House in multiple occupation

Some housing legislation makes a distinction between those buildings occupied mainly on long leases and those where the majority of the occupants are short-term tenants.

On 1 October 2018, the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018[8] amended the large HMO definition in the 2004 Act by abolishing the "3 or more floors" requirement.

[13] These provisions were included in response to a fatal fire at a student flat in Glasgow, which had no working smoke detectors, and metal bars preventing escape through a window.

[19] Where an Article 4 direction has been applied by a local authority, planning permission is required for the change of use of a dwelling house to HMO accommodation in the area designated.

This is usually to protect the housing mix in particular areas of a city; for example in Newcastle upon Tyne article 4 directives have come into force in parts of Heaton, Jesmond, South Gosforth, Sandyford and Spital Tongues.

Depending on the region of the authority, they have some or all of the following powers, to vary: Failure to apply for or comply with the terms of a licence for an HMO constitutes a criminal offence.

[27] Landlords must pass a fit and proper persons test, fixed penalties have been introduced HMO managers have to adhere to a Code of Practice.

[29][30] At the end of March 2019 there were over 15,600 licences in force and 87% of these were accounted for by the four major cities and the Fife local authority (Aberdeen, Dundee, Edinburgh and Glasgow).

Edinburgh accounts for almost two in five of Scotland's HMO licences due to its higher rents, large student population, tourist lets and young professionals sharing.

By splitting single properties into multiple bedsits that are each let out on separate tenancy agreements, landlords can also reduce their exposure to loss of earnings through rental arrears or voids.

While HMOs may generate higher income, HMO investments, at least in heavily regulated Scotland, entail significantly higher initial costs if compared with regular buy-to-let properties due to significant costs of licensing, safety checks and certificates, fireproofing, alarms, joinery and other required remedials.

Often they need larger cash deposits, as the average loan-to-value ratio is slightly lower than for an ordinary buy-to-let mortgage, while the minimum property value tends to be higher.