Licensing
HMO Licence Thresholds After the Renters' Rights Act
Search results still mix up two different numbers. An HMO in the Housing Act sense can exist from three occupiers forming more than one household. A mandatory licence is only required from five occupiers. The Renters' Rights Act did not collapse those two lines into one.
The national threshold is still five
In England a property needs a mandatory HMO licence under Part 2 of the Housing Act 2004 when it is occupied by 5 or more people forming 2 or more households who share a toilet, bathroom or kitchen. The old “three-storey” rule was removed in 2018. The 2025 Act did not touch that occupancy test. GOV.UK's HMO licence guidance is the source to re-check if a later instrument ever does.
Additional licensing is how 3–4 person HMOs get caught
Councils can designate additional HMO licensing under section 56, pulling smaller HMOs into the same licensing regime. That is why “do I need a licence in Newham?” and “do I need one in rural Northumberland?” have different answers for a four-person share. Look up the council licensing directory rather than a national rule of thumb.
Selective licensing is different again: it can apply to a single-household rental in a designated area, with no HMO threshold at all.
What the Act did change
- Civil penalty maximum for letting unlicensed: £40,000 from 1 May 2026 (was £30,000).
- Rent repayment orders: up to 24 months' rent for offences on or after that date (was 12 months).
- Section 21 abolished, so you cannot paper over an unlicensed HMO with a no-fault notice. Possession is Section 8, Form 3A, and a missing licence is still a defence and a prosecution risk.
- When the PRS Database opens in your region, licence status will sit on the national record.
Wales and Scotland
Wales uses Rent Smart Wales nationally and still licenses HMOs locally - see whether Rent Smart Wales applies. Scotland licenses HMOs from a lower occupancy threshold (typically three occupiers from three families) and requires landlord registration. Neither regime was rewritten by the English Act.
Vantage tracks HMO and selective licences with the rest of the property's obligations, using the long lead time those applications actually take.
Frequently asked questions
Did the Renters' Rights Act lower the HMO licence threshold to 3 people?
No. The national mandatory threshold in England remains 5 occupiers forming 2 or more households. Some councils already licence 3- and 4-person HMOs under additional licensing - that is a local designation, not a change made by the Act.
What did change on 1 May 2026?
The maximum civil penalty for letting a licensable property unlicensed rose to £40,000 (from £30,000). Rent repayment orders can cover up to 24 months' rent. Section 21 is gone, so an unlicensed HMO remains a serious obstacle to possession under Section 8.
Does a 3-person house share need a licence?
Only if it meets the national HMO definition and the council has designated additional licensing that covers that size of HMO, or if it is a large HMO of 5 or more. Check the council page for the property's local authority.
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