What are HMO and selective licensing?
Mandatory licensing applies to HMOs with five or more people forming two or more households. Councils can also introduce additional licensing for smaller HMOs and selective licensing for other privately rented homes in particular areas. A licence is personal to the licence holder and does not pass to a buyer.
Read more in our guide: Selling an HMO portfolio
The Three Types of Licensing
| Scheme | What it covers |
|---|---|
| Mandatory HMO licensing | HMOs with 5 or more people forming 2 or more households, everywhere in England |
| Additional HMO licensing | Smaller HMOs, in areas where the council has a scheme |
| Selective licensing | Other privately rented homes, including single-family lets, in designated areas |
| Maximum licence length | 5 years |
| Fees | Set by each council, commonly several hundred to over a thousand pounds per property |
| Transferable to a buyer? | No, the buyer must apply |
How Licensing Works
Part 2 of the Housing Act 2004 covers HMO licensing and Part 3 covers selective licensing. A licence names the licence holder and manager, sets the maximum number of occupiers and attaches conditions, such as fire safety, room sizes, waste arrangements and how tenants' complaints are handled. The council must be satisfied that the licence holder is a fit and proper person and that management arrangements are satisfactory.
Since 23 December 2024, councils in England have been able to introduce selective licensing schemes of any size without seeking approval from the Secretary of State, so more areas are adopting them. Check each council's website for current and proposed schemes.
Penalties for Letting Without a Licence
- prosecution with an unlimited fine, or a civil penalty from the council;
- rent repayment orders requiring the landlord to repay rent to tenants or the council;
- restrictions on recovering possession of the property;
- a record that can affect future fit and proper person assessments and appear on the landlord database.
The Renters' Rights Act 2025 strengthened rent repayment orders and councils' investigatory powers.
Licensing When You Sell
- List every property needing a licence, with the licence number, expiry date and conditions, in the sale pack.
- Be ready to show that the conditions have been met, such as fire safety certificates and occupancy levels.
- The buyer applies for their own licence. Applying on or before completion means they are protected while the council processes it.
- Tell the council about the change of ownership so your licence can be revoked.
Buyers will check whether any property needed a licence it did not have. A missing licence can lead to a reduced offer, an indemnity or a retention, so put things right before you sell. A licensed property may also show the council's view of the maximum occupancy, which supports the rent roll.
Official Sources and Further Reading
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
Mandatory licensing applies to HMOs with five or more people forming two or more households. Councils can also introduce additional licensing for smaller HMOs and selective licensing for other privately rented homes in particular areas. A licence is personal to the licence holder and does not pass to a buyer.
A council scheme requiring landlords of privately rented homes in a designated area, including single-family lets, to hold a licence for each property.
No. Licences are personal to the licence holder. The buyer must apply for their own licence and you should tell the council about the sale.
Up to five years, although councils can grant shorter licences.
The council can prosecute or impose a civil penalty, and tenants or the council can apply for a rent repayment order.
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