HMO Licensing in England: What Every Landlord Must Know in 2026

Running an HMO without understanding your licensing obligations is one of the more expensive mistakes a landlord can make. Civil penalties now reach £40,000. Tenants can claim back up to 24 months' rent. And licensing expansion is accelerating, meaning obligations that did not apply to you last year may apply now.

This guide covers the three tiers of HMO licensing in England, how the rules interact with Article 4 Directions, what licence conditions require, and what has changed in 2026.

The Three Tiers of HMO Licensing

England has three types of property licensing in the private rented sector. They operate independently, and a property can be subject to more than one at the same time.

Mandatory HMO Licensing

Mandatory licensing is a national requirement under the Housing Act 2004. It applies to any property that is:

Occupied by 5 or more people
Forming 2 or more separate households
Who share basic amenities such as a kitchen, bathroom, or toilet

Since October 2018, the number of storeys has not mattered. The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 removed the former three-storey rule. Any number of storeys now triggers mandatory licensing at the five-occupant threshold. A ground-floor flat shared by five unrelated adults needs a mandatory licence. So does a bungalow, a converted warehouse, or a purpose-built block of rooms.

This catches more properties than many landlords realise. If you let a five-bedroom property to five separate individuals, each forming their own household, you need a mandatory HMO licence regardless of the building type.

Source: Housing Act 2004 Part 2; Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 [verified June 2026].

Additional Licensing

Additional licensing is a discretionary scheme that councils can introduce under Section 56 of the Housing Act 2004. It extends licensing to smaller HMOs that fall below the mandatory threshold, typically properties with 3 or 4 occupants.

Councils must designate an additional licensing area by formal decision, publish notice, and give landlords time to apply. Once a scheme is in force, any HMO within the designated area that meets the scheme's definition requires a licence even if it does not hit the five-occupant mandatory trigger.

Over 70 English councils now operate additional HMO licensing schemes. Among the councils with confirmed additional schemes are Bristol, Nottingham, Brighton and Hove, Liverpool, Sheffield, Oxford, Salford, Waltham Forest, Havering (from March 2026), and Reading (from March 2026).

Frequently Asked Questions

When does mandatory HMO licensing apply?

Mandatory HMO licensing applies nationally to any property occupied by 5 or more people forming 2 or more separate households who share basic amenities such as a kitchen or bathroom. Since October 2018, there is no minimum storey requirement. A bungalow shared by five unrelated adults requires a mandatory licence in the same way a three-storey house does.

What is the difference between mandatory, additional, and selective licensing?

Mandatory licensing applies nationally to all HMOs with 5 or more occupants from 2 or more households. Additional licensing is a discretionary scheme that councils can introduce to cover smaller HMOs, typically those with 3 or 4 occupants, beyond the mandatory threshold. Selective licensing covers all private rented properties in a designated area, regardless of whether they are HMOs.

What is the penalty for operating an unlicensed HMO?

Operating an HMO without a licence can result in a civil penalty of up to £40,000. The Renters Rights Act 2025 raised the maximum from £30,000 to £40,000 from 1 May 2026. Tenants living in an unlicensed HMO can also apply to the First-tier Tribunal for a Rent Repayment Order (RRO) covering up to 24 months' rent for offences from 1 May 2026 onwards (previously 12 months). Both enforcement routes are used by councils that actively prioritise housing standards.

How much does an HMO licence cost?

Fees vary by council and are not set nationally. As a guide, a five-year mandatory HMO licence costs £700 to £900 on average nationally, but ranges from approximately £500 in some areas to over £1,500 in others. London boroughs tend to be at the higher end, often £1,000 to £1,800. Regional city councils typically charge £900 to £1,200.

Is HMO licensing the same as an Article 4 Direction?

No. They are separate requirements. HMO licensing is a property management obligation under the Housing Act 2004, administered by the housing authority. An Article 4 Direction is a planning restriction that requires planning permission before converting a C3 dwellinghouse to a C4 small HMO. You can need both, and holding one does not satisfy the other.