Do you need an HMO licence? The thresholds, and what changed in 2026
Mandatory licensing in England is five or more occupiers in two or more households — and the old three-storey rule has been gone since 2018. Below five, it depends entirely on whether your council has designated a scheme. The checker below works through both questions in order. It also covers the thing most guidance still has backwards: on 1 May 2026the “you can’t evict” penalty for unlicensed properties was repealed — while the fines went up.
Do you need an HMO licence?
Two separate questions get muddled together constantly: is it an HMO? and does it need a licence? A property can be one without needing the other. This works through both, in order, and shows which test decided it.
A household is one family. Couples and relatives (parent, grandparent, child, grandchild, brother, sister, uncle, aunt, nephew, niece or cousin) count as one; unrelated sharers each count separately. Three friends = three households.
Covers smaller HMOs below the mandatory threshold.
Covers private rentals in an area whether or not they are HMOs.
It is an HMO — but whether it needs a licence depends on your council
Below five occupiers there is no mandatory licence. But councils can designate an additional licensing scheme covering smaller HMOs, and many have. This is the answer most guides get wrong by stopping at "under five, no licence". Check your council before letting.
Step 1 — is it an HMO? Yes (s.254 standard test)
- It is not a self-contained flat s.254(2)(a)
- The occupiers do not form a single household s.254(2)(b)
- They occupy it as their only or main residence s.254(2)(c)
- Rent or other consideration is payable s.254(2)(e)
- Two or more households share — or the property lacks — a kitchen, bathroom or toilet s.254(2)(f)
Step 2 — does it need a licence?
Mandatory licensing needs five or more occupiers in two or more households. You have 3 occupiers in 3 households — that does not meet it, so any licence would come from a local scheme.
The three-storey rule is gone. Mandatory licensing used to require three or more storeys. The 2018 Order removed that, so a two-storey house — or a single flat — with five occupiers in two or more households is licensable. Plenty of guidance online still repeats the old test.
Nothing you type here leaves your browser. Additional and selective schemes are local designations that start and expire, so this tool deliberately asks you rather than guessing — confirm with your council before letting. Not legal advice.
What actually changed on 1 May 2026
The possession penalty was deleted, not rewritten. Section 75 of the Housing Act 2004 said no section 21 notice could be given while an HMO was unlicensed. Section 98 said the same for houses under selective licensing. Paragraphs 62 and 63 of Schedule 2 to the Renters’ Rights Act 2025 omitted both, and Schedule 2 inserts nothing in their place.
That is the opposite of what happened with deposits, which is what makes it easy to get wrong. For tenancy deposits, section 215 of the same Act was substituted rather than deleted — the sanction survived and was re-pointed, so a court still cannot make a possession order where the deposit was not protected. Two provisions that looked like twins before 1 May 2026 were treated in opposite ways. Anything telling you an unlicensed HMO blocks eviction is now wrong twice over: the section 21 route is gone, and the specific bar was repealed.
But the money got much worse, on the same day. The maximum financial penalty for the section 72 offence rose from £30,000 to £40,000, and the rent repayment order lookback doubled from twelve months to two years’ rent. The section 72 offence itself was restructured, with superior landlords expressly in scope and new defences added around reasonable excuse and knowledge.
So the practical shape of licensing enforcement has inverted. It used to be “you can’t get your property back”. It is now “you pay a penalty of up to £40,000 and hand back up to two years’ rent”. If you were relying on the old framing to judge the risk, you are now underestimating it considerably.
The three licensing regimes
| Type | When it applies | Set by |
|---|---|---|
| Mandatory | 5+ occupiers in 2+ households. Everywhere in England, no storey test. | 2018 Order, art. 4 |
| Additional | Smaller HMOs, where the council has designated a scheme. | HA 2004 s.56 |
| Selective | Private rentals in a designated area, HMO or not. | HA 2004 s.80 |
Only the first is national. The other two are local designations that are made, renewed and allowed to lapse council by council — which is why no honest tool can tell you whether they apply to your postcode without you checking. Anyone presenting a definitive national answer on additional or selective licensing is guessing.
Official sources: GOV.UK: HMO licence · the 2018 Order, art. 4 · HA 2004 s.254 (HMO definition) · s.258 (households).
