Rental Property and Houses In Multiple Occupation (HMO)

Recent changes to the Housing Act mean that a rented property containing 3 or more unrelated individuals is now legally classified as a House in Multiple Occupation (HMO).  

A landlord of an HMO may be required to pay a licence fee to the local council, 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 are termed an HMO for licensing purposes. Part-time landlords like yourself, who hold properties more as an investment rather than as a business, are likely to be most affected.  The fee can vary from £400 to £1,000 depending on location 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, then you may be served with an enforcement notice which requires you to apply for a licence within 28 days - or cease renting rooms in the relevant property.

The government and local councils raised awareness regarding the new Act with a nationwide press campaign, advertisements on the television, radio and more information is available on www.propertylicence.gov.uk or from your local TaxAssist Accountant.

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.