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HMO licences and Article 4

Two separate sets of rules decide whether you can run an HMO: housing licensing from the council's housing team, and planning from its planning team. You need to pass both.

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The short answer

In England, a house let to five or more people from two or more households, who share a kitchen or bathroom, needs a mandatory HMO licence. Many councils also license smaller HMOs. Separately, in an Article 4 area you need planning permission to turn a family home into even a small HMO.

When an HMO needs a licence

  • Mandatory licensing: five or more tenants, forming two or more households, sharing facilities. This applies across England.
  • Additional licensing: a council can extend licensing to smaller HMOs, often three or four tenants, in all or part of its area.
  • Selective licensing: some councils license all privately rented homes in certain streets, not just HMOs.

A licence usually lasts up to five years. The council checks room sizes, fire safety, amenities and that you are a fit and proper person to be a landlord.

Penalties

Running an HMO without a required licence is a criminal offence. Since 1 May 2026, councils can issue civil penalties of up to £40,000 per offence, and tenants can claim back up to two years' rent through a rent repayment order.

Article 4 and planning

Normally, turning a family house (use class C3) into a small HMO for three to six people (class C4) does not need planning permission. An Article 4 direction removes that right in a set area, so you must apply for planning permission. Large HMOs for seven or more people always need planning permission.

Article 4 areas are common around universities. In the North East, Newcastle has had one covering several neighbourhoods for years, and County Durham has consulted on a countywide direction for small HMOs. Always check the council's planning pages for the exact boundary and start date before you buy.

Existing HMOs. A property already lawfully used as a small HMO before an Article 4 direction starts can usually keep that use. Keep evidence such as tenancy agreements, licences and council tax records.

What it means for your mortgage

  • Most HMO lenders ask for a copy of the licence, or proof you have applied, before they complete.
  • In an Article 4 area, lenders and valuers will want to see the planning permission or proof of existing use.
  • Some lenders value licensed HMOs on their rental income (an investment valuation), which can be higher than the bricks-and-mortar value. See HMO mortgages.

Common questions

Does a three-bed house let to three sharers need a licence?

Not a mandatory licence, but it may need one if your council runs additional licensing. Check the council's website for the area.

How much does an HMO licence cost?

Fees are set by each council and are often several hundred to over a thousand pounds per property for five years.

Can I get an HMO mortgage before the licence is granted?

Often yes, if you can show you have applied. Some lenders want the licence in place, especially for larger HMOs.