Over 70 English councils now run HMO additional licensing schemes, many covering three and four-person shared properties. The Renters' Rights Act raised the maximum civil penalty for operating without a licence to £40,000 from May 2026. Check your postcode today. Not at renewal time, not next quarter. Today.
What Has Happened?
On 25 August 2026, Telford & Wrekin Council launched a new additional HMO licensing scheme. Under it, many smaller shared properties occupied by three or four unrelated people who share kitchen and bathroom facilities now require a licence they previously did not need. Mandatory HMO licensing, which applies nationally across England, covers properties occupied by five or more unrelated people forming more than one household. Additional licensing is separate. It is a discretionary power under Section 56 of the Housing Act 2004 and can be applied to smaller properties, including three and four-person HMOs, at a council's discretion.
Hillingdon, in west London, also launched an additional scheme during August 2026. Havering and Reading both designated schemes in March 2026. The running total for English councils operating additional licensing now sits above 70. The councils in that group include Bristol, Nottingham, Brighton and Hove, Liverpool, Sheffield, Oxford, Salford, and Waltham Forest. This is not a problem limited to London boroughs or historic university towns. Telford is a provincial West Midlands market. If an additional scheme can land there, it can land in most places with an active private rented sector.
The regulatory trigger behind the acceleration was a December 2024 change. Before that date, councils wanting to designate a new additional scheme had to apply to the Secretary of State and wait for central government approval. That approval requirement was removed. Councils can now designate schemes through their own local consultation process and launch without a national sign-off. The consultation period can be as short as three to four months. That means a scheme can go from non-existent to operational before an annual compliance check would catch it.
The Renters' Rights Act 2025, which came into force on 1 May 2026, raised the maximum civil penalty for operating a licensable HMO without a licence from £30,000 to £40,000. That increase applies to mandatory and additional licensing offences. A landlord running a three-person shared house without an additional licence in a council area where a scheme is in operation faces the same raised penalty ceiling as someone running an unlicensed mandatory HMO. The offence category did not change. The maximum financial exposure did.
Why This Matters to UK Property Investors
The practical question for every HMO landlord is straightforward: does your local authority operate an additional licensing scheme, and if so, does your property fall within its scope? The answer depends entirely on where the property is. A three-bed shared house in central Manchester needs to be checked against Manchester's current licensing position. The same structure across the boundary in Salford needs checking against Salford's. These are different councils, different schemes, different fee schedules. There is no single national rule that resolves it.
Licence fees are set locally. Most additional HMO licences across English councils run in the range of £600 to £900 per property, valid for five years. That works out at £120 to £180 per year per property, which is manageable for any organised HMO portfolio. Telford's published fee exceeds £1,500 per property. That is at the high end of what any English council charges. A landlord with six HMOs in Telford faces a licence cost of over £9,000 every five years, purely on the licence fees, before any works required under the licence conditions. That is a cost that should have been in the acquisition model before purchase.
Rent repayment orders are the more serious financial exposure. Under the Renters' Rights Act, a tenant occupying an unlicensed HMO in a scheme area can apply to the First-tier Tribunal for a rent repayment order covering up to twelve months of rent. On a room renting at £650 per month, that is up to £7,800 per tenant. A four-room HMO running unlicensed in a scheme area for twelve months carries potential combined rent repayment exposure of up to £31,200, on top of a civil penalty that could reach £40,000. The cost of the licence is not the risk. The cost of not having it is.
Portfolio landlords with properties across multiple council areas face a specific administrative challenge. They need to track the licensing position in each local authority separately, and they need to do it often enough to catch new designations before they go live. A landlord with properties across Nottingham, Salford, and Sheffield who does an annual check is working at the limit of what is defensible. Councils can consult and designate within three to four months. A new scheme in one of those authorities could be live before the next annual review.
The Risks Investors Need to Understand
The £40,000 civil penalty ceiling is the headline figure, but it is worth understanding how councils actually apply penalties in practice. Most councils use a civil penalty notice scaled to the severity and duration of the offence and the landlord's financial position. A landlord who was genuinely unaware of a new scheme designation and applied promptly once they found out is in a different position to one who was notified and continued operating without applying. That context matters, but it does not eliminate the offence. Councils do not need to prove the landlord knew about the scheme. The obligation to comply sits with the landlord from the date the scheme goes live.
There is no single, real-time, publicly maintained database of all active additional licensing schemes in England. The government's advisory resource exists but is not always current. Kamma and LettCheck both maintain aggregated databases, and both carry some lag on newly designated schemes. The most reliable check for any specific property is the relevant local authority's own housing licensing pages. For a portfolio landlord covering five or more council areas, that means checking five separate council websites. It is a maintenance task, not a one-time exercise.
