Property licensing is becoming more widespread, not less. For landlords, that matters because the consequences of getting it wrong have become significantly more serious since the Renters' Rights Act came into force on 1st May 2026.
Many landlords are familiar with HMO licensing, but fewer realise that local councils are continuing to expand additional and selective licensing schemes across England. In 2026 alone, new and expanded schemes have been introduced or announced in several London boroughs and surrounding areas, bringing thousands more privately rented properties within scope.
The challenge is that licensing rules are not always straightforward. Whether a licence is required depends on the type of property, the number of occupants, how those occupants are related, and whether the property falls within a designated local authority scheme. Missing a licence can lead to substantial financial penalties, restrictions on possession proceedings, and reputational consequences that may affect future applications.
At Hamptons, we manage thousands of properties across London and the South of England. Our in-house compliance team monitors licensing designations, consultations, launches and expiry dates across local authorities, helping landlords stay informed as requirements change.
This guide explains:
- The three property licensing routes under the Housing Act 2004.
- Which properties are most likely to require a licence.
- How to check whether your property falls within a scheme.
- Typical fees and licence requirements.
- The penalties for operating without a licence in 2026.
- How the Renters' Rights Act has changed the compliance landscape.
Key insights
There are three licensing routes under the Housing Act 2004 - mandatory HMO licensing, additional HMO licensing, and selective licensing.
Mandatory HMO licensing applies across England to properties occupied by five or more people from two or more households who share facilities.
Additional and selective licensing schemes are determined locally, and coverage continues to expand. Hackney's borough-wide scheme began on 1st May 2026, Havering's schemes launched in March 2026, Hillingdon's scheme is scheduled to begin in August 2026, and both Harrow and Croydon are due to introduce new schemes in September 2026.
Civil penalties for operating an unlicensed property can reach £30,000 per offence, with rent repayment orders potentially adding up to 24 months' rent.
Under the Renters' Rights Act 2025, landlords of unlicensed properties face significant restrictions when seeking possession through Section 8 grounds, creating practical obstacles until the correct licence is in place.
What property licensing is, and why it exists
Property licensing is a legal framework introduced under the Housing Act 2004 to help local authorities regulate standards in the private rented sector. Where a property falls within a licensing scheme, the landlord must obtain and maintain a valid licence, comply with licence conditions, and demonstrate that they are a fit and proper person to hold that licence.
A licence is more than a registration process. Councils use it to assess whether a property is being managed appropriately and whether it meets the standards required for occupation. Depending on the type of licence, councils may set conditions covering issues such as fire safety measures, maximum occupancy levels, property management arrangements, maintenance responsibilities, and procedures for addressing anti-social behaviour.
The policy objective is straightforward. Licensing is intended to help councils identify and tackle poor management practices, improve housing standards, and take enforcement action against landlords who fail to meet their legal obligations. It also gives local authorities greater visibility over privately rented homes within their area, particularly in neighbourhoods where housing conditions have become a concern.
For tenants, licensing provides an additional layer of transparency. Local authorities are required to maintain a public register of licensed properties, allowing existing and prospective tenants to check whether a property has a current licence and, in many cases, who holds it.
One point that landlords often overlook is that licensing sits alongside every other compliance requirement. Holding a valid property licence does not replace the need for:
A property can be fully licensed and still fall short of wider legal requirements. Equally, a landlord who complies with every other regulation may still face enforcement action if a licence is required and has not been obtained.
For that reason, licensing should be viewed as one part of a broader compliance framework rather than a standalone obligation.
The three licensing schemes explained
There are three main licensing routes under the Housing Act 2004. The scheme that applies depends on the property's occupancy, how it is occupied, and where it is located. In some cases, landlords may need to consider both national HMO licensing rules and local authority schemes at the same time. Where multiple schemes appear to apply, only one licence will usually be required, with mandatory licensing taking priority over additional licensing, and additional licensing taking priority over selective licensing.
Mandatory HMO licensing
Mandatory HMO licensing applies across England and cannot be disapplied by local councils.
A property requires a mandatory HMO licence when it is occupied by five or more people who form two or more separate households and share facilities such as a kitchen, bathroom, or toilet. For example, five unrelated professionals sharing a property would typically fall within the mandatory HMO regime.
Importantly, the number of storeys is no longer relevant. Prior to 2018, only larger HMOs spread across three or more storeys required a mandatory licence. That threshold was removed, meaning the licensing requirement now depends solely on occupancy and household composition.
Although councils administer the application process and set local fees, the qualification criteria for mandatory HMO licensing are consistent across England. If a property meets the threshold, a licence is required regardless of the local authority area in which it is located.
Additional HMO licensing
Additional licensing allows local authorities to extend HMO licensing beyond the national mandatory criteria.
