Social media is packed with landlords teaching the secrets of making easy money through buy-to-lets and HMO conversions. Far fewer videos help renters understand their rights in the same market.
If you rent a room in a shared house, HMO licensing is one of those rights. Knowing how it works can help you spot dangerous living conditions, challenge an illegal eviction, and in some cases claim back thousands of pounds in rent.
What does HMO mean?
HMO stands for House in Multiple Occupation. This refers to any property where multiple people from separate families live and share facilities like kitchens or bathrooms. Common examples of HMOs include student flats and flatshares for working professionals.
In 2018, there was a reported 497,000 HMOs across England and Wales, of which 61% were flats. The current estimates are higher, in part due to the rise of undocumented, smaller 3 and 4 bedroom HMOs.
What are the three types of HMO licence?
Whether your home requires an HMO licence is determined by where the property is, and how many households and people live there. There are three forms of HMO licensing:
- Mandatory HMO licensing: required for any property with 5+ people from 2+ households sharing basic facilities.
- Additional licensing: local schemes that extend to smaller HMOs, usually of 3 or 4 people from 2+ households who share basic facilities.
- Selective licensing: applies to all privately rented properties in designated areas.
HMO rules use the word "household" to refer to separate people or groups of people who are not married, cohabiting, or members of the same family.
Mandatory licensing is the universal scheme which covers England and Wales, the Additional and Selective schemes are at the discretion of the local authorities.
As licensing requirements can vary significantly between neighbouring areas, a property compliant in one borough might require licensing just across the street.
Why does HMO licensing exist?
Tragedies like the Grenfell tower fire in 2017 have brought more recent attention to the necessity of safe living conditions. However, this public discourse is not limited to tower blocks, and stretches back to the 1980s.
The usage of HMOs dates back to the 19th century, where Victorian housing was converted into HMOs to meet the new demands for workers in a more urbanised and industrial Britain. These homes often lacked any safety standards, with the first acts to address the dangerous living conditions being the Public Health Acts 1936 and 1961.
HMO safety measures were further expanded following safety concerns in the 1980s and 1990s, when overcrowded shared housing led to preventable deaths. On average, three people per week died in fires in such properties between 1985 and 1991. The modern licensing scheme we know today was introduced by the Housing Act 2004.
The original spirit of these regulations remains evident in Judges' focus on landlords' attentiveness to fire safety compliance in HMO cases.
Why would a landlord prefer an HMO?
Landlords often choose to let HMOs, or set up businesses specifically for converting existing houses into HMOs because of the possible increase in rental income. Compared with family dwellings, in HMOs you have more incomes and fewer rooms used for communal spaces, meaning a greater rent for a given property. For example:
A typical family home in Montpellier, Bristol:
- 3-bedroom house: £2,000/month (£24,000 annually)
The same property as an HMO Conversion:
- Now 5 bedrooms: £700/room = £3,500/month (£36,000 annually)
- Income increase: 75%
Why don't all landlords have the proper HMO licence?
The licensing process is straightforward: submit your required documents like floorplans and safety certificates, pay the required fee, and pass an assessment.
The fees range between councils, and are usually based on property size, but they can range from £420 for a single storey property in Denbighshire, Wales, up to £520 per bedroom in Lambeth, London. For most rental properties, the fees represent less than one month's rent.
So why are some landlords still not getting a licence?
The motive is usually found in the property's condition. For landlords who have cut corners with their property, and who fall short of HMO standards, passing the council assessment can be an involved and expensive fixing process.
What are the most common fixes to get an HMO licence approved?
Council inspectors conduct thorough evaluations of fire safety, room sizes, bathroom ratios, electrical systems, and structural integrity. The most common recommendations landlords receive include:
- Installing fire doors (£350-£1,500)
- Fire alarm systems (£1700-£3,000)
- Adding emergency lighting (£1,000-£3,000)
- Adding additional bathrooms (£5,000-£15,000)
- Upgrading electrical systems (£2,000-£8,000)
- Modifying layouts to meet space standards (£1,000+)
A £1,000 licence fee can quickly become a £20,000+ compliance project.
