Understanding HMOs for Tenants in the UK (Licences & Rights)

Social media is packed full of landlords teaching the secrets to making easy money by flipping houses, buy-to-lets, and HMO conversions. But, fewer videos are found helping renters understand how to navigate the UK's treacherous housing market.

At Remedy, we're here to ensure that everyone can understand their rights, and enforce them. Understanding HMO licensing as a renter can help you identify dangerous living situations, prevent illegal evictions, and even be worth tens of thousands of pounds.

What does HMO mean?

HMO stands for House in Multiple Occupation (HMO). 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.

HMO licence types

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 all of the UK, 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. An easy way to check which particular licensing schemes apply to your home is by searching on Remedy.

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 horrible 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 HMO 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.

Are all HMO landlords really predatory?

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.

But aren’t 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 HMOs include civil fines, criminal convictions, and the potential to face Rent Repayment Orders by tenants.

Local authorities can issue a Penalty Charge Notice (PCN) to landlords up to £30,000.

It's a common misunderstanding that these PCNs are the maximum which a landlord can be fined for an unlicensed HMO. In reality, criminal convictions are also possible, which carry unlimited fines. One unlicensed HMO manager in Kensington & Chelsea was recently fined £480,000.

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 RR01 form to bring a Rent Repayment Order (RRO) claim against their landlord. If successful, tenants are refunded up to 12 months of rent for living in the unlicensed property.

In practice, tribunal judgements rarely exceed 70% of the maximum 12-month period, though the rules around this are expected to change in the coming Renters' Rights Bill.

Renters also have further protections outside of RRO claims. Landlords cannot legally serve Section 21 eviction notices to tenants living in unlicensed HMO properties, and, as it common with unlicensed HMOs, if the property was also in disrepair this opens the door for additional County Court claims.

Key takeaways for tenants in HMOs

A quick recap of what you need to know:

• What an HMO is: a shared home where people from 2+ households share facilities.
• Types of HMO Licences: Mandatory (nationwide for most 5+ person/2+ household shares), plus Additional and Selective schemes set by local councils.
• Why HMO licensing exists: to stop overcrowding, fires, and preventable deaths. Born from real tragedies.
• Why some HMOs aren’t licensed: higher landlord yields + costly upgrades (fire doors, electrics, extra bathrooms) can tempt non-compliance; though some landlords just don't realise.
• Penalties & tenant claims: councils can issue large fines, including criminal convictions, tenants can pursue Rent Repayment Orders (RROs), which can be substantial, and Section 21 evictions are invalid.
• The reality: HMO enforcement by Councils is uneven, but informed tenants can make the difference.

If you live in a flatshare or student house, an HMO licence may be legally required. If it’s missing, you may have strong protections and a route to get money back. Timing, evidence and knowing your local rules all matter.

Get support from Remedy

If you believe you might be living in an HMO, reach out to us at Remedy, we'd love to help. We understand the process and the law, and we can help you to take the necessary steps to protect your rights. We can:

• Confirm whether your home needs a licence and if your landlord has applied for one.
• Estimate your expected RRO claim value.
• Help you outline all the important steps (including RR01 submissions and council reporting).
• Help you plan a low-stress path that protects your rights.

Please get in touch with us at hello@remedylegal.ai