The ultimate guide to letting an HMO property - Total Landlord Insurance

September 5, 2023
The ultimate guide to letting an HMO property - Total Landlord Insurance

Read an interactive and user-friendly version of this guide below.

Houses in Multiple Occupation (HMOs), also known as house shares, are properties that are rented out to multiple unrelated tenants.

There are two ways that this can be done:

  1. Either all the tenants sign the same tenancy agreement on a ‘joint and several basis’ 
  2. Each tenant has a separate agreement for their own room, which includes shared use of the rest of the property 

Around 20 years ago, the HMO sector was mainly made up of tatty student housing and very basic room rentals for those on low incomes.

But through the 2000s, as the buzz around buy to let property investment became much more widespread, landlords realised there was a demand – particularly from young working adults - for affordable, good quality accommodation. 

With room-rent HMOs, tenants pay rent for their own private bedroom and then benefit from all the amenities of a large house, which is maintained by the landlord. And because their rent is usually inclusive of all bills, it’s easy for them to budget.

Many of those moving away from home for the first time or starting a job in a new city like the idea of living with others in a sociable house share. It also tends to suit people whose job requires them to move frequently, people who work long hours – e.g. in healthcare or as cabin crew - and those who simply don’t want to have to worry about looking after a whole property themselves. 

As lettings legislation has tightened up over the past 15 years, particularly around health and safety for tenants, the standard of HMOs has improved further and there are now professional houseshares that almost have a ‘boutique hotel’ feel. And given the way that rents have risen through the past few years, and the severe shortage of available accommodation in many towns and cities across the UK, demand can be strong for this kind of affordable, convenient housing.

While HMOs are more time-consuming to manage and the operating costs are higher than for a single-let property, the rental profits are what make it worthwhile for landlords. And although the relative cost of making sure you’re following HMO requirements and being legally compliant is higher than it was 15 years ago, and the cost of living has pushed up the price of utilities and maintenance, yields for HMO property are still leading the private rental market.

Paragon Banking Group’s PRS report for Q1 2023 in England shows that HMO property  generated the best rental yields at 6%, versus 5.3% for houses and 5% for flats and bungalows. And their latest research shows that HMO yields around the UK are currently varying from around 6% to 9% (as at mid-2023).

However, it’s important to understand that with greater profits come extra responsibilities. Letting any property requires a huge amount of knowledge and carries a certain amount of risk, but both those are heightened when it comes to HMOs. It’s also true that because the yields can be higher, many landlords have entered this market without checking out the supply and demand in their area. This means that although HMOs can make money, some areas have become over saturated, so knowledge and research are essential to invest and run HMOs successfully.  

In this ultimate guide to HMOs, we’ll look at:

  • What is an HMO
  • Student HMOs and the impact of the Renters (Reform) Bill on student HMO properties
  • HMO licensing
  • The laws that apply to letting a property as an HMO including the latest fire safety requirements in HMOs
  • Who is responsible for council tax in an HMO
  • HMO tenancy agreements
  • The pros and cons of investing in an HMO property 
  • How you can minimise the risks of being an HMO landlord
  • HMO insurance
  • What to know and consider if you’re thinking of converting an existing property into an HMO
  • FAQs from HMO landlords

What is an HMO?

The legal definition of a House in Multiple Occupation (HMO) in England and Wales is:

  • There are three or more occupiers, who form more than one household
  • The occupiers share toilet, bathroom or kitchen facilities

If there are at least five occupiers, the property is defined as a ‘large HMO’ and must be licensed.

Each tenant usually rents and exclusively occupies either a room or a bedsit in the HMO, then enjoys the use of the common parts of the property, such as the kitchen and bathroom, and often a living room.

Because the tenants are unrelated, usually don’t know each other and tend to be moving in and out at different times, they will each sign their own tenancy agreement.

Student tenants and HMOs

Most student houses qualify as HMOs as they are usually home to three or more unrelated people who are sharing facilities. 

However, one of the big differences between student lets and other HMO properties, is that students will often go into a house share as a group, all moving in and out at the same time.

As such, it’s common for landlords to have students all sign one joint tenancy agreement for the whole property (although rent may still be calculated on a ‘per room’ basis). This means each of them is jointly and severally liable for the rent, bills and damage – i.e. if one of them leaves or fails to pay their share of the rent, the rest have to cover it. 

