HMO Licensing Exemptions UK — Which Properties Do Not Need an HMO Licence?

What is a House in Multiple Occupation (HMO)?

Before applying exemptions, it is essential to understand what qualifies as an HMO. Under the Housing Act 2004, a property is an HMO if:

• It is occupied by 3 or more people forming more than 1 household, and
• At least some living accommodation is shared (kitchen, bathroom, toilet, or living room)
• Or it is a converted building where at least one third of the flats are not owner-occupied (a converted block HMO)

Mandatory HMO licensing exemptions

Mandatory licensing applies to HMOs occupied by 5 or more people in 2 or more households. The Housing Act 2004 (Schedule 14) specifies buildings that are exempt from mandatory licensing altogether:

• Buildings managed or controlled by a local authority: Local authority-owned or managed properties are exempt from mandatory HMO licensing
• Buildings regulated by other legislation: Properties regulated under the Care Standards Act 2000 (care homes, children's homes) or similar social care legislation are exempt — these properties have their own registration regime
• Student halls of residence managed by an educational institution: Purpose-built student halls managed directly by a university or college under an agreement with the institution are exempt. Private landlords letting to students in converted houses are generally NOT exempt
• Buildings occupied by religious communities: Buildings principally occupied by a religious community under the direction of a religious body are exempt
• Buildings with an owner/family member in occupation: Where the owner (or a member of the owner's family) lives in the building as their only or principal home and shares accommodation with no more than 2 lodgers, the property may be exempt. This is the 'resident landlord' or 'lodger exemption' — the owner must genuinely live in the property as their home
• Buildings subject to a management order: Where a local authority has made an Interim or Final Management Order over the property, the property does not additionally need a licence while the order is in force
• Properties with a valid temporary exemption notice (TEN): A TEN can be granted by the local authority where a property temporarily does not qualify for a licence (e.g. the property is being prepared for sale, or the licensing regime is changing). TENs last for 3 months and can be renewed once only

The resident landlord exemption — detail

The resident landlord exemption is the most commonly relied-upon exemption from mandatory HMO licensing. It applies where:

• The owner lives in the property: The owner must genuinely occupy the property as their only or main home — not an investment property in which the owner has a room nominally available
• No more than 2 lodgers: The owner can share with up to 2 other people (lodgers or family members) without mandatory licensing being triggered. Three or more non-family occupants means the exemption does not apply
• Genuine sharing: The arrangement must involve genuine sharing of living accommodation (kitchen, bathroom) — a property divided into entirely self-contained flats where the landlord occupies one flat is not a lodger/sharing arrangement and is assessed differently
• Not applicable to converted blocks: The resident landlord exemption does not apply to converted blocks of flats (even if the freeholder lives in one flat)
• Exemption ceases if the landlord moves out: If the resident landlord moves out, even temporarily, the exemption may cease to apply and mandatory licensing could be required if the occupancy threshold is met. Apply for a licence promptly

Additional licensing exemptions

Additional HMO licensing schemes (introduced by local authorities for smaller HMOs with 3–4 occupants) can specify their own exemptions in the designation order. Common exemptions include:

• Resident landlord properties: Most additional licensing schemes exempt properties where the owner/landlord lives on the premises with lodgers, in the same way as mandatory licensing
• Properties managed by accredited landlords: Some local authorities exempt landlords who are members of a recognised accreditation scheme (such as the NRLA or a local landlord accreditation scheme). Check the specific designation order for your local authority
• Newly built or converted properties: Some additional licensing schemes exempt properties built or substantially converted within a certain period (e.g. within 10 years of the designation)
• Social housing and registered providers: Social housing managed by registered providers of social housing is typically exempt from additional licensing
• Local authority-owned properties: Council-owned properties are exempt from additional licensing just as they are from mandatory licensing
• Purpose-built student accommodation managed by a PBSA operator: Purpose-built student accommodation managed directly by the operator (not a private landlord) is typically exempt under additional licensing designations

Selective licensing — which properties are exempt?

Selective licensing applies to all private rented properties in a designated area (not just HMOs). Selective licensing schemes have their own Schedule 14 exemptions:

• Owner-occupied properties: Properties occupied entirely by the owner (and family) without any tenants are exempt from selective licensing
• Registered social landlords: Properties owned and managed by registered providers of social housing are exempt
• Holiday lets and short-term lets: Properties let on a holiday let basis (typically less than 31 days at a time) are generally exempt from selective licensing, though this depends on the specific scheme designation and the short-term let registration scheme
• Properties subject to mandatory or additional HMO licensing: Properties that already require and hold a mandatory or additional HMO licence do not additionally require a selective licence — they cannot be dual-licensed
• Buildings regulated under Care Standards Act: Care homes and similar regulated premises are exempt
• Student accommodation managed by educational institutions: University-managed halls are typically exempt, though privately let student houses in the selective area are not

Temporary Exemption Notices (TENs)

A Temporary Exemption Notice is available where a property temporarily does not qualify for licensing — for example, where a licensing scheme is about to change, or where the property is being prepared for sale.

• Duration: A TEN lasts 3 months from the date of issue. The local authority can grant one renewal only (total of 6 months maximum protection)
• Application: Apply to the local authority before the licensing requirement triggers — do not wait until after the property is occupied without a licence
• Grounds: The local authority must be satisfied that there are reasonable grounds for not applying for a licence — typically an imminent end to the HMO use (sale, redevelopment) or a pending licensing designation change
• Not a substitute for a licence: A TEN only provides temporary protection while a licence application is being prepared or the HMO use is genuinely ending. It cannot be used indefinitely to avoid licensing
• After a TEN expires: If the HMO is still occupied and no licence has been obtained, the property is unlicensed and the landlord is committing a criminal offence

When exemptions cease — landlord action required

HMO licensing exemptions can cease to apply if the circumstances change. Key triggers that end an exemption:

• Resident landlord moves out: Once the owner/landlord vacates the property (even temporarily), the resident landlord exemption does not apply. Apply for a licence immediately if occupancy remains at 5+ persons or if the property is in an additional licensing area
• Change in occupancy: If the number of occupants increases above the threshold for the relevant licensing regime (e.g. from 2 lodgers to 3), the exemption may no longer apply
• New local authority designation: If your local authority introduces a new additional or selective licensing scheme, previously exempt properties may require a licence — check new designation orders promptly
• TEN expiry: If a Temporary Exemption Notice expires without a new licence being obtained, the property is unlicensed from the date of expiry
• Change in management: If management changes from an exempt manager (e.g. an educational institution) to a private landlord, exemption typically ceases

Consequences of operating without a required licence

Getting the exemption analysis wrong and operating unlicensed carries severe consequences:

• Criminal offence: Operating an unlicensed HMO is a criminal offence under section 72 of the Housing Act 2004. On conviction, there is an unlimited fine
• Civil penalties up to £30,000: Local authorities can impose civil penalties of up to £30,000 as an alternative to prosecution for each unlicensed property
• Rent Repayment Order: Tenants (or the local authority) can apply for a Rent Repayment Order of up to 12 months' rent — recoverable against the landlord where the property was unlicensed
• Invalid Section 8 notices: An unlicensed HMO landlord cannot serve a valid Section 8 notice relying on Ground 8 (mandatory rent arrears) while the property remains unlicensed
• Private Landlord Database: Civil penalties and prosecution results are entered on the national Private Landlord Database (Rogue Landlord Checker) — visible to tenants, agents, and other local authorities

Frequently asked questions