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Property Licencing



If a property is let to three or more tenants who form two or more households (i.e. are not part of the same family) and who share kitchen and bathroom facilities, the property may need to be licenced as an HMO with the local authority.

If the property has three or more storeys and is occupied by five or more tenants in two or more households (sharers are classed as different households), a licence will certainly be required. Some local authorities will also licence smaller HMOs.


Selective licensing is a form of discretionary property licensing for privately rented properties. It was first introduced as part of the 2004 Housing Act to improve the safety, management and quality of the Private Rented Sector (PRS). Unlike mandatory and additional licensing, it is not restricted to properties classified as a house in multiple occupation (HMO).

A growing number of local authorities (i.e., councils) are choosing to designate selective schemes in their areas. As of August 2022, nearly 90 active schemes in England and Wales. The following will summarise the key points for landlords and tenants.

  • Which properties need a selective licence?
  • Where do selective licences apply?
  • What are the licensing conditions for a selective scheme?
  • How do you obtain a selective licence?
  • Who can apply?
  • How much does it cost?
  • How long does it last?
  • What happens if I do not have a selective licence?
  • Are there exemptions?

Which properties need a selective licence?

All privately rented properties within a selective licensing area have to be licensed, regardless of whether or not the property is an HMO. Selective licensing schemes are determined at the discretion of the local authority, hence the term ‘discretionary scheme’. 

The aim of selective licensing is to raise living standards by improving the management of privately rented properties. There are four main reasons for the designation of a selective scheme, including poor housing conditions, anti-social behaviour (ASB), high levels of deprivation, and high migration rates.

Where do selective licences apply?

A local authority may designate a selective scheme to a particular region, ward or street within its jurisdiction. New rules stipulate that only 20 percent of a local authority’s area can be placed under a selective licensing scheme without approval from the central government.

At least 10 weeks prior to a new designation, the local authority must consult with everyone affected. It is often encouraged that letting agents and landlords also get involved in the consultation of a new selective scheme.

Above: London’s selective licensing schemes as shown in red

What are the licensing conditions for a selective scheme?

It is common for many of the conditions of an HMO licence to be adopted in a selective scheme, but there are variations between local authorities. These normally aim to tackle specific local issues. For example, the councils of Southwark and Doncaster both designated a selective scheme in March 2022 to tackle high levels of ASB. The schemes adopted many similar conditions, however the latter imposed an additional condition forcing all affected properties to be routinely inspected every six months.

How do you obtain a selective licence?

Properties that fall under a selective scheme will need to be licensed by the local authority using the forms they provide. It should be noted that selective licensing is a constantly changing landscape where licensing schemes are introduced and updated regularly. This is part of what makes licensing so difficult to keep a track of manually for landlords, especially those with large portfolios.

Hawks Estate Agents monitors the UK’s property licensing landscape to help landlords identify what licence is required for a property. We also offer help with the licensing application process. Speak to Hawks to find out more. 

Who can apply?

The landlord is responsible for applying for the licence and paying the associated fee, however Hawks are legally obligated to ensure that all properties in their portfolio are correctly licensed. Therefore, Hawks and landlords should work together to guarantee that a property under their management is compliant with local licensing regulations. For more information, check out our in-depth guide on the roles and responsibilities associated with property licensing.

How much does it cost?

Selective licences are less expensive than mandatory and additional licences. The cost of a selective licence varies between local authorities, but they tend to range from £350 to £700.

How long does it last?

Selective licences last for up to 5 years, however some licences may last for less than the maximum period if, for example, the application details are later found to be incomplete or the management of the property is called into question. When the licence is coming to an end, the landlord should check whether the selective scheme has been renewed or replaced by another scheme in the area. If so, they must submit a renewal application before the licence expiry date. 

What happens if I do not have a selective licence?