And because the academic year only runs for around nine months, landlords generally ask students to sign a 12-month tenancy agreement, so that they’re not left with a vacant property over the summer holidays. In contrast, tenants in other types of HMO may have no fixed minimum period.

This student HMO market is generally a reliable source of income offering some of the best rental yields for many UK landlords. To find out more, read our ‘Ultimate landlord guide to student properties’.

The potential impact of the Renters (Reform) Bill on student HMOs

One of the key concerns about the proposal to end fixed-term ASTs and abolish section 21 is the impact those changes would have on the student HMO market.

If landlords were unable to get students to commit to a 12-month tenancy, they could leave at the end of the summer term, risking landlords having a completely vacant property until the start of the following academic year. Without the ability to issue a section 21, landlords wouldn’t be able to let to a short-term tenant for just those few months over the summer, and a three-month void would make the investment unviable. 

Clearly, these aspects of the Bill need rethinking, and will undoubtedly be addressed as it is debated in Parliament. 

For more information on the Renters (Reform) Bill, see our dedicated guide.

When do you need an HMO licence?

In England and Wales, it is mandatory for every large HMO to be licensed. That’s any property where:

  • There are five or more tenants, who form more than one household
  • The tenants share toilet, bathroom or kitchen facilities

However, each local authority also has the power to require any HMO – of any size – to be licensed, so you must check with your local authority whether they have any of these ‘additional licensing’ schemes in place.

The licence relates to the property, not the landlord, so you need a separate licence for each HMO that falls under the requirements. A licence is usually valid for a maximum of five years and must be renewed before it runs out.

It’s a criminal offence not to have an HMO licence if one is required and offending landlords can face an unlimited fine. In addition, tenants can also apply to the First Tier Tribunal for a Rent Repayment Order if their landlord has not obtained a licence, which can result in them being awarded up to 12 months’ worth of rent.

Failure to comply with HMO requirements can therefore be very expensive - landlords letting HMOs are regularly fined for not being licensed, so read our previous article, ‘Landlord fines: How much are the charges and how do you avoid them?’ You can apply for an HMO licence at GOV.UK.

Different rules apply in Scotland and Northern Ireland – see our separate guide on licensing for more information and advice.

What are the different types of HMO licence?

There are two categories of HMO licensing: 

Mandatory licensing

Large HMOs – those that are occupied by five or more people from more than one household, who share facilities – must be licensed under national law. 

The exception to this rule is large self-contained flats (containing five or more tenants) within a block that has three or more self-contained flats.

Additional licensing

Each local authority in England and Wales has the power to extend licensing requirements to smaller HMOs. Additional licensing is entirely at the discretion of the council and can be applied to any area – e.g. an individual ward, a certain street or the entire local authority. As a result, the rules can vary wildly from even one part of a city to another, which can make it very tricky for landlords to know and keep up with their obligations.

So, if you’re planning to let a property as an HMO, it’s essential to contact your council to find out if your property requires a licence and how much it will cost. Even if there  isn’t currently a licensing scheme in place, it’s worth getting on their mailing list (if they have one) so you’ll be notified if the situation changes. 

You can check your HMO property postcode and find out more about HMO licensing on GOV.UK or speak to a good local agent who should know which streets have which type of licensing. 

What are the HMO licensing requirements?

Under mandatory licensing rules, you must make sure that:

  • The property’s size and facilities are suitable for the number of occupants 
  • Whoever is managing the house is a ‘fit and proper’ person – and the council will carry out checks to make sure the landlord or agent does not have a criminal conviction, hasn’t breached any landlord laws, etc.

You must also:

The council may then add other conditions to your licence, e.g. improving the standard of certain facilities. 

Note: If you consider the conditions unreasonable, it may be worth taking legal advice as it is possible to challenge them, and you may be able to get some of the most onerous conditions removed.  

Councils may also deploy an inspector to visit your property to make sure it is suitable as an HMO and, if all conditions are satisfied, a licence will be issued. 

Be aware that if you fail to obtain a licence where one is required or you breach the conditions of your licence, you could face an unlimited fine in court. Plus, your tenants can apply for a Rent Repayment Order, which can award them up to 12 months’ worth of rent.

How much is an HMO licence?

Costs vary, as they are set by individual councils. The licence fee is usually payable when you apply and is generally non-refundable, even if the licence is refused.