These landlords often choose to not approach the local authority for licensing at all, as once they receive official compliance requirements, they can no longer claim ignorance if caught operating without the proper safety measures.
Do all unlicensed HMO landlords break the rules on purpose?
Of course not all landlords are trying to skirt the rules or exploit their tenants.
Occasionally, compliance issues aren't intentional violations but result from changing regulations. Regulatory changes can create genuine confusion, particularly for amateur landlords with limited rental property experience. Properties that were compliant yesterday become non-compliant today, often without landlords realising any change has occurred.
Tenants should be aware that Judges often take into account a landlord's inexperience when determining the severity of penalties for non-compliant landlords.
Are unlicensed HMOs good for the housing shortage?
HMOs often operate in areas of housing shortage, and some landlords argue that unlicensed HMOs are beneficial, as they offer more options for affordable housing to more renters.
The reality is that in areas of housing shortage, there is also reduced pressure on landlords to maintain property standards. Vulnerable tenant groups end up accepting unsafe living conditions because alternatives are scarce or unaffordable.
This is a dangerous cycle: properties with the greatest safety risks house the larger numbers of more vulnerable tenants, and fewer safe properties are available, further exacerbating the shortage of affordable and safe housing.
Rogue landlords exploit this dynamic to cut corners, and create exactly the overcrowded, unsafe housing that HMO licensing was designed to prevent.
What are the penalties for operating an unlicensed HMO?
The penalties for operating an unlicensed HMO include civil fines, criminal convictions, and the potential to face Rent Repayment Orders by tenants.
Local authorities can impose a financial penalty (a civil penalty) on landlords of up to £40,000. This is the maximum for penalties imposed from 1 May 2026, raised from £30,000 by the Renters' Rights Act 2025.
The £40,000 civil penalty, the rent repayment order route below, and the end of Section 21 apply in England. Wales runs its own system through the Renting Homes (Wales) Act 2016 and Rent Smart Wales. Welsh tenancies became occupation contracts in December 2022, and a no-fault notice is still possible there under section 173, with at least 6 months' notice. The HMO licensing rules themselves cover both England and Wales.
It's a common misunderstanding that this civil penalty is the most a landlord can be fined for an unlicensed HMO. In reality, criminal convictions are also possible, which carry unlimited fines. In 2023 a landlord and their management company in Kensington & Chelsea were fined a combined £480,000 for a poorly managed unlicensed HMO.
Unfortunately, enforcement is inconsistent. With limited council resources and thousands of properties to monitor, many unlicensed HMOs operate without detection for years. The onus to hold these landlords accountable falls on the tenants, many of whom are unaware of their rights, or dissuaded by the time and cost it used to take to bring a claim against their landlord.
How can tenants claim rent back from an unlicensed HMO?
Tenants have protections in unlicensed HMOs. They can file an RRO1 form to bring a Rent Repayment Order (RRO) claim against their landlord. If successful, tenants can recover up to 2 years of rent for living in the unlicensed property, for offences committed on or after 1 May 2026. For an offence before that date, the limit is 12 months.
The Renters' Rights Act 2025 doubled that cap from 12 months to 2 years. It also made the maximum award mandatory where the landlord has a conviction or a financial penalty for the offence, so a tribunal has less room to award below the ceiling than it once did. Our guide to the 2-year rent repayment order cap covers the offence-date split and the new 2-year application deadline, and how to apply for a rent repayment order walks through the tribunal process itself.
Renters have further protections outside RRO claims. Section 21 "no-fault" evictions were abolished on 1 May 2026 under the Renters' Rights Act 2025, so a landlord can no longer use one against any tenant. Operating an unlicensed HMO remains a criminal offence and the gateway to a rent repayment order. And if the property was also in disrepair, as is common with unlicensed HMOs, this opens the door for additional County Court claims.
If you live in a flatshare or student house, an HMO licence may be legally required. If it's missing, you may have real protections and a route to get money back. Timing, evidence, and knowing your local rules all matter.
Not sure whether your HMO should be licensed? Remedy can check your property against the local rules and tell you whether you have a rent repayment claim worth pursuing.
