Key facts every Landlord NEEDS to know about licencing & HMO Insurance

Key facts every Landlord NEEDS to know about licencing & HMO Insurance

The key ingredients every landlord or would-be property investor needs to know about House in Multiple Occupation – Licencing and HMO Landlord Insurance

What is House in Multiple Occupation?

A House in Multiple Occupation, or HMO as it is more commonly referred, is a property which is let or rented out to at least 3 people who are not from one “household” or “family”, but share facilities or common areas such as a kitchen or bathroom.  

In more general terms it can also be described as a “house share”.

There is no restriction on tenant occupation, and typically HMO’s can include:

  • Multiple Rooms let to professionals
  • Student Lets
  • Asylum Seekers
  • Tenants receiving benefits

When was HMO licencing introduced?

Licencing for HMO properties was first introduced in Scotland under The Civic Government (Scotland) Act 1882 (Licencing of Houses in Multiple Occupation) Order 2000.

This was following the death of a student in a 1999 house fire at a multiple student-let in Glasgow where the property had no working smoke detectors and metal bars restricted escape and access to the properties windows.

England and Wales followed under the Housing Act 2004 which came into for force in April 2006 with a mandatory HMO licencing requirement, whereby all HMO need to be registered with their local council.

HMO definition & Do I need an HMO licence?

In Scotland, a let property is defined as an HMO if it is shared by 3 or more adult tenants who are unrelated.

The rules in England and Wales are slightly different. A property is usually defined as an HMO if it is:

  • Rented to 5 or more people who form more than 1 household
  • Is at least 3 storeys high

However, local councils can still request an HMO licence for smaller properties and those rented to fewer people if they see fit.

As such, we recommend that you check with your local authority if you let your property to more than 3 unrelated adult tenants.


What are the conditions of an HMO licence?

Your licence application looks at the safety and quality of amenities provided to tenants.  The types of areas considered by the licencing authority typically include:

  • Heating (including gas and boiler safety, a copy of the gas safety certificate will need to be forwarded each year)
  • Fire Protection and Safety (including installation and maintenance of smoke alarms)
  • Electrical Appliance testing (copies of certificates should be available for inspection on request)
  • Property size and general Condition (is it suitable for the number of occupants)
  • Cooking and laundry facilities
  • A “fit and proper” reference check on the manager of the house (you as the Landlord or your managing agent)

What happens if I don’t have an HMO licence?

Fines and penalties for renting out an unlicensed HMO can be severe, ranging from £5,000 in Scotland, up to £20,000 in England and Wales.

It could also be a condition of your Buy-to-let Insurance policy that your HMO property has the appropriate licence in place.

Do I need specialist Insurance for an HMO Property?

Yes, multiple-occupancy-let properties require a specialist Landlords HMO Insurance policy from an insurance company that fully understands the buy-to-let HMO insurance market.

Many mainstream insurers will not offer cover for HMO rented properties, or they may impose onerous policy terms and conditions.

You should speak to a specialist Property Insurance Advisor such as Insync Insurance who understand the complexities of HMO and have access to bespoke HMO Landlord Insurance policies which can be tailored to your specific requirements.


What if I have multiple buy-to-let properties in my portfolio, but they are not all Houses in Multiple Occupation?

To benefit from economies of scale and ease of handling, it can often be advantageous to arrange all of your Landlord policies on a multiple or block policy.

An insurance property portfolio can consist of a mix of Residential buy-to-lets, commercial properties, blocks-of-flats and HMO’s.

For multiple-property owners, we recommend speaking to a specialist property insurance broker to arrange fully comprehensive cover for your assets.

FREE Landlord HMO Insurance Review

Hopefully, you have found some of this information useful, sometimes it pays to speak to an expert.  

As such, you may want to take advantage of our FREE Property Insurance review service.

You can book a slot that suits YOUR diary via our website, or call one of our insurance gurus on 0330 1240730.