There is usually a standard fee for a certain number of bedrooms, then a charge for each additional bedroom. Renewals tend to be offered at a reduced rate and there is often a discount for accredited landlords. However, the level of fees and charging structure can vary significantly – for example:

In the East Riding of Yorkshire, the licence fees for a five-bedroom property from April 2023 are £1,016.50 for a new application, £856 for a renewal application and £25 per additional bedroom.

In the Bournemouth, Christchurch and Poole Council area:

  • Fees are charged in two stages - when the application is made and then after the intention to grant the licence is issued:
  • New application: £764 (£476 + £288)
  • Renewal application: £654 (£397 + £257)
  • Fees are for properties with up to nine households – for those with 10 or more, there is a charge of £16.50 per additional unit
  • A 20% licence discount is available to accredited landlords

Meanwhile, a licence for a five-bedroom HMO in the London City of Westminster costs a total of £1,450 (charged in two stages), plus £65 for each additional bedroom, with a 10% discount available for accredited landlords.

For information on your local council and to apply for a licence, simply input the property’s postcode on the GOV.UK website.

Complying with HMO legislation

In addition to obtaining a licence if needed, HMO landlords must also comply with specific HMO property requirements, as well as the general private rented sector legislation which applies to all landlords. This includes the Homes (Fitness for Human Habitation) Act 2018, which came into force for all tenancies in March 2019 and provides tenants with greater powers to hold their landlord to account if their rental property does not meet a good standard.

HMO fire safety requirements

Fire safety regulations are possibly the most important safety requirement for buildings occupied by multiple households. While exact requirements for fire safety in licensable HMOs can vary slightly from one area to another, as it is ultimately the local authority that sets and enforces the rules, HMO landlords should meet the following minimum fire safety standards:

  • Carry out a written risk assessment, which must be updated annually
  • Install mains-powered, interconnected fire alarms. If the HMO is three storeys or higher, an alarm system with a central panel is required. There must be:
  • A smoke alarm on each storey where there is living accommodation
  • A smoke alarm in each individual ‘unit’ (i.e. bedroom or bedsit)
  • A heat alarm in high-risk rooms, such as kitchens

Landlords must also:

  • Make sure the alarm system is maintained in good working order
  • Have a competent person carry out maintenance on the fire alarm system, according to the manufacturer’s instructions  
  • Provide evidence of the regular checking/servicing of fire alarms to the local authority on request
  • Have multi-purpose fire extinguishers on each floor in the common parts (e.g. hallway and landings)
  • Install fire doors, fitted with closers
  • Provide a fire blanket in the kitchen
  • Fit thumb-turn locks on the main exit doors
  • Display notices giving tenants with instructions on what to do in the event of a fire 

Your local authority may impose other requirements, such as emergency lighting and escape route signage, so you must check with the housing department before letting the property.

Even in smaller HMOs that are not subject to licensing, it is advisable to go over and above with fire safety measures to make sure your tenants are kept safe.

We’d suggest that the best way to make sure you are meeting your legal fire safety obligations is to have a local council HMO Enforcement Officer or a fire safety officer visit the property to advise you on exactly what’s required.

More information and advice on fire safety in rented properties can be found in our ultimate guide to fire safety regulations for landlords.

Fire Safety Regulations 2022

On 23 January 2023, the Fire Safety Regulations 2022 came into force. For all multi-occupied buildings that fall under the Building Safety Act 2022, a ‘Responsible Person’ (RP) must be appointed to carry out certain duties. 

The requirements increase with the height of the building, but these are the minimum duties of the RP that will apply to all HMOs:

For all HMOs, these duties include:

  • Ensuring fire safety instructions - which must include the evacuation strategy and how to report a fire - are displayed in the building
  • Providing all residents with certain information about fire doors, including that they should be shut when not in use and any faults or damage should be reported to the RP
  • Making sure that these instructions and information are given to residents when they move in and every 12 months after that.

From 1 October 2023, the next stage of the Building Safety Act (Section 156) - which applies to fire safety in communal parts - comes into force. These requirements apply to non-domestic premises, such as where people work, visit or stay. This includes workplaces and the non-domestic parts of multi-occupied residential buildings (such as communal corridors, stairways and plant rooms). In the private rented sector, they apply to landlords (RPs) who have control over the communal parts of buildings, typically landlords who let properties by the room. The requirements do not apply within individual domestic premises.

The new legislation has the effect of amending the Fire Safety Order and introducing new rules on the performance of fire risk assessments and the provision of information to tenants about fire safety risks. 