Hawks Estate Agents and landlords are permitted up to 28 days to secure a selective licence. Failing to do so risks being issued with a penalty, normally in the form of a fine, although more severe sanctions do occur. The average fine for a landlord is £5,545, whereas the largest fine levied against a Landlord is £167,000. Licence dodgers are being fined increasingly greater amounts. As of August 2022, £8,010,344 in fines have been levied against rogue agents and landlords for unlicensed properties in London alone.

Another important consideration for property managers is the growing number of Rent Repayment Orders (RRO) that require landlords to repay up to 12 months rent to the local authority or tenant. Recent national press coverage has sharply raised awareness of RROs. Local authorities are also continuously building their enforcement efforts against rogue agents and landlords. Our Rogue Landlord Roundup has all the latest information on how to avoid fines.

Failure to comply with licensing regulations puts agents at risk of being stuck with a banning order that prevents the property from being let. Serious and repeat offences may result in prosecution, which may be a sentence of up to five years or an uncapped fine. The landlord may also be listed on the Rogue Landlord database. An unlicensed property also means that the property manager cannot serve the occupier with a Section 21 (s21) notice, potentially preventing them from regaining possession of the property at the end of a tenancy agreement. 

Are there exemptions?

Some properties are exempt from selective licensing, including business premises, student dormitories, holiday lets, properties where the tenant is a family member, and buildings managed by the local housing authority or other public services, such as the police, fire and rescue services or health service. Properties subject to a housing prohibition order, covered by a temporary exemption notice, or occupied under an exempt tenancy or licence are also exempt from selective licensing requirements.

Property and HMO Licensing – The Ultimate Guide For Landlords

The government believes there are around 500,000 HMOs (house in multiple occupation) in the UK, yet Hawks has tracked licences (mandatory and additional) for almost 800,000 HMOs and 200,000 selective licences across 285 local authorities.

With even the government unsure of the size and scale of the sector, we believe it’s time for an ultimate guide for landlords.

Property licensing is not as straightforward as one might think (or hope), and although licensing has been around since 2006 there is still a lot of confusion around the definition of an HMO, which local authorities run discretionary schemes, what properties need a licence and who is responsible for obtaining it.

In this ultimate guide, we’ll look at everything from what constitutes an HMO to types and trends in enforcement and how agents can use this complexity to provide greater value to their landlord customers.

What will we cover? 

  • What is an HMO
  • When did property licensing start?
  • Different types of licences
  • Who is exempt from HMO licensing?
  • The patchwork of licensing rules
  • Licensing fines
  • Rent Repayment Orders
  • Who is responsible for the licence application and maintaining the licence?
  • How do you apply for an HMO licence?
  • Benefits of compliance
  • How Kamma can help
  • Summary

What is an HMO?

An HMO is defined as any property that has at least three occupiers, forming more than one household that share common areas and facilities. The common areas may be the toilet, bathroom, or kitchen. A household, according to the government’s definition, consists of either a single person or members of the same family who live together. It includes people who are married or living together and people in same-sex relationships.

A home is a large HMO if the following apply:

  • At least five occupiers live there, forming more than one household
  • The occupiers share toilet, bathroom or kitchen facilities with other occupiers
  • If at least one occupier, or their employer, pays rent

There tends to be a higher concentration of HMOs in university towns and cities such as London and Manchester, in fact almost a quarter of all HMOs in England are located in London (24%). But the sector is also seeing growth amongst older renters as they look to take advantage of the cheaper rents available. The cost of living also contributes to the growth of HMOs and shared living as tenants look for affordable places to live. Letting rooms in HMOs has become a popular way for landlords to increase revenue and maximise the rental value of their properties. In 2020 for example, there was a 160% increase in landlords planning to acquire HMOs as they looked to take advantage of the higher yields available. Renting more rooms in a property to more people drives revenue, but comes with more risk, with additional regulations and compliance requirements to meet, and hefty fines for those that fail to do so.

When did property licensing start?

