Additional Licensing
Quick answer
A discretionary HMO licensing scheme a council can introduce under section 56 of the Housing Act 2004 to cover smaller HMOs that fall below the mandatory threshold of five or more occupants in two or more households. (The old three-storey condition was removed on 1 October 2018 — mandatory licensing now applies regardless of how many storeys the property has.) It is separate from selective licensing (which covers all rented homes in a designated area, not just HMOs). Operating an unlicensed HMO where additional licensing applies is a criminal offence with civil penalties up to £30,000 and exposure to a Rent Repayment Order of up to 24 months’ rent.
At a glance
- What
- A council scheme licensing smaller HMOs not caught by mandatory licensing
- Law
- Housing Act 2004, s.56
- Covers
- HMOs below the mandatory 5-person threshold in a designated area
- Penalty if unlicensed
- Up to £30,000 civil penalty + Rent Repayment Order
Full guide
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Open full guideWhy Additional Licensing matters for landlords
Additional licensing lets a council require a licence for HMOs that fall outside mandatory HMO licensing — typically smaller shared houses. Whether your property needs one depends entirely on your local authority: the same 3-person HMO can be licence-free in one borough and licensable in the next. Renting an unlicensed HMO where a scheme applies is a criminal offence, exposes you to a civil penalty of up to £30,000 (or prosecution), can block a possession claim and lets tenants reclaim up to 12 months’ rent through a Rent Repayment Order. Always check the specific council’s licensing designations before you let.
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Official sources
LetCompliance editorial reviews this entry every quarter against the sources above. Always confirm specific duties with a qualified solicitor or your local council.
Related terms
Landlord Licensing
Local authority schemes that require landlords to hold a licence to let property in a defined area. Three types: mandatory HMO licensing (national), additional licensing (smaller HMOs), and selective licensing (non-HMOs). Operating without a required licence carries fines up to £30,000 and can invalidate possession claims.
HMO (House in Multiple Occupation)
A property let to 3 or more people from 2 or more households who share facilities (kitchen, bathroom, toilet). Any HMO with 5 or more occupants from 2 or more households needs a mandatory HMO licence from the local authority. Many councils also operate additional licensing for smaller HMOs.
Mortgage Interest Tax Credit (Section 24)
The 20% basic-rate tax credit that replaced full mortgage interest deduction for individual UK landlords under section 24 of the Finance (No.2) Act 2015. From 6 April 2020, finance costs (mortgage interest, loan interest, mortgage broker fees) are no longer deductible from rental profits; instead HMRC gives a tax reducer at the basic rate, capped at the lower of finance costs, property profits or adjusted total income after personal allowance. Higher- and additional-rate taxpayers are materially worse off than pre-2017; Limited Company landlords are unaffected because Ltd interest remains a fully deductible business expense.
Stamp Duty Surcharge (Additional Property)
The additional 5% Stamp Duty Land Tax surcharge (England and Northern Ireland, raised from 3% on 31 October 2024) on the purchase of an additional residential property over £40,000, including most buy-to-let purchases and second homes. Applies on top of the standard SDLT residential bands. A separate 2% non-resident surcharge applies to non-UK-resident buyers. Refundable within 36 months if the previous main residence is sold; rules differ in Scotland (Land and Buildings Transaction Tax + 8% Additional Dwelling Supplement) and Wales (Land Transaction Tax + 4% Higher Residential Rate).
Selective Licensing
A local authority scheme that requires every private landlord in a designated area to hold a licence, regardless of property type. Operating without a required selective licence carries fines up to £30,000 and can block possession.
Accelerated Possession
A fast-track court procedure used under a Section 21 notice in England and Wales. Abolished for new claims from 1 May 2026 because Section 21 no longer exists. Possession is now pursued under Section 8 using a specified ground.