Under Section 56 of the Housing Act 2004, councils can introduce an additional licensing scheme where they believe a significant proportion of HMOs in their area are being managed ineffectively or are contributing to housing-related issues.
These schemes commonly bring smaller HMOs into scope, including properties occupied by three or four unrelated people forming two or more households. A property that does not require a mandatory HMO licence may therefore still need an additional licence depending on its location.
The exact rules vary between local authorities. Councils decide:
- Which areas the scheme covers.
- Which property types are included.
- The licence fee.
- The conditions attached to the licence.
This means a property that requires an additional licence in one borough may not require one in a neighbouring authority.
A current example is Hackney's borough-wide additional licensing scheme, which came into force on 1st May 2026 and expanded licensing requirements for many smaller HMOs across the borough.
Selective licensing
Selective licensing is the broadest of the three licensing routes.
Unlike mandatory and additional licensing, selective licensing is not limited to HMOs. It can apply to virtually any privately rented property within a designated area, including a family home occupied by a single household.
Councils can introduce selective licensing where they can demonstrate local housing challenges, such as:
- Low housing demand.
- Persistent anti-social behaviour.
- High levels of tenancy turnover.
- Poor property conditions.
- Wider deprivation indicators.
The size of a selective licensing area can vary considerably. Some schemes cover a handful of streets, while others extend across multiple wards or, in some cases, most of a borough. Where a designation covers more than 20% of a council's geographical area or privately rented stock, additional approval from the Secretary of State is required.
For landlords, selective licensing often comes as the biggest surprise because even a standard single-family let can require a licence if it falls within a designated area.
A recent example is Havering's selective licensing scheme, which went live on 18th March 2026 and covers seven wards within the borough.
The key point is that licensing is not solely an HMO issue. Many landlords who do not own shared accommodation can still find themselves within a licensing scheme because of where their property is located.
How to check if your property needs a licence
Working out whether a licence is required is often less complicated than landlords expect, provided the checks are completed in the right order. The key is to verify both the property's location and how it is occupied, as either factor can bring it within a licensing scheme.
Identify the local authority. Licensing is administered by the council where the property is located. This may sound obvious, but property marketing descriptions do not always align neatly with council boundaries. The relevant authority is the local council with responsibility for housing enforcement, not necessarily the area name used in listings or postcodes.
Check the council's property licensing webpage. If the council operates an additional or selective licensing scheme, it must publish the scheme details, designated areas, start and end dates, application requirements and current fees. Many councils also provide postcode checkers to help landlords determine whether a specific property falls within a designated area.
Cross-check against the mandatory HMO threshold. Even if no local scheme applies, a property occupied by five or more people forming two or more households who share facilities will usually require a mandatory HMO licence. This requirement applies nationally and sits alongside any local licensing arrangements.
Review the occupancy arrangements carefully. Licensing often depends on household composition rather than the number of bedrooms. For example, three unrelated friends sharing a property may fall within an additional licensing scheme, while a larger family occupying the same property may not. Understanding how the council defines a household is therefore essential.
Check whether the scheme is currently active. Most additional and selective licensing designations run for up to five years before expiring. Councils may then choose to renew, vary or replace them following consultation. A property that did not require a licence last year may require one today if a new designation has come into force.
Monitor renewal and expiry dates. Licensing is not a one-off exercise. A licence holder remains responsible for ensuring the licence is renewed where required and that any ongoing conditions continue to be met throughout the licence period.
Look out for consultation notices. New schemes do not appear overnight. Local authorities are generally required to consult before introducing a designation, giving landlords an opportunity to understand the proposals and prepare for potential costs and compliance requirements. Monitoring consultations can provide several months' notice before a scheme takes effect.
Keep records of your checks. If there is later a dispute about whether a licence was required, having a clear record of the steps taken, the council guidance reviewed and any correspondence received can be helpful.
For landlords with a single property in one council area, these checks are usually manageable. For those with portfolios spanning multiple boroughs or districts, staying on top of changing schemes, consultations and renewal dates can become considerably more time-consuming. At Hamptons, we can help with our dedicated Property Management service.
Licence fees and what they cover
One of the first questions landlords ask is how much a licence costs. The answer varies considerably depending on the council, the type of licence required, and sometimes the size or occupancy of the property itself.
There is no national fee structure. Each local authority sets its own charges, which means costs can differ significantly between neighbouring areas.
Recent examples illustrate the variation. In Hackney, the 2026 additional HMO licence fee is £1,400 per property, while a selective licence costs £925. In Brighton & Hove, licence fees typically range from around £690 to £906, depending on the scheme and property type.
Most councils divide the fee into two stages:
- An application fee, payable when the licence application is submitted.
- A grant fee, payable once the council is satisfied that the licence can be issued.