England only
The five-occupier threshold, the 2018 Order and the Renters’ Rights Act changes are all England. Wales licenses through Rent Smart Wales, Scotland has its own HMO regime with a three-occupier threshold, and Northern Ireland runs a separate scheme. Do not carry these numbers across the border.
Questions
Do I need an HMO licence for 3 tenants?
Not a mandatory one. Mandatory licensing applies where a property is occupied by five or more people living in two or more separate households — that is the whole test, set by article 4 of the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018. Three tenants cannot reach it. But two things still matter: with three unrelated sharers the property is very likely an HMO under section 254 of the Housing Act 2004 even though it is not mandatorily licensable, and your council may run an additional licensing scheme that covers smaller HMOs. So the correct answer is “no mandatory licence, now check your council”, not a flat no.
What counts as a household?
One family. Section 258 of the Housing Act 2004 defines it: people married to or in a civil partnership with each other, or living together as if they were, plus relatives — parent, grandparent, child, grandchild, brother, sister, uncle, aunt, nephew, niece or cousin. Half-blood relationships count as whole blood and stepchildren count as children. So three friends sharing are three households; a couple plus a friend are two; a family of six is one. This is the number people most often get wrong, and it decides everything downstream.
Does the property still need three storeys?
No, and this is the most common piece of stale advice on the subject. The three-storey requirement was removed by the 2018 Order. A two-storey house, a bungalow, or a single flat can all be mandatorily licensable if five or more people in two or more households live there. If a page tells you to count storeys, it has not been updated since 2018.
Is being an HMO the same as needing a licence?
No, and conflating them is why so much guidance is unhelpful. Section 254 decides whether the property is an HMO — broadly, occupiers who are not one family, living there as their main home, paying rent, and sharing or lacking a kitchen, bathroom or toilet. Licensing is a separate question layered on top: mandatory at five or more occupiers, additional where the council has designated a scheme for smaller HMOs under section 56, and selective under section 80 for private rentals in a designated area whether or not they are HMOs.
What happens if I let an unlicensed HMO?
It is a criminal offence under section 72(1) of the Housing Act 2004, punishable by an unlimited fine on conviction. The council can instead impose a financial penalty of up to £40,000 — the maximum was raised from £30,000 on 1 May 2026. Your tenants or the council can also apply for a rent repayment order, which since 1 May 2026 can reach back up to two years’ rent rather than the previous twelve months. Banning orders are available for serious or repeated offending.
Can I still be stopped from evicting a tenant if the HMO is unlicensed?
Not in the way the old rule worked, and almost every guide still gets this wrong. Section 75 of the Housing Act 2004 used to say no section 21 notice could be given while an HMO was unlicensed, and section 98 said the same for houses under selective licensing. Both were omitted outright on 1 May 2026 by Schedule 2 to the Renters’ Rights Act 2025, and nothing was inserted to replace them. That is a deliberate contrast with tenancy deposits, where the equivalent provision was rewritten rather than deleted so that a court still cannot make a possession order. For licensing, the penalty is now purely financial — but it is a much bigger penalty than it used to be.
How much does an HMO licence cost?
It varies by council, because each local housing authority sets its own fee — there is no national figure, and any page quoting one is describing a single council. Fees commonly run into several hundred pounds and licences typically last up to five years. Your council’s HMO licensing page is the only reliable source for the current fee and duration in your area.
Does this apply outside England?
No. The thresholds here are the England ones. Wales licenses HMOs through Rent Smart Wales under the Renting Homes (Wales) Act 2016 framework, Scotland has its own HMO licensing regime with a three-occupier threshold, and Northern Ireland licenses HMOs through a separate scheme. Do not apply the five-occupier test outside England.
Licence conditions are a record-keeping job
An HMO licence comes with conditions — gas certificates supplied annually, electrical safety, smoke alarms, occupancy limits — and a rent repayment order now reaches back two years. LandlordHub keeps certificates, tenancy dates and the rent record per property, so the evidence exists before anyone asks for it.
Try it freeRelated: section 8 notices and grounds for possession · what replaced the assured shorthold tenancy · section 13 rent increases · more in the UK toolbox · all countries on the tools hub.