The Government has published guidance explaining what RPs need to do as a result of these changes made to the Regulatory Reform (Fire Safety) Order 2005, through the Building Safety Act 2022. Check your fire safety responsibilities on GOV.UK where there is full list of amendments.

Read more about the new fire safety regulations in our separate guide, ‘Cladding and the Building Safety Act 2022: What do landlords need to know?’.

Other HMO property requirements

In addition to fire safety, there are a number of other health and safety requirements that HMO landlords must comply with:

Gas and electrical safety

gas safety check must be carried out each year and the full electrical installation must be checked at least once every five years. Current certificates must be provided to tenants. All electrical appliances provided must be safe, and the best way to make sure of this is to have them PAT tested annually, although this is not law.

Energy performance certificate

The requirement to have an Energy Performance Certificate (EPC) with a minimum rating of E in order for a property to be legally let, only applies to self-contained properties. So, if your HMO is let to tenants on a room-only basis, an EPC is not required. However, if the whole property is let to house sharers that have signed one AST – e.g. students – then an EPC is required and a copy of the certificate must be provided to new tenants.

Whether you need an EPC or not, it’s advisable to retain the one you were given when you bought the HMO and update it every 10 years. It doesn’t cost very much and will help you know if your property needs upgrading in the future when all rental properties are likely to require an energy performance rating of ‘C’. Find out more in our article about EPCs and energy efficiency laws

Legionella risk assessment

All landlords should carry out a risk assessment for legionella, although the Health and Safety Executive states that this doesn’t have to be detailed. Check that toilets are flushed regularly, and if there is a hot water cylinder, make sure the water is stored at 60 degrees Celsius.


HMO landlords must make sure that the property is not overcrowded and provide cooking, washing and waste facilities suitable for the number of tenants that are in the property. See the NRLA website for more details.

Minimum room sizes

A room cannot be let as a bedroom if it does not meet the following minimum size requirements:

  • One person aged over 10 years – room must be not less than 6.51 sqm
  • Two persons over 10 years – room must be not less than 10.22 sqm
  • One person aged under 10 years – room must be not less than 4.64 sqm

Maintenance and repairs

All HMO landlords – regardless of whether the property requires a licence - must comply with The Management of Houses in Multiple Occupation (England) Regulations 2006. These include:

  • The person managing the HMO must provide their contact details to all tenants and have them on display in the property
  • All means of escape from fire must be kept free from obstruction and any fire-fighting equipment kept in good working order
  • The property must be safe, including roofs and balconies and windows with low sills
  • The water supply and drainage must be kept in a good and clean condition and protected from frost damage
  • The common parts must be maintained in a good and clean decorative order and kept safe, with adequate lighting
  • Living accommodation must be in a good and clean condition at the start of the tenancy and the internal structure and fixtures and fittings maintained in good and clean working order, including windows
  • Adequate waste bins, bags and storage facilities must be provided and the manager must make sure there is appropriate collection of waste 
  • Outside areas - including outbuildings and forecourts used by occupiers - must be maintained and boundary walls and fences kept in good repair

Read more about landlords’ and tenants’ repairs responsibilities.

Council tax

Usually, when a property is classed as an HMO, or when tenants pay rent for individual rooms on individual tenancy agreements, the landlord is responsible for paying council tax. So remember to factor this into your room rental calculation, as well as the cost of utilities and services.  

It’s worth noting that, as the quality of HMO accommodation has improved, some local authorities are assessing them in such a way as to attract a council tax band for each individual unit. Either before you invest in an HMO, or if you have an existing one, check whether the local authority is one of the 50 plus  areas across the UK that are re-banded by the Valuation Office Agency (VOA) as containing multiple ‘individual homes’ rather than just one for council tax purposes. 

The potential good news is that the Government has held a consultation with the proposal that HMOs should always be valued as a single dwelling (other than in exceptional circumstances) to help make sure the council tax liability remains with the landlord and tenants don’t become subject to their own individual council tax bills. However, at the time of writing we are still awaiting the feedback. 

If you have a student HMO and all the tenants are in full-time education, the property is not subject to council tax. However, if even one of the occupiers ceases to be a student, council tax will become payable for the whole property.  It is your responsibility to prove that all of your tenants are in full-time higher education and if you can’t, you may be liable for the bill. Find out how to apply for an exemption here. And read our guide to when is a landlord responsible for council tax for more information on council tax in rental properties. 

