If the HMO has five or more ten- ants or the property is on three or more storeys it will require a li- cence from the local council. This will cost £400—£600 and will be valid for five years. The additional risk to the tenants is reflected in the penalty for land- lords who refuse to comply. This can be a fine for up to £20,000 and a criminal record.
There are big incentives for the ten- ants to inform the local authorities of HMOs that should be licensed. If a landlord has not applied for a licence when he should have, the tenants could recover up to twelve month’s rent from the landlord. Also, the landlord will not be able to serve the usual two month’s notice on the ten- ants for them to leave. They could electively become “sitting tenants” unless you have other grounds for notice such as serious rent arrears.