Schemes run on five-year terms and must be re-designated through a fresh consultation process before they can continue. Most councils have re-designated their schemes without interruption. A few have allowed gaps before re-designation. If you applied for a licence under an active scheme and it lapsed at renewal, you could technically be operating unlicensed during the gap even if the council subsequently relaunched. This is an edge case that applies mostly to long-hold portfolios. It is worth checking the expiry date of any existing additional licence alongside confirming the scheme itself is still active.
Investors acquiring HMO properties need to build licensing status into pre-exchange due diligence. Buying a three or four-bed shared property in a council with an additional scheme without confirming the current licence status is the same as buying with an unknown legal liability. The vendor should be able to provide the licence, including the conditions attached to it. If they cannot, the property may be unlicensed. That is not necessarily a deal-breaker, but the licence application cost, any works required under licence conditions, and the period of potential exposure between completion and the new licence being issued all need to be priced into the offer.
Where the Opportunity Could Be
Compliance pressure in the HMO sector has historically been a consolidation driver. The expansion of mandatory HMO licensing in 2018 pushed a number of accidental and undercapitalised landlords out of the three and four-bed shared property market, because they were unwilling or unable to do the compliance work. Additional licensing running across 70+ councils, with fines now at £40,000, is applying similar pressure to a wider property set. Some of that pressure creates motivated sellers.
Telford specifically is worth monitoring. From today, a cohort of smaller HMO operators in TF postcodes who have never engaged with licensing will face a decision: apply for the licence and get compliant, or sell. For investors already active in the West Midlands or researching the regional market, that decision window over the next six months may create acquisition opportunities from sellers who find the compliance requirement too much to deal with. A property that needs a Telford additional licence at £1,500-plus is not a problem for a buyer who operates licensed HMOs routinely. It may be a problem for a vendor who does not.
The same logic applies in Bristol BS3 and BS5, where additional licensing has been running for several years. Operators who have navigated Bristol's scheme have already built the compliance infrastructure. They understand the application process, they know the council's housing team, and their renewal applications move faster because of that track record. An investor entering those markets now is not starting from the same position as the established operators. That is a cost of entry. It is also not an insurmountable one for anyone who treats licensing as an operational task rather than an obstacle.
For investors doing due diligence on any HMO acquisition in England, one non-negotiable check before exchanging contracts is confirming the property's licensing status and whether the local authority has an active additional scheme. If the property is in a scheme area and unlicensed, that is a negotiating point. The licence application cost and any required works should be priced into the offer. A vendor who has been operating unlicensed in a scheme area for twelve months has created a potential rent repayment liability that any competent buyer's solicitor will pick up and flag. Get that information before exchange rather than after.
Arsh's Investor View
I have been running licensed HMOs for over a decade. Mandatory HMO licensing did not put me off the sector when it expanded in 2018, and additional licensing does not change my view now. What it does do is raise the operational floor. To run shared accommodation at scale in 2026 you need to track licensing in every council where you hold property, maintain current gas and electrical safety certifications, and keep management standards consistent with what the licence conditions require. None of that is unreasonable. But it is work, and that work is exactly what separates the operators who will still be in this market in five years from those who will not.
My direct read on where this goes: more councils will designate additional schemes over the next twelve to eighteen months. The political direction in most English authorities is toward more PRS regulation, and the December 2024 removal of the central approval requirement has made designation cheap in administrative terms. Any HMO investor who has been assuming additional licensing is a London and university city problem should update that assumption today. Telford is not a major university city. If it can designate a scheme covering three and four-person properties, any English council with political will to do so can follow.
On the fee structure: Telford's over £1,500 per property is at the top end of what councils charge and is not typical. Most schemes across England run at £600 to £900 per property for a five-year term. The difference matters for acquisition modelling, particularly in lower-value markets where the licence fee represents a more meaningful proportion of the annual gross rental income. In a Nottingham three-bed at £130,000 grossing £850 per month, a £700 licence fee over five years adds roughly £140 per year to operating costs, a minor line item. In Telford, a £1,500 fee on a similar property adds £300 per year. Still manageable, but worth putting in the numbers before you exchange, not after.
The practical step I would take this week is checking every three and four-bed shared property I hold against its local authority's current additional licensing position. If any of them are in a scheme area without a current licence, I would be making that application immediately rather than waiting. The cost of the application is small. The cost of operating unlicensed once someone complains is not.
How Property Investor App Can Help
Property Investor App gives investors access to HMO opportunities from sourcers who understand the local licensing landscape across England. Whether you are looking at Bristol, Nottingham, Sheffield, or newer scheme areas including Telford and Hillingdon, PIA's deal platform includes listings from operators who have already carried out the licensing due diligence and can confirm a property's current compliance status. For landlords holding shared properties in scheme areas and wanting to understand their obligations before they become enforcement issues, PIA connects with specialist HMO compliance consultants and mortgage brokers covering the full lender panel including Foundation Home Loans, Paragon Bank, and Precise Mortgages. Browse live UK property investment opportunities at Property Investor App.
