PROPERTY LICENSING IN LONDON

Property licensing is the Local Authority’s process of improving standards in rental accommodation. Typically this is split between concerns regarding fire safety and those which are concerned with the standard of living within the property.

In order to determine whether you need a property licence, it is important to consider that both national and local authority regulations need to be taken into account. There are a slightly different set of rules for each London borough, which creates some confusion amongst landlords as to how best to be compliant. In short, the type of licence required will depend on the property itself, how it is tenanted and the borough that it is in.

The most famous type of licence is an HMO licence, which has a confused reputation. The stereotype for an HMO consists of overcrowded accommodation with terrible living conditions and sparse facilities. Although local authorities are aiming to tackling this issue, licensing schemes also apply to smaller HMOs of 3+ sharers and seek to ensure a standard quality of life in let properties.

The requirements expected from the council are adjusted according to the property and the type of tenancy, so fire safety stipulations are usually stricter in a 5 bed shared house than for a family home. This is backed up by case studies which have illustrated the respective risk factor in each type of residential property.

TYPES OF PROPERTY LICENCE IN LONDON

MANDATORY HMO LICENSING

This is a nationwide scheme which applies to properties which contain 5+ sharers over 3 storeys. From October 2018, this is set to change to any property with 5+ sharers regardless of storeys. Find out more about Mandatory HMO Licences here. 

ADDITIONAL HMO LICENSING

This is a borough-specific scheme which applies to properties with 3-4 sharers, or those which have 5 sharers and have less than 3 storeys. Find out more about Additional HMO Licences here.

SELECTIVE PROPERTY LICENSING

This is a borough-specific scheme which applies to any let property in the streets or areas selected by that local authority. This includes families and properties let to 1-2 tenants. Find out more about Selective Licensing here.

What is an HMO?

‘HMO’ stands for house in multiple occupation. Also known as houses of multiple occupancy, these are residential properties where ‘common areas’ exist and are shared by more than one household. In layman’s terms, this covers the majority of shared houses on the market in London, which used to be family homes and are now usually shared by young professionals or students.

An HMO is any property with:

  • 3 or more tenants
  • More than 1 household
  • Shared facilities

How do you define how many households are in your property?

A household is a single person, or members of the same family that live together. Every tenant from a separate family creates a new household. So a group of 4 unrelated students is 4 households.

However, if all of your tenants are from the same family, this counts as one household.

What constitutes as family in this context?

As family can be a complicated situation, it is good to know how local authorities define what family is in order to understand what your property falls under. Here are the definitions of family:

  • Tenants that are married or living together as a couple, (including same sex relationships) and their children.
  • All relatives & half-relatives- e.g. grandparents, step-parents, aunts, uncles, siblings & step-siblings.

Examples

  • 3 brothers or sisters living together are one household – is not an HMO
  • 3 friends living together are 3 households – is an HMO
  • 2 couples living together are two households – is an HMO
  • 1 couple and one single person are two households – is an HMO

Summary

If you let a property to 3 or more unrelated people it will require an HMO licence.

If you let any property that falls within selected streets or areas it will require a Selective licence.

If you let a property on a Selective street, but it qualifies as an HMO, they will require an HMO licence.

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