Property Rental & HMO

If your property is classified as a House in Multiple Occupation (HMO) under new legislation, then from 6th April 2006 you may need to pay a licence fee to your local council in order to continue letting the property. Part-time landlords like yourself, who view their properties more as an investment or pension, rather than as a business, are most likely to be most affected as the fee can vary from £400 to £1,000 depending on area and you may also be obliged to carry out additional work on the property.

The main objective of the licence is to ensure that sub-standard properties are no longer being let. If you choose to do nothing, the next time you hear about the Act may come in the shape of an enforcement notice through the letterbox, with a demand to apply for a licence within 28 days - or cease renting.

Previously, an HMO has meant a group of bed-sits, a hostel or a rehabilitation centre, not a residence. However, a change made in the 2004 Housing Act means rented property containing at least three unrelated individuals is now legally classifiable as an HMO - and that means it is licensable. However, licensing is at the discretion of local authorities and, in most cases, only properties with three or more floors and five or more tenants will be termed an HMO.

National government and local councils are preparing a nationwide press campaign with advertisements on the television and radio campaign to raise awareness about the new Act, but in the meantime if you require more information visit www.propertylicence.gov.uk.

Date published 5 Dec 2012

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.