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HMO licence fees are set by individual councils, not central government. That means costs vary enormously depending on where your property is located, what type of licence you need, and how many occupants the property houses. A mandatory HMO licence can cost anywhere from £375 to over £1,500 for a five-year period — and if you own HMOs across multiple council areas, you will pay different fees for each.
This guide breaks down the cost structure, shows what typical councils charge, explains what drives the fee up or down, and covers the hidden costs that sit alongside the licence fee itself.
How HMO Licence Fees Are Structured
Since the Supreme Court ruling in R (Hemming) v Westminster City Council (2017), councils must split licence fees into two parts:
Part 1 — Application fee: Covers the cost of processing your application. Payable upfront when you submit. Non-refundable even if the licence is refused.
Part 2 — Licence fee: Covers the cost of running the licensing scheme, enforcement, and compliance monitoring. Payable once the licence is granted.
For more on this topic, see our guide to Financial Planning for HMO Owners.
Some councils collect both parts at once; others invoice Part 2 separately after granting the licence. The total across both parts is what matters when comparing costs.
Typical HMO Licence Costs by Scheme Type
Mandatory HMO Licence
| Council area | Typical 5-year fee | Notes |
|---|---|---|
| London boroughs | £800–£1,500 | Westminster, Camden, Newham among the highest |
| Major cities (Manchester, Birmingham, Leeds) | £600–£1,100 | Varies by council |
| University towns (Nottingham, Bristol, Sheffield) | £500–£900 | Often have additional licensing too |
| Smaller councils | £375–£700 | Lower volumes, lower fees |
The national average for a five-year mandatory HMO licence sits at approximately £700–£900, though outliers exist in both directions.
Additional HMO Licence
Additional licensing fees are generally similar to or slightly lower than mandatory fees, typically £400–£1,000 for five years. Some councils set identical fees for both schemes; others charge less for additional licences on the basis that the properties are smaller and require less inspection time.
Selective Licence
Selective licensing fees tend to be the cheapest of the three schemes, typically £300–£750 for five years. This reflects the fact that selective licensing covers all private rentals (not just HMOs) and the properties involved are generally less complex.
Multiple Licences
If your property requires both a mandatory HMO licence and a selective licence (because it is in a selective licensing area), you will need to pay for both. Some councils offer a discount for dual applications, but many do not.
What Affects Your Licence Fee
Number of occupants
Some councils use a tiered fee structure based on the number of habitable rooms or occupants. A six-bed HMO might cost £100–£200 more to licence than a five-bed in the same council area.
First application vs renewal
Many councils charge a reduced fee for licence renewals — typically 10–25% less than a first application. This reflects the lower processing cost when the property has already been inspected and the licence holder is known to the council.
Accreditation discounts
Several councils offer fee discounts of £50–£200 for landlords who are members of recognised accreditation schemes such as the National Residential Landlords Association (NRLA), local landlord accreditation schemes, or property redress schemes. Check with your council before applying — the discount must usually be claimed at application.
Early application discounts
Some councils offer a discount for applications submitted within a specified period after a new licensing scheme is introduced. These early-bird discounts can be meaningful — some councils have offered 25–50% off for applications within the first three months of a scheme.
Online vs paper applications
A small number of councils charge more for paper applications than online submissions. The difference is typically £50–£100.
Costs Beyond the Licence Fee
The licence fee is not the only cost. Budget for the following:
Fire safety compliance
If your property does not already meet fire safety standards, bringing it into compliance can cost £500–£3,000+ depending on the property size and what work is needed. Fire doors alone cost £200–£400 each fitted, and a six-bed HMO may need doors to every bedroom and the kitchen.
Mains-wired interlinked smoke detection costs £300–£600 to install across a typical HMO.
Electrical installation condition report (EICR)
An EICR is required for every HMO licence application. Cost: £150–£350 depending on property size and location. Valid for five years, so you need one per licence cycle.
Gas safety certificate
Required annually (not just at licence application). Cost: £60–£90 per year for a typical HMO.
Energy performance certificate (EPC)
Required at application. Cost: £60–£120. Valid for 10 years.
