HMO licence cost: who sets the fee and what else to budget for

People often ask "how much is an HMO licence?" and expect one number. There is not one.

GOV.UK states plainly: you will be charged a fee which is set by the council. It does not give an amount, because each council decides its own. The law says the same. Section 63 of the Housing Act 2004 lets the local housing authority require an application to be accompanied by a fee fixed by the authority. When it fixes the fee, the authority may take into account all the costs it incurs in carrying out its licensing functions. The Act also lets regulations set maximum fees, so ask your council whether any cap applies.

So this page does not quote an average or a typical price. Any figure you see without a named council and a date is not one to plan around. Always get the current fee from the council that covers the property.

There are three kinds of scheme. Which one applies depends on the size of the HMO and where it is.

Mandatory licensing. GOV.UK says you must have a licence if you are renting out a large HMO in England or Wales. In England, the government's guidance for councils says an HMO must be occupied by 5 or more people from 2 or more separate households. Mandatory licensing is no longer limited to buildings of 3 or more storeys.

Additional licensing. The same guidance says a council can designate a specific area as subject to additional HMO licensing. This covers HMOs that are not covered by mandatory licensing, so smaller shared houses may need a licence in some areas and not others. The council must follow the statutory requirements when it introduces such a scheme.

Selective licensing. Some councils also run selective licensing schemes under Part 3 of the Housing Act 2004. The government guidance we read does not set out the criteria, so ask your council whether a scheme covers the property.

GOV.UK also says smaller properties may still need a licence depending on the area, so check with your council.

The fee is only one cost. GOV.UK sets out conditions that can mean spending money:

• The house must be suitable for the number of occupants, based on its size and facilities.
• The manager, you or your agent, must be considered "fit and proper".
• You must send the council an updated gas safety certificate every year.
• You must install and maintain smoke alarms.
• You must provide electrical appliance safety certificates when asked.
• The council may add conditions, such as improving facilities, and will tell you when you apply.

Any work needed to meet them is a cost on top of the licence. Our HMO calculator lets you add your own estimates of compliance costs alongside rent and finance. We do not provide the figures for you, because they depend on the property.

1. Go to the GOV.UK HMO licence page and enter the property's postcode, or use "Find your local council".
2. Open your council's HMO licensing page. Look for the fee schedule and the date it applies from.
3. Check whether the fee covers one HMO or each, and whether it varies with the number of rooms.
4. Ask whether the council has an additional or selective licensing scheme in that area.
5. Ask what happens if you need to change the number of occupants during the licence.
6. If anything is unclear, ask the council's licensing team. Keep the answer in writing.

You should apply yourself, but GOV.UK says a managing agent can apply on your behalf.