This two-part structure reflects legal requirements around licence administration. It is also worth noting that fees are generally non-refundable if an application is refused, making it important to ensure all supporting information is accurate and complete before submission.
While the cost understandably attracts attention, the fee itself is only part of the licensing process. What landlords are ultimately paying for is the council's assessment and ongoing regulation of the property during the licence period.
A licence will typically include conditions relating to:
- Property management standards.
- Fire safety measures and equipment.
- Maximum occupancy levels.
- The provision and maintenance of kitchens and bathrooms.
- Waste storage and disposal arrangements.
- Procedures for dealing with anti-social behaviour.
- Record-keeping and compliance obligations.
The precise conditions vary between councils and licence types, but landlords are expected to comply with them throughout the licence term, not simply at the point the licence is granted.
Another important consideration is that licences are property-specific and non-transferable. If a licensed property is sold, the licence does not pass to the new owner. The purchaser must submit a new application and obtain a licence in their own name where one is required.
For many responsible landlords, licence fees can feel like an additional cost imposed on those who already comply with their obligations. However, viewed in the context of the wider enforcement regime, the fee is usually modest compared with the potential consequences of operating without a licence.
A licence may cost several hundred pounds, or in some areas more than £1,000. By contrast, an unlicensed property can expose a landlord to civil penalties of up to £30,000 per offence, rent repayment orders, and restrictions on possession proceedings. For most landlords, the financial risk of non-compliance far outweighs the cost of obtaining the licence itself.
Penalties for operating without a licence
For many landlords, licensing only becomes a priority when they discover the consequences of non-compliance. In 2026, those consequences extend well beyond the cost of a missed application and can affect a landlord's finances, legal position, and ability to recover possession of their property.
Under the Housing Act 2004, local authorities can impose a civil penalty of up to £30,000 per offence for operating a licensable property without the required licence. Councils can use these penalties as an alternative to prosecution, allowing them to take enforcement action without going through the criminal courts.
In more serious cases, councils may choose to prosecute instead. A successful criminal prosecution can result in an unlimited fine and become a factor when assessing whether a landlord meets the "fit and proper person" test required for future licence applications. Because licensing records and enforcement history can be considered by local authorities across England, a significant breach in one area can have implications elsewhere.
Rent repayment orders
The financial consequences do not stop with council enforcement.
Where a landlord has operated a property that should have been licensed but was not, tenants can apply to the First-tier Tribunal for a rent repayment order (RRO). If granted, the tribunal can require the landlord to repay up to 24 months' rent, depending on the circumstances of the case.
The Renters' Rights Act 2025 strengthened the rent repayment regime by widening its scope and increasing potential liability in certain situations. It also extended liability to superior landlords in some rent-to-rent arrangements, making it harder for responsibility to be passed down the management chain.
Even where a landlord subsequently obtains a licence, a historic period of non-compliance may still be relevant to a tenant's claim.
Possession proceedings and licensing
Perhaps the most significant change for landlords since 1st May 2026 is the impact licensing can have on possession proceedings.
With the abolition of Section 21 no-fault evictions under the Renters' Rights Act, landlords seeking possession must now rely on the available Section 8 grounds. Compliance has therefore become more closely linked to a landlord's ability to enforce their rights through the courts.
Where a property requires a licence but does not have one, landlords can face practical barriers to serving a valid Section 8 possession notice on many grounds. In effect, a licensing failure can delay possession proceedings until the underlying compliance issue has been resolved.
For landlords dealing with rent arrears, antisocial behaviour, or a planned sale, that delay can have serious financial consequences. Court timescales are rarely short, and discovering that a possession claim cannot proceed because a licence has not been obtained can be a costly mistake.
A higher-risk enforcement environment
The combined effect of civil penalties, rent repayment orders and possession restrictions has changed the risk profile of licensing.
Historically, some landlords viewed licensing as an administrative requirement that could be dealt with later. In 2026, that approach carries far greater exposure. An unlicensed property can face enforcement action from the council, a repayment claim from the tenant, and obstacles in the courts, all arising from the same compliance failure.
For that reason, checking whether a licence is required before a tenancy begins, and keeping licences renewed throughout their term, has become one of the most important compliance tasks for landlords operating in areas affected by licensing schemes.
How much is my home worth?
Book an expert valuation to get an accurate value of your home, or use our instant valuation tool to get a quick estimate.
What's changed since the Renters' Rights Act came into force
The Renters' Rights Act 2025, which came into force on 1st May 2026, has altered the compliance landscape for landlords in England. While property licensing itself remains rooted in the Housing Act 2004, the wider reforms mean that licensing now sits within a more closely connected enforcement framework.
The most widely discussed change has been the abolition of Section 21 no-fault evictions. Alongside this, fixed-term assured tenancies have been replaced by a periodic tenancy system, and the private rented sector is moving towards greater oversight through measures including the Decent Homes Standard.
