Letting agents must ensure their landlords properties are properly licensed or they could risk prosecution and an unlimited fine or a civil penalty of up to £30,000, while their landlords could be ordered to repay tenants up to 12 months’ rent. Recent research showed that 75% of privately rented properties in the capital that required a licence under mandatory HMO or additional licensing schemes were operating without one, putting letting agents, landlords, and their tenants at risk, so it’s important that letting agents are aware of their obligations.
Large HMOs in England or Wales must be licensed. A house in multiple occupation (HMO) is a property rented out by at least three people who are not from one household and share facilities in the property, like the bathroom and kitchen. A family or couple would be considered a household, while friends in a house share would not.
A property is defined as a large HMO if all of the following apply:
- it is rented to five or more people who form more than one household
- some or all tenants share toilet, bathroom or kitchen facilities
- at least one tenant pays rent (or their employer pays it for them)
Smaller HMOs may still need a licence, depending on the area the property is in. Even if a property is smaller and rented to fewer people, it may still need a licence, depending on the area. This can be checked with the property’s local council.
In order for a property to be licensed, it must:
- be suitable for the number of occupants (this depends on its size and facilities),
- the manager of the house - the landlord or an agent - must be considered to be ‘fit and proper’ - for example, they don’t have a criminal record or previous breach of landlord laws or code of practice.
The landlord or agent is also required to:
- send the council an updated gas safety certificate every year,
- install and maintain smoke alarms,
- provide safety certificates for all electrical appliances when requested.
The council could also add other conditions to the HMO licence, for example, improving the standard of the property’s facilities.
A rental property might still be subject to additional licensing requirements, even if it isn’t an HMO. Under the Housing Act 2004, local authorities have powers to introduce selective licensing of privately rented homes to address problems in their area caused by low housing demand and/or anti-social behaviour. You will need to check with the relevant local authority to find out if a rental property needs to be licensed.