A rise in demand for affordable accommodation has led to an increase in Houses in Multiple Occupation – an attractive proposition for landlords and tenants alike.
For tenants looking for ways of saving money, shared accommodation is one of the cheapest rental options. It also offers a greater ROI for landlords due to multiple tenants paying rent, as the total income is usually greater than that of a single household property. Having multiple income streams also means there’s less likely to be a time when the landlord isn’t receiving any rent, which can happen with a traditional house or flat
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The legal requirements and regulations that landlords must comply with when managing HMOs are more complex than those of a traditional property. Understanding your responsibilities is essential to staying compliant and avoiding penalties.
HMO property boom
The number of new HMO licences in England increased by a record 27,177 in 2024, compared with 23,712 in 2022 and 7,839 in 2018, according to research by data analysts at Searchland. The biggest increases have been in the east and north-west of England, where applications have increased by 55% and 47% respectively.
A poll of local authorities revealed there were 18,454 HMOs in Wales in 2024, up 2% from 2023. The highest number was concentrated in Cardiff at 3,072. In Scotland, there are around 15,400, after a steady increase annually since 2001, when mandatory licencing was introduced. The biggest concentration of 6,000 properties is in Edinburgh. The number in Northern Ireland has seen a slight increase from 5,881 to 6,600 since 2018, with the highest concentration of 60% being in Belfast, particularly in the Holylands area. In England, as of 2024, there were an estimated 362,000 HMOs, representing around 10% of the total private rental stock and by far the biggest number of the four Home Counties.
Licencing requirements
In England and Wales, the definition of a house in multiple occupation is a property rented out by at least three people who aren’t from one household, but who share facilities, such as the kitchen and bathroom. If your property has less than five tenants, you should contact the local authority to find out what the local regulations are on licencing, as it can vary from borough to borough.
A licence is mandatory if you’re renting out a large HMO in England or Wales, which is a property rented to at least five people from more than one household who share kitchen, toilet and bathroom facilities. Operating without a licence in England and Wales can lead to serious penalties for landlords, including an unlimited fine if convicted in court, or a civil penalty of £30,000 issued by the local council.
In Scotland, licencing is mandatory if your property is occupied by three or more individuals who are unrelated and share amenities including the bathroom and kitchen. Operating an unlicenced property in Scotland is a criminal offence punishable by a fine of up to £50,000.
In Northern Ireland, it’s also compulsory to have a licence, as a result of the Houses in Multiple Occupation Act (Northern Ireland) 2016. The penalty for non-compliance is a fixed penalty of £5,000, or £20,000 if the case goes to court.
Essential HMO safety standards
In order to meet mandatory requirements, landlords must also comply with a number of important safety standards. These come under the umbrella of the Housing Health and Safety Rating System (HHSRS) and include relevant furniture standards.
The HHSRS is a framework used by local authorities in the UK to assess risks in residential housing and ensure they are dealt with appropriately – main hazards addressed include damp and mould, structural issues, electrical faults, poor ventilation and overcrowding. It also includes ensuring the HMO furniture complies with safety regulations, as laid out in the Furniture and Furnishings (Fire) (Safety) Regulations 1988. All furniture, especially upholstered items, must be fire-resistant and display labels confirming compliance. Upholstered items must pass the cigarette and match resilience tests. Bed bases and mattresses aren’t required to have permanent labels, but must meet the recognised BS7177 safety standards.
Tenants are permitted to check whether the landlord furniture packages supplied meet the relevant standards and can inform the landlord of any concerns. Due to the importance of adhering to the law, many landlords choose furniture packages from a reputable supplier, saving time, and usually money, safe in the knowledge the items are fit for purpose.
Non-compliance with HHSRS can result in a range of penalties including fines, rent repayment orders and even banning orders for landlords in serious cases. Fines of £30,000 per offence can also be enforced in England and Wales under the Housing Act 2004. Local authorities are empowered to take enforcement action, such as carrying out required repairs at the landlord’s expense, or imposing civil penalties if the work isn’t completed in a timely and satisfactory manner.
What are HMO tenant rights?
The Housing Act 2004 protects tenants’ rights in England and Wales, supported by the subsequent Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 and the Management of Houses in Multiple Occupation (Wales) Regulations 2006. In Scotland, the main law protecting tenants is the Housing (Scotland) Act 2006, along with subsequent amendments. In Northern Ireland, the Houses in Multiple Occupation Act (Northern Ireland) 2016 and the Private Tenancies Act (NI) 2022 serve a similar purpose.
In addition, the Tenant Fees Act 2019 applies in England, outlawing renters’ letting fees and capping tenancy deposits paid in the private rented sector. The Act aims to reduce the costs that renters face at the outset and throughout their tenancy. They can see at a glance what the rent charges will be, without hidden costs.
As well as managing their properties in terms of licencing and safety requirements, landlords also have a responsibility to carry out regular inspections and timely repairs, oversee waste management and report significant changes to the licencing authority. While tenants are ultimately responsible for disposal of their own waste, the landlord must ensure adequate bin provision, storage and disposal methods, and inform tenants about recycling practices.
Serious breaches of HMO law
Non-compliance with the law can have serious consequences, not only endangering tenant safety, but ruining the landlord’s reputation and leading to hefty fines.
In December 2024, Liverpool HMO landlord Sheikh Ryhan Allen Miah, director of SRA Property Ltd, and his company were fined a total of almost £52,000 by Liverpool Magistrates Court after pleading guilty to 23 safety related offences. SRA Property and the director received fines of £37,973 and £13,991 respectively for multiple breaches. These included defective fire doors and fire detection equipment, serious trip hazards and various disrepairs during an inspection of two properties in September 2023. The judge described the breaches as being “extremely serious”.
Prior to the conviction, the director and company were served with an enforcement notice, but didn’t carry out the required works, leading to the substantial fines.
For landlords operating HMOs, compliance with regulations is not optional; it’s a legal and ethical responsibility. The rules are in place to ensure tenant safety and maintain housing standards.