For landlords, the practical implication is that compliance issues can no longer be viewed in isolation. Licensing, property standards, tenancy management and possession proceedings increasingly overlap.
A licensed property must still meet the conditions attached to its licence, but it must also satisfy broader legal requirements relating to safety, repair and habitability. Where problems arise, councils now have a wider range of information and enforcement tools available to them.
For example, a property that:
- Falls below the Decent Homes Standard.
- Breaches one or more licence conditions.
- Generates repeated tenant complaints.
- Fails to meet management obligations.
may attract scrutiny from multiple directions at the same time. What might previously have been treated as a standalone issue can now contribute to a broader compliance investigation.
The result is a more active enforcement environment. Councils are better placed to identify patterns of non-compliance, while tenants have greater awareness of their rights and stronger mechanisms for challenging poor management practices.
For responsible landlords, this does not necessarily mean a significant increase in day-to-day administration. However, it does mean that licensing should be viewed as part of an ongoing compliance strategy rather than a one-off application process.
The direction of travel is also becoming clearer. Across many parts of England, particularly London and the South East, licensing schemes continue to expand through new designations and renewals. At the same time, the post-Renters' Rights Act framework has increased the consequences of falling behind on compliance obligations.
In practical terms, landlords who keep licences current, maintain accurate records and respond promptly to changing local requirements are likely to find the new system manageable. Those who allow licences to expire or assume historic arrangements still apply may face greater financial and legal risk than under the previous regime.
How a managing agent helps with licensing
Keeping track of licensing requirements is relatively straightforward when you own a single property in one council area and the scheme rules rarely change. It becomes far more complex when properties are spread across multiple boroughs or districts, each operating different schemes, fees, consultation periods and renewal dates.
Licensing is not static. Schemes expire, are renewed, expanded or replaced. Councils can consult on new designations, alter the areas covered and introduce different licence conditions. A property that sits outside a scheme today may require a licence in the future, while an existing licence holder must ensure renewal applications are submitted before a licence lapses.
For landlords managing their own portfolios, monitoring these changes can become a significant administrative responsibility.
A managing agent with a dedicated compliance function can help by monitoring local authority licensing developments and identifying properties that may move into or out of scope as schemes change. This is particularly valuable in London and the South East, where licensing coverage continues to evolve across neighbouring boroughs.
Good licensing support typically includes:
- Monitoring new licensing consultations, launches and scheme renewals.
- Identifying whether a property requires a mandatory HMO, additional HMO or selective licence.
- Preparing and submitting licence applications.
- Tracking renewal dates and ongoing compliance requirements.
- Maintaining records of licence conditions and supporting documentation.
- Coordinating licensing requirements alongside other compliance obligations, such as gas safety, electrical safety and EPC requirements.
The administrative side of licensing is only part of the picture. Licence conditions often require landlords to demonstrate ongoing compliance throughout the licence period. Maintaining accurate records and responding promptly to council requests can help avoid unnecessary delays or enforcement issues.
At Hamptons, our in-house compliance team supports managed landlords by tracking licensing schemes across London and the South of England, monitoring changes in local authority requirements and helping ensure applications and renewals are completed when required. This sits alongside wider property management and compliance support, giving landlords a single point of oversight for their regulatory obligations.
For landlords with one property, licensing may be a task that can be handled independently. For those with several properties, particularly across different councils, delegated compliance can provide reassurance that changing local requirements are not overlooked.
Stay ahead of the scheme that affects you
Property licensing is not a one-off administrative task. Schemes expire and are renewed, councils consult on new designations, and properties can move into or out of scope as occupancy arrangements change or local authority boundaries are reviewed.
The compliance environment has also become less forgiving. Since the Renters' Rights Act came into force, licensing failures can have consequences that extend beyond a financial penalty. Delays to possession proceedings, rent repayment order claims and increased enforcement activity mean landlords have far more to lose from overlooking a licence requirement than they did a few years ago.
The key numbers to remember are simple:
- Three licensing routes: mandatory HMO, additional HMO and selective licensing.
- Five years: the typical duration of most licensing schemes and licences.
- Twelve months of rent: a commonly cited benchmark landlords associate with rent repayment risk, although tribunals can order repayment of up to 24 months' rent in certain circumstances.
For landlords, the challenge is rarely understanding the rules once they are identified. The real challenge is knowing when those rules change and whether a property has quietly moved into scope of a new scheme.
If you're letting a property in London or the South of England and want to understand whether licensing affects your property, Hamptons' lettings teams and in-house compliance specialists can help identify the requirements that apply, monitor scheme changes and assist with applications where needed.
Find your local branch or get in touch with our Property Management service.
