Context of HMO Licensing in England
To understand whether a 4-bedroom property with 4 unrelated tenants requires a licence after a local scheme ends, it is necessary to distinguish between the two layers of licensing that operate in England. The first is national mandatory licensing, which is set by central government and applies across all local authorities. The second is discretionary licensing, which includes Additional and Selective schemes that councils choose to implement based on local housing needs.
A House in Multiple Occupation (HMO) is defined as a property rented by at least three people who are not from the same household (e.g., a family) but share facilities like the bathroom or kitchen. Even if a property does not require a licence, it may still be classified as an HMO for the purposes of management regulations and council tax. The requirement for a licence is a separate legal threshold from the definition of the property type itself.
The National Mandatory Licensing Rule
The national mandatory licensing scheme is the baseline for the entire country. Under current legislation, a property must be licensed if it is occupied by five or more people who form two or more households and share basic amenities. Since your property is occupied by 4 unrelated tenants, it does not meet the threshold for national mandatory licensing. This rule remains constant regardless of what a local council decides to do with its own discretionary schemes.
If you were to increase the occupancy to five people, the property would immediately fall under the mandatory regime. This triggers a legal requirement to apply for a licence from the local authority, regardless of any other local scheme status. Failure to do so can lead to significant financial penalties or Rent Repayment Orders (RROs).
Understanding Additional Licensing Schemes
Local authorities, such as Birmingham City Council or other major urban hubs, often feel that the national mandatory threshold of five people is too high to address local issues like anti-social behaviour, poor waste management, or sub-standard housing conditions. To counter this, they can introduce an Additional Licensing scheme. This allows them to require licences for smaller HMOs, typically those with three or four unrelated occupants.
When a council states that their Additional HMO licensing scheme is ending, they are effectively removing this extra layer of regulation. Once the scheme expires, the legal requirement to hold a licence for a property with 3 or 4 occupants ceases to exist. At that point, the property reverts to the national standard, which only requires a licence for 5 or more occupants. For a landlord with four tenants, this usually means the property is no longer subject to licensing until a new local scheme is introduced.
Common Pitfalls During Scheme Transitions
The transition period between one scheme ending and the potential start of another can be confusing. Landlords often face several risks during this time:
- Overlapping Schemes: Councils often consult on a replacement scheme months before the current one ends. There may be a short gap where no licence is required, but a new scheme may be implemented shortly after.
- Article 4 Directions: It is important not to confuse licensing with planning permission. Even if a licence is no longer needed, an "Article 4 Direction" might still be in place in your area. This means you still need planning permission to convert a family home into an HMO, even for just 3 or 4 people. Licensing and planning are two separate legal departments within a council.
- The "Grace Period" Myth: If a scheme is still active on the day you tenanted the property, you must have a licence. You cannot wait for the scheme to expire in a few months; you are legally required to comply with the rules in force at the start of the tenancy.
Management Regulations Still Apply
A common misconception is that the end of a licensing scheme means the end of HMO regulations. This is incorrect. The Management of Houses in Multiple Occupation (England) Regulations 2006 apply to all HMOs, whether they require a licence or not. These regulations place strict duties on the manager to ensure safety and maintenance.
These duties include maintaining all means of escape from fire, ensuring the water supply and drainage are in good repair, and keeping all common parts in a clean and safe condition. Environmental Health Officers can still inspect your property and issue improvement notices or fines if these management standards are not met, even if the property is no longer licensed under an Additional scheme.
Practical Next Steps for Landlords
If you currently have a 4-bedroom property and the local Additional scheme is ending, you should take the following steps to protect your position:
- Verify the Expiry Date: Check the official local council website for the exact date the scheme ceases. Do not rely on second-hand information from forums or news articles.
- Check for New Consultations: Councils are required to consult the public before introducing a new licensing scheme. Look at the "consultations" section of the council website to see if a replacement scheme is being planned.
- Review Tenant Numbers: Ensure you have a clear record of how many people are living in the property. If a multi-room property has four tenants, but one tenant has a partner move in permanently, the occupancy hits five, and you will suddenly require a national mandatory licence.
- Maintain Safety Certificates: Continue to keep your Gas Safety Record, Electrical Installation Condition Report (EICR), and Fire Alarm testing logs up to date. These are fundamental requirements for all rentals and are often the first things checked during any council intervention.
Broader Compliance Responsibilities
While the focus here is on HMO licensing, several other legislative requirements remain in force regardless of the licensing status of the building. The Minimum Energy Efficiency Standards (MEES) currently require a rating of at least E on the Energy Performance Certificate (EPC) before a property can be let. While there has been much discussion about moving this to a C rating, the current legal requirement remains at E.
Furthermore, the government is increasingly focusing on property standards through initiatives like the Decent Homes Standard and Awaab’s Law. These are designed to ensure that all tenants, regardless of the size or type of their home, live in environments free from hazards like damp and mould. As a landlord, your liability for the health and safety of your occupants does not diminish just because a specific licensing fee is no longer payable to the council.
Finally, always ensure that your tenancy agreements are updated and that you continue to protect deposits in a government-approved scheme. If a property requires a licence and you do not have one, you cannot use a Section 21 notice to regain possession. Once the requirement for a licence is removed (due to the scheme expiring), this specific restriction on serving notice is usually lifted, provided all other compliance duties have been met.
In summary, if the local Additional scheme expires, your 4-bedroom property with 4 tenants will generally move into a period where it does not require a licence, provided the occupancy does not increase and no new Selective or Additional schemes are introduced by your local authority.