How many tenants before I need an HMO licence?

In England, five or more occupiers in two or more households, at any number of storeys, since 1 October 2018. In Wales the same five-and-two test applies but the property must also comprise three storeys or more. An additional licensing designation can bring the figure down to three occupiers in either country.

Does the three-storey rule still apply?

In Wales, yes — the Prescribed Descriptions (Wales) Order 2006 still requires three storeys or more. England removed it on 1 October 2018, bringing an estimated 160,000 further properties into licensing. Landlords working from pre-2018 knowledge are the most common accidental unlicensed HMO, and 'it is only two storeys' is the exact sentence.

How do you count storeys for a Welsh HMO?

More generously than landlords assume. Basements and attics used for living accommodation count, as does a storey used as business premises where the HMO sits above or below it, mezzanine floors used for living, and any storey forming an integral part of the HMO. A flat above a shop is often three storeys on this count.

What happens if I let an unlicensed HMO?

The same in both countries, because it is the same Act: an offence under section 72 of the Housing Act 2004, an unlimited fine on conviction, or a civil penalty of up to £30,000 as an alternative, plus a rent repayment order of up to twelve months' rent. Possession is affected while the property is unlicensed.

Mandatory HMO licensing: England dropped the storey rule, Wales kept it

Mandatory HMO licensing is the one national licensing regime — no designation, no consultation, no council discretion. It applies everywhere in England and Wales.

But the threshold is not the same in both, and the difference is a whole storey.

England — no storey requirement since 1 October 2018

The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 sets the test. An HMO needs a mandatory licence where it:

is occupied by five or more persons,
living in two or more separate households, and
meets the standard test, the self-contained flat test or the converted building test.

There is no storey condition. Before October 2018 there was one — three storeys or more — and its removal brought an estimated 160,000 additional properties into licensing overnight. A two-storey terrace let to five sharers has needed a licence since that date.

Landlords still working from pre-2018 knowledge are the most common category of accidental unlicensed HMO, and "it is only two storeys" is the exact sentence.

Wales — three storeys, still

Wales runs on the Houses in Multiple Occupation (Specified Educational Establishments) (Wales) Regulations and, for the threshold, the Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (Wales) Order 2006, which still requires:

the HMO or any part of it comprises three storeys or more,
it is occupied by five or more persons, and
occupied by persons living in two or more single households.

All three. Wales did not follow England’s 2018 deregulation of the storey test, so a two-storey Welsh house let to five sharers does not need a mandatory licence — though it may well need an additional one, and it certainly needs Rent Smart Wales.

Counting storeys, where it still matters

The Welsh order is specific, and the count is more generous than landlords assume. It includes:

basements and attics used for living accommodation;
a storey used as business premises where the HMO sits above or below it;
mezzanine floors used as living accommodation;
any storey that is an integral part of the HMO.

A flat above a shop is frequently three storeys on this count when the occupiers would describe it as two.

The number that is the same either side

Five persons, two households. Both countries. And in both, additional licensing can bring the figure down to three where a council has designated — 63 councils across England and Wales operate one, 10 of them in Wales.

Consequences of getting it wrong

Identical in both, because it is the same Act: an offence under section 72, an unlimited fine on conviction, a civil penalty of up to £30,000 as an alternative, and a rent repayment order of up to twelve months’ rent. Possession is also affected while unlicensed.

The practical rule

England: five people, two households, any building, any height. If that is you, you need a licence.

Wales: the same, plus three storeys — and check the additional designation and Rent Smart Wales regardless. See the divergence map.

Your council’s position, on record. Browse all 318 councils with the designation and its source.

Information tool, not legal advice.