Property and HMO licensing was introduced in the Private Rented Sector (PRS) to uphold living standards and ensure tenants’ safety, precisely because many professional landlords have a history of taking actions to cut corners to yield higher profits. The licensing regime introduced measures for health and safety, including setting standards for acceptable room sizes and fire safety. The legislation really became a focal point for the government after several preventable deaths involving people in overcrowded buildings.

The Housing Acts 1985 and 1989 defined HMOs and laid out the first guidance for safety requirements and licensing. In 2006, two years after the Housing Act 2004 was introduced, mandatory licensing was established for large HMOs, with five or more tenants from more than one household.

Further changes to the legislation were then made in October 2018, where the ‘3 storey’ requirement for HMOs was scrapped. This means that since 2018, small and large HMOs with any number of storeys also require a licence. Since 2018 mandatory licensing is no longer limited to certain HMOs that are three or more storeys high, but also include properties with one or two stories. Since then, schemes have continued to grow, and more than 500 licensing scheme are now in place, including just under 400 mandatory schemes and over a 100 additional and selective schemes. We’ll get into the definition of the different schemes in more detail later.

Different types of licences

The basic definition of an HMO is quite straightforward; however, complications arise for agents when they need to identify if their property needs a mandatory, additional, or selective licence.

To clarify, there are three types of licences that may be required.

  • Mandatory HMO licensing: Mandatory HMO licensing applies to all large HMOs in England. Mandatory licensing schemes apply to most ‘large’ HMOs with five or more occupants from two or more households. These licensing requirements include minimum room sizes and other council guidelines.
  • Additional HMO licensing: Councils also have the discretion to require licensing for HMOs of smaller sizes. It can include any additional requirements beyond the mandatory licence – and the rules can often be complex and confusing. Currently, more than half of London’s boroughs operate additional licensing schemes.
  • Selective licensing: Selective licensing applies to any property, whether it is are an HMO or not, and allows councils to specify areas down to the specific side of a street that need a licence. Local councils often introduce selective licensing in areas that have received many complaints about rental homes, including anti-social behaviour. To add to the complexity, only 20% of a local authorities housing stock can be covered by a selective licence scheme without central government approval, creating a complex web of rules and regulations depending on the location of the property. More on this later.

Licensing schemes change periodically, for example additional and selective schemes are only in place for a maximum of five years before they either end, or are replaced with a new scheme. So monitoring the local council for any regulatory changes is very important: even if you’re compliant now, a change in the rules can put you at risk of fines in the future. Ignorance of the changes will not protect agents or their landlord customers from fines. This adds another layer of complexity for agents who are trying to navigate the PRS and protect their landlord customers against fines.

Who is exempt from HMO licensing?

HMOs owned by a housing association or cooperatives, a higher education institute, a health service, a council or a police or fire authority are excluded from licensing requirements. Other examples include:

  • Properties with shared facilities rented to a single family
  • Hostels or premises for vulnerable individuals
  • Properties where the owner lives with one or two other households.

The patchwork of licensing rules

There are more than 100 additional and selective licensing schemes in place across the UK. According to Hawks’s data, a new scheme or consultation was introduced every eight days in 2021, and so far, since August 2022, more than 25 new schemes and consultations have already been introduced across the country. The interplay of selective and additional licensing schemes, along with Article 4 planning legislation, creates a complex patchwork of rules for agents to follow:

Above: Some areas have extremely complicated licensing guidelines. Just within London, for example, we see wide diversity of approach from local authorities


Haringey has new selective licensing scheme that went live later in 2022. Letting agents and their landlord clients in the London borough of Haringey have to abide by a Selective Licensing scheme to include measures requiring those with low or non-existent EPCs to upgrade them. This is the first scheme of its kind and, the new EPC requirement has just been given the green light by the Secretary of State. The scheme will cover 14 or the 19 wards within the borough or some 30,000 PRS properties.


In 2021, Westminster council amended its new additional licensing scheme just a month after launching it in a bid to improve tenants’ living conditions. The change will exclude S257 HMOs (a converted block of flats where the standard of the conversion does not meet the relevant building standards and fewer than two-thirds of the flats are owner-occupied) from the council’s additional licensing scheme. Yet critics are questioning if the change is even legal.

