Guides
Guide to Houses in Multiple Occupation (HMO)
19 November 2024
A house in multiple occupation (HMO) is a property let to at least three people who form more than one household and share facilities such as a kitchen, bathroom or toilet. A household is a single person, a couple, or members of the same family, so three unrelated sharers are an HMO but a family of five is not. Whether an HMO needs a licence, and whether it needs planning permission, are two separate questions with separate rules.
This guide covers both for England and Wales; Scotland and Northern Ireland run separate regimes, and Scottish cases sit with a different set of lenders as well as different tenancy law. For how lenders assess HMOs, see how to compare HMO mortgage lenders and for the wider criteria picture, how lenders differ across buy-to-let as a whole.
Does an HMO need a licence?
In England, an HMO needs a licence if five or more people from two or more households live there. Smaller HMOs, and properties in certain council areas, can also need one. There are three types of licence, and a property can fall under more than one.
| Mandatory licensing | Additional licensing | Selective licensing | |
|---|---|---|---|
| Who sets it | National law | Individual councils | Individual councils |
| What it covers | Larger HMOs (see below) | Smaller HMOs not caught by mandatory licensing | All private rented property in the area, not just HMOs |
| Where it applies | England and Wales, on different thresholds | Designated areas only | Designated areas only |
Mandatory licensing
In England, an HMO needs a mandatory licence if it is occupied by five or more people forming two or more households, whatever the number of storeys. One exception: a flat in a purpose-built block of three or more self-contained flats falls outside mandatory licensing, though additional or selective licensing can still apply to it.
In Wales, the older rule still applies: mandatory licensing covers HMOs of three or more storeys with five or more people forming two or more households. A two-storey house with five sharers does not need a mandatory licence in Wales, though it may need an additional one. Wales also requires all landlords to register with Rent Smart Wales, and landlords who let or manage the property themselves need a Rent Smart Wales licence too, unless they use a licensed agent.
Additional licensing
Councils can extend licensing to smaller HMOs in designated areas, typically those with three or four occupants. This is the scheme most likely to catch a landlord out, because the property falls below the national threshold.
Selective licensing
Selective licensing covers every privately rented property in a designated area, whether it is an HMO or a single let. Councils use it to address problems such as poor property conditions or anti-social behaviour. It is a licensing tool, not a planning control.
What licence conditions apply?
Licences typically last up to five years, and fees vary by council. Licensed HMOs in England must meet minimum bedroom sizes: 6.51 m² for one adult, 10.22 m² for two adults, and 4.64 m² for a child under 10. Councils can set further conditions on amenities, fire safety and management. Letting a licensable HMO without a licence can lead to civil penalties and rent repayment orders, so check with the council before letting. See gov.uk’s guidance on HMO licences.
Does an HMO need planning permission?
Planning is separate from licensing. A licence does not grant planning permission, and planning permission does not remove the need for a licence.
In England, planning law sorts residential property into use classes:
| Use class | What it covers | Changing into it |
|---|---|---|
| C3 | A single household, such as a family home | — |
| C4 | Small HMO: 3 to 6 unrelated people sharing facilities | Usually permitted development from C3, unless an Article 4 direction applies |
| Sui generis | Large HMO: more than 6 people sharing | Always needs full planning permission |
What is an Article 4 direction?
An Article 4 direction removes the permitted development right to convert a family home (C3) into a small HMO (C4). Councils use them to limit HMO numbers in particular areas. Where one applies, the conversion needs full planning permission, which may be refused. Check before buying, because an HMO created without permission in an Article 4 area can face enforcement. A missing consent or a retrospective application is one of the things that turns an ordinary HMO purchase into a case that needs placing carefully
Converting to a large HMO
Moving to more than six occupants always needs planning permission, even if no building work is involved.
Wales has its own use classes and permitted development rules, so check with the local planning authority for Welsh properties.
Small and large HMOs: the terms differ by context
“Small” and “large” mean different things depending on who is using them:
- Planning: small is 3 to 6 occupants (C4), large is more than 6 (sui generis).
- Mandatory licensing in England: the threshold is 5 or more occupants.
- Lending: Landbay classes a small HMO as up to 6 bedrooms and a large HMO as 7 to 12. Other lenders draw the line differently.
When a client describes a “large HMO”, confirm which meaning applies, then check the criteria that apply at that end of the market.
Where Landbay fits
We lend on HMOs of up to 12 bedrooms in England and Wales, at up to 80% LTV, and properties must meet the relevant licensing and planning requirements. Correct as at 24 September 2026. For full criteria, see our intermediary lending criteria. Clients new to letting should read what we ask of a first-time HMO landlord before committing to a purchase. For blocks of self-contained flats rather than shared houses, see our guide to MUFB mortgages.
Frequently asked questions
What counts as an HMO?
A property let to at least three people forming more than one household who share facilities such as a kitchen or bathroom.
Do I need an HMO licence for 3 or 4 tenants?
Not a mandatory licence, but you may need an additional licence if the council runs a scheme in that area, or a selective licence if the area has one. Check with the council.
What is the difference between additional and selective licensing?
Additional licensing extends HMO licensing to smaller HMOs in a designated area. Selective licensing covers all private rented property in a designated area, including single lets.
Is HMO licensing the same in Wales?
No. In Wales, mandatory licensing only applies to HMOs of three or more storeys with five or more occupants. All landlords must also register with Rent Smart Wales, and self-managing landlords need a Rent Smart Wales licence.
Do I need planning permission to turn a house into an HMO?
In England, converting a family home into a small HMO for 3 to 6 people is usually permitted development, unless an Article 4 direction applies. Converting to a large HMO for more than 6 people always needs planning permission.
What is the difference between a C4 HMO and a sui generis HMO?
C4 covers small HMOs of 3 to 6 unrelated occupants. Sui generis covers large HMOs of more than 6, which always need planning permission.
Does an HMO licence mean I have planning permission?
No. Licensing and planning are separate regimes, and a property may need both.
Settle licensing and planning first
Licensing and planning decide whether an HMO can be let at all, so they come before any conversation about the loan. Once the classification is clear, the lending question is a separate one: how to compare HMO mortgage lenders covers the market, and our beginner’s guide to buy-to-let finance covers the fundamentals for clients new to it. Buy to let is all we do. If you want to talk a case through, speak to your local BDM.