And for more information on letting and managing student HMOs, read our ultimate landlord guide to student properties.

HMO property tenancy agreements

An Assured Shorthold Tenancy agreement (AST) can be used for both individuals and groups, and this is the most common tenancy agreement used for HMOs in England.

In Wales, you should use an occupation contract (which must contain the various fundamental and supplementary clauses as prescribed in regulations, suitably adapted), and in Scotland a private residential tenancy agreement.

While there is no legal requirement for landlords in England to have a written tenancy agreement, it’s important to know that without one, many insurers won’t be able to offer you HMO insurance cover.

And without a tenancy agreement, landlords also have reduced legal security in the event that landlord-tenant relations deteriorate.

What to include in the tenancy agreement

Tenancy agreements differ between properties, but some essential elements apply to all tenancy agreements. The names of everyone involved, cost of rent, deposit amount, address of the property, tenancy start and end date, and landlord and tenant obligations must always be included. 

And for HMOs where the rent includes most or all bills, you should clearly state exactly what these are. 

For more information on what should be included in any HMO tenancy agreement, see our separate article on HMO tenancy agreements

Joint or separate tenancy agreement?

If your tenants don’t know each other, they should each have a separate tenancy agreement. This means they are only responsible for their own rent and for taking care of the property. 

However, if your tenants all know each other well and are moving in and out at the same time – as tends to be the case with students – it may be wise to use a joint agreement. In this case, they agree to be ‘jointly and severally’ liable for the rent, so if one person moves out or doesn’t pay, the other tenants are obliged to make up that person’s share of the rent. 

Advantages of investing in HMO properties

Despite the increased risks and legislative requirements of being an HMO landlord, HMOs can be a lucrative investment, with many landlords benefitting from two to three times more rental income than they would get from letting the same property to a single household. Even taking the higher management costs into account, healthy profits are the overriding reason landlords invest in HMOs. 

Read more about how to maximise profits in our separate guide to student lets and our ultimate guide to buy to let property investment

In addition to rental yields being typically much higher than for standard single lets:

  • HMOs can be in high demand, as all-inclusive room rents offer an affordable option for the many tenants that are priced out of the traditional rental market
  • Collecting individual rents from multiple tenants can lead to improved cash flow – if one tenant leaves or fails to pay the rent, you still have an income from the other tenants, so the risks associated with void periods are greatly reduced
  • There can be tax advantages as there are generally more costs that you can offset

Disadvantages of investing in HMO properties

Government reforms over the last five years or so - such as shifting HMO licensing, bringing in minimum room sizes and banning administration fees - have been cited by landlords as reasons why they are considering exiting the HMO sector.

As we have seen, HMO requirements are more complicated and there are additional regulations to comply with because there are more safety aspects to consider when a group of people from separate households live together. Failure to comply with the legal requirements aimed at HMO landlords can result in heavy fines.

Due to the fact that more people are living in the property, it will face more wear and tear, so regular repairs and maintenance will inevitably be required. And because HMO tenants tend to move more frequently than those renting a whole property, there are higher administrative demands, such as issuing tenancy agreements, carrying out tenant referencing and right to rent checks, and taking check-in and check-out inventories.

Overall, managing an HMO property is undoubtedly more labour intensive and complex than overseeing a single buy to let. In addition to having more extensive responsibilities as the landlord, you also need to be on hand to settle any issues that may arise - or pay for the property to be professionally managed by a letting agent.

So, some of the potential disadvantages of letting out an HMO property to bear in mind are:

  • Some areas have too many HMOs and rents are either falling or static
  • Higher set-up costs, particularly with regard to HMO-specific health and safety laws
  • Higher turnover of tenants
  • Sorting tenant disagreements and issues 
  • Additional administration demands
  • Increased risk of damage and wear and tear
  • Higher running costs, including supplying and maintaining furniture and paying for cleaning and gardening
  • Increased need for property and tenant management, which can be time-consuming and expensive

What are the risks of an HMO?

The up-front and ongoing costs of an HMO versus a single-let property are higher, so there could be more of your own capital at stake. Then, because there’s additional legislation governing HMOs, the risk of falling foul of the law and being subject to heavy fines is increased.

And with multiple separate households living in one property:

  • There’s likely to be more wear and tear
  • There’s a greater risk of damage
  • The risk of fire is elevated
  • Local councils may impose additional licensing requirements that may impact profitability

Specialist HMO insurance can help protect you against the financial losses associated with these risks. 