Landlords struggle to understand which schemes apply

The various start and end dates and the inconsistent regulations that underpin different licensing schemes mean landlords struggle to understand which schemes apply to them and which don’t. This confusion can and does lead to thousands of pounds in fines. Providing accurate answers to landlords displays real expertise and adds substantial value. In a competitive market, therefore, agents can stand out from the competition by being the leading expert on licensing on the high street.

Licensing fines

Licensing schemes vary greatly between councils, and it’s therefore not surprising that many landlords and agents get unwittingly caught out and slapped with fines or, worse still, rent repayment orders (RROs).

Over recent years, fines have increased in amount and frequency as councils enforce their schemes more stringently. According to the Mayor of London’s Rogue Landlord and Agent Checker, as of August 2022, £8,010,344 in fines has been levied against rogue landlords and agents. Letting agents also stand to face fines for leasing unlicensed properties in the same way as landlords do. In fact, according to Hawks’s data, the average amount for fines imposed on agents (for all types of offences) is £4,440 compared to £4,223 for landlords. This means that although landlords get fined more regularly, agents get fined more (on average).

In addition to monetary fines, landlords and agents can also face prosecution, banning orders and even criminal charges for operating unlicensed properties. Agents failing to comply with local licensing regulations also face reputational damage, which can have a detrimental effect on any agency, especially in a competitive market like lettings. So, the financial ‘penalty’ could be much higher than the original fine.

Rent Repayment Orders

Enforcement through Rent Repayment Orders (RRO) is also increasing, so Landlords must act to protect themselves. There have been several RROs issued to rogue landlords and agents in various councils this year. For example, a Landlord in Bethnal Green in London was earlier this year hit with an RRO totalling more than £30,000 for not obtaining a licence for an HMO property. Each of the five tenants was awarded their full rent back for the months they lived in the property. The HMO was covered by Tower Hamlets Council’s additional licensing scheme, which has been in place since 2019.

Similarly, a landlord in Ealing was recently handed a £5,400 RRO for not applying for a selective licence earlier in the year. Despite the landlord’s defence that she was unaware of the licensing scheme, Ealing council and the Court refused the reasoning.

Another example is an HMO landlord in Preston that last year was faced with RROs of almost £50,000 and fines of £24,000 after the council found that the landlord did not obtain the correct HMO licence. As a result, the landlord was fined, but kept fighting the decision with appeal after appeal. However, the appeals were all dismissed and the landlord is now being forced to pay the fine, the RROs, and has been prevented from operating any licensed HMO properties in Preston.

Who is responsible for the licence application and maintaining the licence?

Most landlords depend on letting agents to support their licensing needs, and rightfully so: letting agents actually share the landlord’s legal obligation to obtain the correct licence for the properties they manage. Even if a letting agent’s terms of business state that they don’t take on the responsibility for licensing, the Housing Act 2004 places responsibility for licensing a property on anyone who meets the statutory definition of person having control or person managing the property. We’ll get into more detail on how to get an HMO licence in the following section.

How do you apply for an HMO licence?

Applying for a licence is a complex, multi-step process and can be daunting for inexperienced as well as seasoned landlords. The first step is to verify if the property needs to be licensed and to find out if you need to apply for a mandatory, additional or selective licence. Second, speak to the council to double-check licensing requirements – as mentioned, the rules change. It’s important to carefully check each time as ignorance is no defence against being fined. A property inspection then usually needs to be set up and the licence applicant needs to meet and liaise with the council and manage the application through to a decision.

This is where agents can really help add value to their landlord customers. Understanding the type of licence that is applicable and then engaging with the council can be time-consuming, so any assistance that Hawks can give to landlords will pay dividends.

Hawks can support landlords and agents with the licensing application process. Hawks can file licence applications for any UK property and manage the whole process on your behalf. This is a premium add on service, Please contact Hawks for further information