HMO licensing: When you need a licence and what it costs

In England, you normally need a mandatory HMO licence if a property is occupied by five or more people who form more than one household and share facilities such as a kitchen, bathroom or toilet. In Wales, mandatory HMO licensing generally applies where an HMO has three or more storeys and is occupied by five or more people forming more than one household. Councils in both England and Wales can also require licences for other HMOs through additional licensing schemes.

Smaller HMOs may also need a licence

Mandatory licensing generally applies to HMOs with five or more occupants, although Wales also retains the three-storey requirement. However, many councils run their own additional schemes covering smaller house shares in designated areas. The government's guidance is blunt: even a smaller property let to fewer people may need a licence depending on the area. The safest approach is to check your council's current licensing requirements before letting the property.

Landlords in Wales should also check whether they need to register and obtain a licence through Rent Smart Wales. This is separate from HMO licensing, so complying with one regime does not necessarily satisfy the other.

HMO licensing is only one of the legal checks landlords need to think about. Our first-time landlord checklist covers the other key requirements to have in place before letting a property.

What does holding a licence involve?

A licence lasts a maximum of five years; you need a separate one for each HMO, and you must renew before it runs out. The council may inspect the property as part of the licensing process and will assess whether it is suitable for the proposed number of occupants. Licence conditions include sending the council an updated gas safety certificate every year, installing and maintaining smoke alarms, and producing electrical appliance safety certificates on request. Councils can also add on their own conditions, such as upgrading facilities, and you can appeal conditions you disagree with to the tribunal.

The licence will normally state the maximum number of people or households permitted to occupy the property. Knowingly allowing more occupants than the licence permits can amount to an offence.

Energy efficiency is another important consideration for landlords, so it is also worth checking the current EPC rules for rental properties.

What it costs

Each council sets the fee, so there is no national price. For example, South Cambridgeshire's HMO licence fees for 2026-27 are £895 for a five-year licence covering up to five bedrooms, plus £36 for each extra room, with renewals at £544.

Worked through, a six-bedroom HMO there costs £931 for five years, or about £186 a year, and £568 to renew. Include the licence fee in your HMO running costs and check the relevant council's current fee schedule, as charges vary considerably between areas.

When working out whether an HMO investment is financially viable, it is also worth considering funding costs. Our guide to buy-to-let mortgages in 2026 explains deposits, lender affordability assessments and other factors to consider.

The cost of skipping it

Letting an unlicensed HMO that needs a licence carries an unlimited fine. In England, tenants may also be able to apply to the First-tier Tribunal for a Rent Repayment Order of up to two years' rent where a landlord has committed a relevant licensing offence. The potential financial consequences can therefore be substantially higher than the cost of obtaining the correct licence.

Buying or selling an HMO

HMO licences are not transferable from seller to buyer. If the existing licence holder will no longer hold the licence after completion, the new owner will normally need to make a fresh application if the property is to continue operating as a licensable HMO. Check the position with the local council before completion, particularly if tenants will remain in occupation. If you are buying or selling with tenants already in place, our guide to selling a buy-to-let with tenants in situ explains how this can affect the conveyancing process.

Do not assume that an existing licence guarantees that a fresh application will be granted on identical terms. The council will consider the property's current room sizes, facilities, condition and proposed occupancy when assessing a new application.

As part of your due diligence, ask the seller for a copy of the current licence and its conditions, together with any recent inspection reports, notices or correspondence from the council. These documents can help you and your conveyancer understand the property's licensing position and identify any work the council may require.

Buying an HMO can involve additional legal work around tenancies, licensing and lender requirements, which we explain in our guide to buy-to-let conveyancing costs.

If an HMO purchase or sale is in your plans, it pays to instruct early: you can compare quotes from conveyancers used to licensed property in a couple of minutes.