HMO / tenancy rules?

[Ahappymediumlarge]

DH and I are hoping to buy a small two bed property as an investment and to help our son who is struggling at the moment. We would be cash buyers, no mortgage.

The plan would be for him live there with his best friend and best friend's partner. DS wouldn't pay rent but would pay bills and maintain the property. The other couple would pay us some rent (but below average rates).

We want to take our legal responsibilities seriously but we are confused as to whether this would be a multiple occupancy? They would be two separate parties/households meaning an HMO, but the wording of everything I've read suggests that this applies to tenants. Our son wouldn't technically be a tenant, so - possibly a naive question but I can't find the answer - would a license still be necessary?

Really unlikely, generally an HMO licence is needed for a house with more than 3 (e.g. Brighton) or 4 (e.g. Leeds) separate households. This would be two so v unlikely - but check your local licensing policy on the council website.

According to the GOV site, an HMO can be three people from two separate households, so strictly speaking that would be the case with my son: www.gov.uk/private-renting/houses-in-multiple-occupation

However it also just refers to 'tenants' rather than 'occupants' so that's what makes me wonder if it wouldn't apply.

The HMO thing is for large HMOs.
House shares like you are describing are not large HMOs.
Some local authorities license all landlords regardless, but this is above and beyond HMO licensing.

OP, how would you be financing the purchase? Would you be using a buy to let mortgage? If so, letting a family member live there can cause complications, I believe.

This is not correct. It’s crucial to check your local authority’s rules. In the area where I have a three-bed flat that I let out, the rules are as follows: ‘Any properties that contain three or more occupiers forming two or more households who share amenities such as kitchen, bathroom, living area and any communal space require an HMO licence. The tenancy agreement is not relevant in determining if a house is an HMO, nor is the number of storeys.’ I now only let it out to families as sharers are a minefield.

So where I am, it is the occupiers that count, not the tenants. But this is particular to certain authorities so you’ll need to check the exact wording.

this would count as an HMO. You need to apply for planning permission for a change of usage for the property. If it is an overcrowded area like where I live, it will not be approved. Probably fine on most areas but be cautious of very studenty areas as they may already be overpopulated and not allowed any new HMOs.
Because there are only 3 people, you wouldn't need an HMO license.

OP says We would be cash buyers, no mortgage.

Have you contacted your council? Licensing schemes are run by local government so while there are national rules in place, the precise details will differ according to where the flat is.

Under the national rules (as you linked to on gov.uk, your property would be classed as an HMO (and therefore subject to certain management 'rules') but would not require a licence. Only 'large' HMOs do.

However, over the years, additional and selective licensing has been introduced by some councils which affects smaller HMOs and even single lets (those occupied by one family). This is area dependent based on the issues related to private rentals in those areas.

So it's important to find out what the situation is in your area.