Cost of HMO Landlord Licences Is a Postcode Lottery

Landlord licences for shared houses in multiple occupation can vary from £55 to £1,150 depending on where the property is located. 

The average landlord HMO licence across the UK stands at £591.

It’s not only the cost that’s confusing, says research by landlord insurer Direct Line for Business. 

Although licensing is mandatory in Scotland and Wales, only one in six local authorities in England have schemes, so taking out a licence and the ensuing costs are a postcode lottery, says the firm. 

“There are a baffling range of licence costs, terms and exceptions depending on the local authority running the scheme. 

These include tiering the cost of licences based on the number of rooms in a property (12%), charging by property type (9%) and the number of occupants (8%). "

The research also found that councils have prosecuted 61% more landlord licensing offences since 2015. 

Local authorities across the UK recorded 5,069 licensing offences in 2017, an increase of 46% since 2016 when 3,476 offences were recorded. 

Offences vary from not having a licence to breaching the conditions, like allowing too many tenants to live in a property. 

Flouting a landlord licence is a criminal offence and punishable with a fine of up to £30,000, but the average fine was £926 in 2017. 

Matt Boatwright, head of Direct Line for Business, said:

“Our analysis shows landlord licensing is truly a postcode lottery, with a phenomenal range of costs for those that do have to sign up for a scheme. Anyone planning on becoming a landlord, or who already has a property portfolio, should contact their local authority to see if they have a scheme in place. 

“It is vital that landlords comply with all appropriate legislation and take steps to protect themselves and their investment.”

View Related Handbook Page

Licensing of Private Rented Properties

The Housing Act 2004 introduced licensing of private rented premises. It is compulsory to license larger, higher-risk dwellings, but local authorities are also able to license other types of rented premises, including other lower-risk HMOs and individual houses and flats, if they can establish that other avenues for tackling problems in these properties have been exhausted.