What is a House in Multiple Occupation (HMO)?
With the cost of living continuing to rise, more tenants are turning to Houses in Multiple Occupation (HMOs) as a cost-effective housing option.
An HMO is a property rented out by at least three people from more than one household (for example, individuals who are not part of the same family). Typically, tenants have their own bedrooms but share facilities such as the kitchen and bathroom. While HMOs are common in student housing, they are increasingly popular with single tenants looking to save on rent.
When is a House in Multiple Occupation Licence Required?
Most landlords who want to rent out an HMO must apply for a licence from the local council. A licence is compulsory if:
- The property is rented to five or more people from more than one household.
- Tenants share kitchen, bathroom or toilet facilities.
- Rent is paid by at least one tenant.
Failing to obtain an HMO licence when required can have serious legal and financial consequences.
Consequences of Operating an Unlicensed House in Multiple Occupation
Running an HMO without the correct licence can expose landlords to heavy penalties and limit their control over their property. Key consequences include:
1. Rent Repayment Orders (RROs)
- Under the Housing Act 2004, tenants (or local authorities paying housing benefit) can apply for a Rent Repayment Order.
- This requires landlords to repay up to 12 months’ rent received during any period when the property should have been licensed but wasn’t.
- Case law confirms that an RRO can only be made against the immediate landlord under the tenancy agreement.
2. Banning Orders
Councils can apply for a ban on non-compliant landlords, preventing them from renting out properties altogether. This could leave landlords unable to legally let part or all of their portfolio.
3. Inability to Regain Possession
- Without a valid HMO licence, landlords cannot use Section 21 of the Housing Act 1988, which allows “no-fault” evictions.
- This can leave landlords stuck with tenants and unable to manage their property as they wish.
Support for Landlords and Tenants
If you are a landlord or tenant facing issues around Houses in Multiple Occupation, our Real Estate Litigation Team at Talbots Law can provide expert advice and support. Get in touch today.
Disclaimer
The contents of this blog or any other published by Talbots Law cannot be considered as legal advice. You should take no action without prior consultation with a qualified solicitor or legal professional. The contents of this blog refers to the process in England and Wales.