Fire risk assessment
A professional fire risk assessment costs £200–£500. While you can carry out your own assessment, many councils prefer or require a professionally prepared document, particularly for larger HMOs.
Floor plans
Councils require floor plans showing room dimensions. If you do not have these, a professional floor plan typically costs £100–£300 depending on property size.
Property improvements
If your property does not meet the required standards for room sizes, kitchen facilities, bathroom facilities, or general condition, remedial works will be needed before (or as a condition of) the licence being granted. These costs are entirely property-specific but can run from a few hundred pounds for minor works to several thousand for significant upgrades.
Total First-Year Cost: A Worked Example
Property: Six-bed HMO in Manchester requiring a mandatory licence
| Item | Cost |
|---|---|
| Mandatory HMO licence (5-year, Part 1 + Part 2) | £900 |
| EICR | £250 |
| Gas safety certificate | £75 |
| EPC | £80 |
| Fire risk assessment | £350 |
| Fire door installation (6 doors) | £1,800 |
| Smoke detection upgrade (mains-wired interlinked) | £450 |
| Floor plans | £150 |
| Total first-year cost | £4,055 |
| Annualised over 5-year licence | £811/year |
On a property generating £3,000/month in gross rent, the annualised licensing cost represents approximately 2.3% of gross rental income. This is a manageable cost, but one that must be factored into your investment appraisal from the outset.
What Happens If You Do Not Pay
Failing to obtain a licence does not save money — it costs far more:
- Civil penalty: Up to £30,000 per offence
- Rent repayment order: Up to 12 months' rent repayable to tenants
- Inability to serve Section 21 notices while unlicensed
- Criminal prosecution with an unlimited fine
The maximum civil penalty of £30,000 is approximately 30–40 times the cost of a five-year licence. Rent repayment orders on a six-bed HMO can exceed £36,000. The economics of non-compliance are unambiguously negative.
How to Check Your Council's Fees
Every council publishes their HMO licensing fees, usually on their website under "HMO licensing" or "private rented sector licensing". If you cannot find the information online:
- Search "[your council name] HMO licence fee"
- Contact the private sector housing team directly
- Check GOV.UK for councils with recently introduced schemes
Fees change when new schemes are introduced or existing schemes are renewed (typically every five years). Always confirm the current fee before submitting your application.
Next Steps
HMO licence costs are a standard operating expense for any HMO landlord. The licence itself is typically the smallest component of total compliance cost — fire safety works, electrical testing, and property improvements often exceed the fee several times over. Budget for the full package, not just the licence.
If you are purchasing an HMO or remortgaging, your lender will require a valid licence. Factor licensing costs into your acquisition appraisal and ensure the property is licensable before you commit to a purchase. Contact The HMO Mortgage Broker for advice on how licensing requirements interact with your mortgage application.
Frequently Asked Questions
How much does an HMO licence cost?
HMO licence fees vary by local authority, typically ranging from £500 to £1,500 for a 5-year licence. Some councils charge per room (£50-£100 per room) in addition to a base fee. Fees are usually split into two parts: an application fee (paid on submission) and a licence grant fee (paid when the licence is issued). Check your council's current fee schedule as they are reviewed annually.
Are there any discounts on HMO licence fees?
Some councils offer discounts for: early applications (before the previous licence expires), accredited landlords (members of NRLA or local accreditation schemes), multiple property applications (portfolio discounts), and online applications. Discounts typically range from 5-20% of the standard fee. Contact your council's licensing team to ask about available reductions.
What happens if I do not renew my HMO licence?
Operating with an expired licence is treated the same as operating without a licence — it is a criminal offence. You could face unlimited fines, civil penalties up to £30,000, and rent repayment orders. Most councils send renewal reminders, but the responsibility is on you as the landlord. Set a calendar reminder 6 months before expiry to start the renewal process.
Can I reclaim HMO licence costs from tenants?
No, you cannot pass HMO licence costs directly to tenants. The Tenant Fees Act 2019 prohibits landlords from charging tenants for licensing costs. However, licence fees are a tax-deductible expense for your rental business, which provides some relief. Factor licence costs into your investment calculations when assessing the property's profitability.