HMO licensing in London: what to check before you exchange

Most HMO purchases do not fall apart because of the property. They fall apart because of a licensing or planning problem that could have been found with two phone calls before the offer was made.

This is the order I would check things in, before exchanging contracts.

First, find out which licences apply

There are three schemes in England and a property can fall under more than one.

• Mandatory licensing. Applies to HMOs with five or more occupants forming two or more households, sharing amenities. Nationwide requirement.
• Additional licensing. Borough schemes that extend licensing to smaller HMOs, commonly three and four person properties. Many London boroughs run these.
• Selective licensing. Covers single lets in designated areas. It does not make a property an HMO, but it does mean a licence and conditions.

Check the specific council’s current scheme, the dates it runs to, and whether the property is inside the designated area. A scheme can cover part of a borough and not the rest, and designations expire and get renewed.

Second, separate licensing from planning

These are two different permissions and people treat them as one.

Planning is about use class. In England, a small HMO of three to six people sits in class C4. Many London boroughs have an Article 4 direction that removes the right to change from a family home to a small HMO without permission. Larger HMOs are outside C4 and need planning permission regardless.

A licence can be granted for an HMO that does not have planning permission, and enforcement can still arrive later. Ask the council’s planning department, in writing, about the property’s lawful use and any Article 4 direction covering the address.

Third, read the standards before you look at the furniture

Every council publishes HMO standards: minimum room sizes, kitchen and bathroom provision per occupant, fire precautions, sometimes sound insulation between rooms. These decide the refurbishment cost, and the refurbishment cost decides whether the deal works.

If the standards require a fire door here, a protected escape route there, and an upgraded detection system, that is a five figure conversation in a large house. It should be in your offer, not your surprise.

Fourth, check what the licence application needs

• The proposed layout and room sizes, which means floor plans
• Gas safety certificate, electrical installation condition report, energy performance certificate
• Fire risk assessment and the detection arrangements
• Details of the proposed manager, and the fit and proper person information for the application
• The fee, which is per property and sometimes per room

A licence is granted for a specific layout and a specific number of occupants. Converting a store room into a sixth bedroom after the fact is a breach of the licence, not a clever optimisation.

Fifth, accept the timeline

Licensing takes weeks to months, depending on the borough and on whether the property needs work first. Refurbishment sits in front of that. If you are buying with a mortgage that assumes rental income from day one, the gap matters.

How purchases usually go wrong

• Assuming the seller’s licence transfers with the building. It does not. A new owner needs a new licence.
• Assuming an existing HMO use means planning is settled. It may have been unauthorised for years.
• Budgeting for cosmetic refurbishment and discovering the fire and sound requirements.
• Buying in an Article 4 area on the basis that nobody checks. Enforcement is complaint driven, and neighbours complain.
• Ignoring bin storage, parking and the practicalities that turn into council contact later.

The checklist before you exchange

1. Confirm the licensing scheme that applies to the address, in writing from the council
2. Confirm the planning position and any Article 4 direction covering the property
3. Get the council’s HMO standards document and price the works it implies
4. Get a fire risk assessment, or an indicative one, before committing
5. Confirm the mortgage product allows the intended use
6. Confirm the licence timeline with the council’s housing team
7. Confirm the fit and proper person position for whoever will hold the licence
8. Model the deal with the licensing gap, the refurbishment and two months of voids

If any of those eight cannot be answered, the answer is not to exchange and hope.

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This is general information, not legal advice. Licensing schemes and standards change, and your borough is the authority on your property. For the broader picture, read the HMO guide.