HMO insurance

Making sure that you have comprehensive landlord insurance, tailored to HMO properties, is key to reducing risk. Be aware that there are a limited number of providers that will cover you for an HMO, so you’ll need to find a specialist insurer.

"While standard landlord insurance will provide cover for a property let under a single tenancy agreement, our HMO insurance cover caters for HMOs or ‘house shares’, where three or more tenants from different households rent out a property and share facilities. Our policy covers all HMOs, from small HMOs and student accommodation to large HMOs, and multiple properties can be included under a single policy. 

HMOs are subject to more rigorous legal requirements than standard rental properties, and they are sometimes seen as higher risk. This places more responsibility on landlords and means a tailored HMO policy is needed to provide the right cover. At Total Landlord, we recognise that some of the risks associated with HMO properties are no greater than a single occupancy property. As such, we’ve negotiated preferential HMO insurance rates providing that facilities such as kitchen and bathrooms are shared by all occupants and that there is no cooking in the rooms."

Steve Barnes, Head of Broking, Total Landlord

As well as being seen as higher risk and subject to more regulations than standard rental properties, there are differences between a normal landlord insurance policy and an HMO landlord insurance policy when it comes to claims. One example of this is loss of rent. Emma Bracchi, senior Claims Technician at Total Landlord, explains.

“When you let a property as a single let, under a single tenancy agreement – for example to one person, or a family – the impact of something going wrong in the property is different to when this happens with an HMO. For example, if you had a situation where there was a leak in one of the bedrooms in a single let property causing the ceiling to fall down, and the tenants wanted to move out while the repairs were being done, the insurer would not be required to consider any loss of rent cover, as the property would still be deemed ‘tenantable’ (fit for occupation by a tenant).

Although the tenant would be inconvenienced, there would usually be other rooms that the tenant could sleep in while the ceiling was being repaired. However, if this scenario happened in an HMO, and the ceiling fell down in one of the tenant’s bedrooms, the tenant may need to move out as that one room would be their whole living space. If there was a spare or vacant room in the property, the landlord could arrange for the tenant to use that, but if all the rooms were let on individual ASTs, the tenant would have to temporarily move out and the insurers would need to agree the loss of rent while the repairs were being carried out. This is an example of where the cover differs between a single let and an HMO property, and why it is important to make sure you have specialised HMO landlord insurance.”

Emma Bracchi, Senior Claims Technician, Total Landlord

Find out more about the comprehensive cover offered by our specialised HMO and student landlord insurance. Understanding what insurance you need to meet your unique needs can be complicated, but our team will be able to help guide you. You can contact them directly by calling 0800 634 3880 or email or get a quote online

And it’s worth reminding your tenants, in writing, that while your insurance will cover accidental damage to the property and furnishings that you have provided, they are responsible for the cover of their own possessions.

For more information on how you can minimise your risks as an HMO landlord by making sure you have the best landlord insurance for your needs, check out our guide to finding the best landlord insurance for you

HMO mortgages

For a single-let rental property, there are a huge number of buy-to-let mortgage products to choose from. However, if you’re buying an HMO – whether that’s an existing multi-let or a property you’re planning to convert to an HMO - you’ll need a specialist mortgage, which only a limited number of lenders offer.

Be aware that if you have a mortgage that does not permit HMO letting, you may find yourself in difficulty – for example, the lender may insist on immediate repayment of the loan. 

So it’s worth finding an independent mortgage broker who specialises in the HMO market and can help you find the most appropriate deal.

How to convert a property into an HMO

Many HMO landlords start off as single let landlords and then move into the HMO property sector as they gain experience, to maximise rental income.

If you’ve weighed up the pros and cons of becoming an HMO landlord and decided to take the plunge, you may be looking to convert an existing rental property into an HMO. 

The first thing to be aware of is that each local authority will have its own planning and licensing policies that may limit the location and number of HMOs they will permit. 

So, before you begin any work to convert a property into an HMO – and ideally before you buy – it’s essential to speak to your local council to find out the specific requirements for HMO properties in your area.

If you are able to operate the property as an HMO, it’s likely that you will have to carry out works to provide accommodation that’s suitable for multiple individual households. The space, layout, amenities, furniture and appliances must all be considered; you will have to comply with building regulations and you may need planning permission for change of use. 

