HMO Planning And Licensing Explained

In this blog, I want to explain to you the difference between HMO Planning and Licensing Requirements. This is a topic that people get very confused about. In fact, so much so, that it puts them off of investing in HMOs, as they do not understand the HMO regulations and requirements. That's a real shame, because HMOs are one of the best strategies to quickly replace your income. So let me explain what you need to know.

I have been investing in property since 1995 and I got my first student HMO in 1998.  While I know about HMO Planning and Licensing, I understand how people can get confused. So we'll keep this a simple as possible.

HMO Planning Requirements

First of all, let's talk about HMO planning requirements. So if you have a large HMO with 7 or more people living in that property, it's no longer seen as a residential property. This will make it "Sui Generis" which means it's in a class of its own.

If you have a smaller HMO for up to 6 people, you can take a normal house and convert it to a HMO and you will not need planning permission in most areas. This is because you can use permitted development rights.

Article 4 Planning Permission

However, in an area that has been deemed an Article 4 Direction area, where permitted rights to set up a HMO are withdrawn, you will need apply for planning permission. The local council doesn't want more HMOs in the area, and so it's likely that the planning application will be automatically rejected.

Now, you can always appeal, and if it meets the criteria, it might be that you do get HMO planning permission. But, what you don't want to do, is to go and buy a house in an Article 4 Direction area, thinking you can turn it into a HMO, as you probably won't be able to.

HMO Licensing Requirements

Now let's look at the other side; HMO Licensing. It used to be that if you had a property with 5 or more tenants, on 3 or more floors, you would need to apply for a mandatory HMO license. However in October 2018, the Government changed the regulations. This is so that any property that has 5 or more tenants needs to have a HMO license. There must be 5 or more unrelated tenants. If there's a family of 5, that's not a HMO.  Nevertheless, you need to check with your local council as some areas limit it to 3 unrelated tenants instead as that is closer to the typical definition of a HMO.

As mentioned earlier, HMO Planning and Licensing are completely different matters. You may have a property that requires a license but doesn't need planning, or vice versa. Some properties may need both Licensing and Planning, or neither. You must think about planning separately first, and then about licensing in order to understand what the fundamental requirements are.

It's important that you adhere to HMO regulations because you could get fined. If it's planning, you might have to change the property, so it's important you understand the regulations and follow them.

Most people don't educate themselves and so are put off of actually doing HMOs because they don't really understand it. On my 12-month Property Mastermind Programme, we teach many different strategies including HMOs. Once you know how it works, it's quite straightforward. I maintain that HMOs are one the best strategies to quickly replace your income.

I hope this article has been interesting for you and you now understand the HMO Planning & Licensing Requirements. Share it to your friends and family who might find it useful.