The unlicensed HMO that cost a landlord £20,000

The property was in demand, and rooms let quickly. The landlord thought they were simply maximising space by renting each bedroom individually. What they overlooked was that once five unrelated tenants occupied the property, it became a House in Multiple Occupation (HMO) requiring a licence. When the local authority discovered the breach, the fine and subsequent Rent Repayment Order totalled more than £20,000.

Licensing rules vary by council, but in England and Wales, all large HMOs — generally defined as five or more people in two or more households sharing facilities — must be licensed. Some councils extend this to smaller HMOs under additional licensing schemes. Letting without the right licence is a criminal offence. Penalties can include unlimited fines, civil penalties up to £30,000, and Rent Repayment Orders requiring landlords to return up to 12 months of rent or housing benefit. In this landlord’s case, failing to research and apply for the correct licence proved far more costly than the licence fee itself.

The lesson is clear: never assume. Always check with your local council whether a property needs licensing, and keep records of your enquiries. The requirements can change depending on the area, and ignorance is not a defence. The cost of compliance is modest compared to the financial and reputational damage of enforcement.

What do you think?

Do you operate HMOs, and how do you keep up with changing licensing requirements across different councils?

Source: Gov.uk HMO licensing guidance

Previous articles in this series

Landlord Lessons: The AST date mistake

Landlord Lessons: The missing inventory

Landlord Lessons: The verbal agreement trap

Landlord Lessons: The gas safety lapse

Landlord Lessons: The unprotected deposit