Key Takeaways
- Telford & Wrekin Council launched a new additional HMO licensing scheme on 25 August 2026, requiring licences for many three and four-person shared properties previously exempt from mandatory licensing. Hillingdon also started an additional scheme in August 2026. Havering and Reading launched schemes in March 2026. The list of English councils running additional HMO licensing schemes now exceeds 70.
- The December 2024 removal of the central government approval requirement for additional scheme designations is driving acceleration. Councils can now designate schemes through local consultation alone, with no national sign-off needed. Consultation periods can run as short as three to four months, meaning a scheme can go from non-existent to live before an annual compliance check would detect it. Six-monthly postcode checks are a defensible minimum; annual checks are not.
- The Renters' Rights Act 2025, in force from 1 May 2026, raised the maximum civil penalty for operating a licensable HMO without a licence to £40,000, up from £30,000. Tenants occupying an unlicensed HMO in a scheme area can separately apply to the First-tier Tribunal for a rent repayment order covering up to twelve months of rent paid. On a four-room HMO at £650 per room per month, combined civil penalty and rent repayment exposure could reach £71,200.
- Licence fees are set by individual councils. Most additional HMO licences in England cost £600 to £900 per property for a five-year term. Telford & Wrekin's fees exceed £1,500 per property. Investors acquiring HMO property must include the local additional licence fee in acquisition models as a known operating cost, alongside confirmation of the current licensing status from the vendor before exchanging contracts.
- There is no single real-time database of all active additional licensing schemes in England. Check each local authority's housing licensing pages directly for any shared property you hold or are considering acquiring. Kamma and LettCheck maintain aggregated databases but may lag new designations by weeks. The local council's own website remains the authoritative source for current scheme coverage and fee schedule.
Frequently Asked Questions
What is HMO additional licensing in England?
Additional HMO licensing is a discretionary power granted to local councils under Section 56 of the Housing Act 2004. It allows a council to extend licensing requirements beyond the mandatory HMO threshold, which applies nationally to properties occupied by five or more unrelated people forming more than one household. Additional licensing can cover smaller shared properties occupied by three or four people. Over 70 English councils now operate additional HMO licensing schemes. Where a scheme is in place, a landlord running a three or four-bed shared property in that council area must obtain an additional licence, even if the mandatory licensing threshold does not apply to their property.
Which councils in England require additional HMO licensing in 2026?
Over 70 English councils run additional HMO licensing schemes. Confirmed councils include Bristol, Nottingham, Brighton and Hove, Liverpool, Sheffield, Oxford, Salford, Waltham Forest, Havering (from March 2026), Reading (from March 2026), Hillingdon (August 2026), and Telford & Wrekin (from 25 August 2026). Westminster also operates a scheme. The list is not static. New schemes have been designating at an accelerating rate since December 2024 when the central government approval requirement was removed. Check each local authority's housing licensing pages directly, or use a licensing database service such as Kamma or LettCheck, to confirm current coverage for any specific property.
What is the fine for running an HMO without a licence in 2026?
Operating a licensable HMO without the correct licence is a civil penalty offence. The Renters' Rights Act 2025, in force from 1 May 2026, raised the maximum civil penalty for HMO licensing offences to £40,000, up from £30,000. This applies to mandatory and additional licensing offences. Separately, tenants living in an unlicensed HMO can apply to the First-tier Tribunal for a rent repayment order covering up to twelve months of rent paid to the landlord. On a room renting at £650 per month, the maximum rent repayment order per tenant is £7,800. A four-room HMO operating unlicensed in a scheme area faces combined maximum exposure of the civil penalty plus up to £31,200 in rent repayment orders.
How much does an HMO additional licence cost?
Licence fees are set by individual councils and vary. Most additional HMO licences in English councils cost between £600 and £900 per property, valid for a five-year term. That is £120 to £180 per year per property. Telford & Wrekin Council's fees for its August 2026 scheme exceed £1,500 per property. Some London boroughs charge fees at the higher end of the national range. Check the specific fee schedule published by the relevant local authority for any property you hold or plan to acquire.
Do I need an HMO licence for a three-person shared house?
If your property is occupied by three unrelated people forming more than one household who share kitchen or bathroom facilities, it qualifies as an HMO. Under mandatory licensing rules, a licence is only required at five or more occupants, so a three-person property does not trigger mandatory licensing. However, if the local council has designated an additional HMO licensing scheme under Section 56 of the Housing Act 2004, a three-person property within that scheme area does require a licence. With over 70 English councils operating additional schemes as of August 2026, this is not a remote possibility. Check your local authority's housing licensing pages to confirm whether your property falls within a designated scheme area.
