definition when they publish their Additional Licensing schemes; for example, these exclusions are made in the designation document from Birmingham City Council:

The HMO is specifically excluded from the scheme as it is either:

(i) a section 257 HMO consisting solely of two flats where neither of the flats is situated above or below commercial premises; or

(ii) a section 257 HMO where the flats share no internal or external common parts and which are no more than two storeys high.

So, make sure to check the Article 4 Designation document for your local authority.

Are holiday lets and short-term rentals exempt?

The Housing Act 2004, the legislation behind mandatory, additional and selective licensing in England and Wales excludes all properties where the property is not the only or main residence for the occupants.

The ‘only or main residence’ is clarified further

Full-Time Students: A person is treated as occupying the property as their only or main residence if it is “for the purpose of undertaking a full-time course of further or higher education.”
Refuge: Another condition is if the property serves “as a refuge” for those fleeing from physical or mental abuse.

So, ostensibly, if you own a property which would normally require a mandatory, additional, or selective licence, and rent it out on a short term basis, you might not need a licence. The entire defence against prosecution would be based on the assertion that the property was not the only or main residence for your occupants… which, is a very difficult thing for you to police.

You might have someone moving to the area for the first time needing to stay for a couple of weeks before they find permanent accommodation. That person who you’ve accepted for 3 months for a work placement, might have just ended their rental agreement back home and your property has become their only or main residence.

If you let your property to a third property on a rent to rent basis, and they subsequently rent the property out on a short-term basis, then you have even less control over who is in the property, yet still have all the liability if the council prosecute you because the property doesn’t have a licence.

Disclaimer: This website provides general information and does not constitute legal advice. Consult a qualified legal expert for advice tailored to your specific situation.