The fact that a property falls within the definition of an HMO means it may be required to be licensed. Not all HMOs must be licensed. There are two regimes: Mandatory Licensing and Additional Licensing.
Mandatory Licensing
Under the provisions of the Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2018/221, an HMO must be licensed if these conditions are met:
- it has five or more occupiers
- The occupiers live in two or more single households
Additional Licensing
Local authorities have a power to impose further licensing schemes on HMOs which fall outside the mandatory scheme, so long as they have complied with the procedures for so doing.
Exemption
If a person having control or management of an HMO notifies the local authority of an intention to take steps to take the property out of the licensable criteria, the local authority can provide a temporary exemption notice in respect of the HMO. The maximum duration of an exemption is 6 months.
Defences
There is a general defence of ‘reasonable excuse’.
Where the licence conditions on the grant of a license include a restriction on the number of occupiers which is lower than that in actual occupation at the time, it is a defence to have taken ‘reasonable steps’ to reduce the number.
Penalties for Failure to License
The Housing Act 2004 provides a number of civil and criminal penalties which may apply on the failure to license an HMO
1) Criminal Prosecution. A local authority can prosecute anyone who is ‘in control of’ or ‘managing’ an unlicensed HMO where a license is required. The fine is unlimited.
2) Civil Penalties. As an alternative to prosecution, a local authority can impose a fine of up to £30,000.
3) Restriction on gaining possession. A section 21 notice seeking possession will be invalid where an HMO is unlicensed and there is no application for a license or for exemption.
4) Rent Repayment Orders. A tenant or the local authority can apply to the First-Tier Tribunal (Property Chamber) for an order that the landlord re-pay the rent for the period of up to 12 months.
Lawfulness of Tenancies
A tenancy granted by a landlord who is in breach of these provisions will, nevertheless, be lawful. Rent is payable and possession must be pursued lawfully.