To make sure your conversion is both suitable for tenants and legally compliant, it’s advisable to work with local experts, such as an architect and planning consultant, who can liaise with the council on your behalf.

Planning permission for change of use

Under planning regulations, buildings are divided into different ‘Use Classes’. And while residential homes occupied by single households are categorised as ‘C3’, HMOs fall into their own ‘C4’ class. 

That means if you want to let a property as an HMO, you may need to apply for planning permission for change of use – and there’s no guarantee the local council will grant it. 

So, before you buy any property you intend to let as an HMO, it’s essential to find out about your local authority’s planning policy. Speak to the council directly and get in touch with local landlord groups to get advice from other HMO investors. 

Ten top tips for converting a rental property into an HMO

  1. Speak to your local council to find out about their requirements for change of use planning permission, HMO licensing and required amenities before you begin any work
  2. Set a budget for converting your property and make sure the project is viable – i.e. that you’ll recoup your investment check 
  3. Make sure you’re compliant with HMO requirements – illegal HMO conversions can result in hefty fines, so make sure all work is carried out by suitable contractors and building regulations are signed off by the local council
  4. Tell your insurer and your mortgage lender about your plans to convert your property into an HMO so that they can make sure you have the right products and are adequately covered
  5. Identify your target tenants and make sure you convert the property to meet their needs - for example, if you’re likely to rent to students, research what students want from their landlords, including the location which may be specific to certain streets or distance to key facilities and amenities
  6. If possible, include a communal sitting/dining area as this will make the property more attractive to tenants – this could even be a kitchen that’s large enough to fit a table and chairs
  7. Today’s tenants expect a high standard of accommodation and the property will be subject to heavy use, so invest in decent kitchen and bathroom fittings, and modern, hard-wearing décor and furnishings
  8. Before works are finished, have a fire safety officer and an agent that regularly lets HMOs visit the property to make sure it is compliant and to advise you of any additional steps that should be taken
  9. Think about outdoor areas – a decent low-maintenance patio or garden with somewhere to sit will help attract tenants, and aim to provide a shed or outbuilding where they can store bikes and other equipment 
  10. Don’t forget about the green credentials of your HMO  – the Government is committed to upgrading private rented sector homes to an EPC rating of C, so it makes sense to get ahead and will help attract eco-friendly tenants, especially as you are likely to pay the utility bills.

If you convert your property into an HMO, your local authority will visit within five years to assess whether the property meets their safety requirements. If the property is licensable, they may visit before issuing the licence.


Being an HMO landlord is not for the faint hearted. It’s important to carry out your research – talk to other landlords on forums such as LandlordZONE, and join landlord organisations such as the NRLA, which runs a course on HMO licensing, to make sure you’re up to speed with the latest news and lettings legislation. Speak to your local council to find out what is expected of HMO landlords in your area – the more educated you are, the less likely you are to fall foul of the law.

Most importantly, if you do decide to take the plunge and let out an HMO property, make sure you have the correct HMO insurance in place. This will help minimise the risks whilst also providing you with peace of mind that your investment is protected and you are following the correct rules on HMO insurance.  Our team are on hand to advise and can tailor your HMO insurance to your specific needs.


What is the difference between an HMO property and a bedsit?

‘HMO’ refers to the whole property; ‘bedsit’ refers to an individual unit within the HMO. For more information, read our article, ‘The difference between a bedsit and an HMO’.

What is a large HMO?

A large HMO is a property where:

  • There are five or more tenants, who form more than one household
  • The tenants share toilet, bathroom or kitchen facilities

All large HMOs must be licensed. 

How can I check if a property has a multiple occupancy licence?

You will need to consult your local authority housing department to find out whether an HMO property already has a licence.

Are the rules on HMO licensing different around the UK?

Yes, England and Wales follow the same HMO rules, but they are different in Scotland and Northern Ireland. See our separate guideWhat is licensing - and do I need a landlord licence to let my property?’ for more information and advice.

How many people can live in an HMO?

The local council will decide on the maximum number of occupants, based on the size of the property and amenities provided. If there are five or more individual households, the property must be licensed.

Can a landlord enter an HMO without notice?

If each tenant is on a separate tenancy agreement relating to their individual room, then the landlord can enter the common parts without notice, provided it is for a legitimate reason. If you want to go into a tenant’s private room, then 24 hours’ written notice must be given, and the tenant is within their rights to refuse entry. 

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