• an entire house or flat let to three or more Ts, forming two or more households and who share a kitchen, bathroom or toilet;
• a house that has been converted into bedsits, or other non-selfcontained accommodation, which are let to three or more Ts who form two or more households;
• a converted house containing one or more flats which are not wholly self-contained, and which are occupied by three or more Ts who form two or more households;
• a building which has been converted into self-contained flats if the conversion did not meet the 1991 Building Regs, and more than one third of the flats are on short-term tenancies.

In general terms, the property must be the only or main residence of the Ts. But, there are some exemptions (property where L and his household live with up to two ‘households’; buildings occupied entirely by freeholders or long leaseholders; buildings owned or managed by public bodies, which includes local housing authorities and registered social L; and where the residential accommodation is ancillary to the main use of the building).

The definition of household is important. It covers (i) couples married or living together as H and W (or in an equivalent relationship if the same sex), and (ii) relatives living together (including grandparents, parents, children, stepchildren, grandchildren, brothers, sisters, uncles, aunts, nephews, nieces or cousins). It also includes half-relatives, foster children living with foster parents, and domestic staff who live rent free.

Not all HMOs need a mandatory licence. In particular, licensing applies to buildings of three or more storeys which are occupied by five or more Ts in two or more households. But, what is a ‘storey’? The answer is that it covers basements and attics occupied/converted for occupation by residents; basements and attics if used in connection with the occupation of the HMO by residents; storeys occupied by a resident L or the L’s family; all storeys in residential accommodation even if they are self-contained; any business premises or storage space on the ground floor or any upper floor (but the position is not clear as regards mezzanine floors).

Do not forget that local housing authorities also have discretionary power to require licences even when mandatory licences are not needed (so check with the LA whether an Additional Licensing Scheme or Selective Licensing applies to a particular area).

The real point to appreciate is that the new mandatory licensing scheme introduced last year has brought many more rented properties within the scope of the HMO legislation. An L who fails to apply for a licence can be fined up to £20,000; perhaps more importantly, an L who receives rent on an unlicenced property can suffer a penalty of up to 12-month’s rent, and will also lose the right to automatic possession under s21 HA 1988. Source: Charles Russell.  © Practical Lawyer