Owners and HMO licences for guardian buildings (2026)

In short

• A shared guardian building can be an HMO, and one with 5 or more people from 2 or more households needs a council licence. Some councils license smaller ones too.
• Before 1 May 2026 the offence fell on whoever controlled or managed the building, usually the firm. Now it also falls on any landlord or licensor above them in the chain.
• The penalties are an unlimited fine in court, or a council penalty of up to £40,000, and rent repayment orders of up to 2 years' rent.
• The new rent repayment rules only reach offences committed on or after 1 May 2026.
• There is a defence if you did not know and had a reasonable excuse for not knowing, took all reasonably practicable steps, or had another reasonable excuse.

When is a guardian building an HMO?

The legal test (Housing Act 2004, s.254) is about who lives there and how. In plain words, the "standard test" is met when:

• the people living there do not form a single household
• they live there as their only or main residence
• living there is the only use of those rooms
• rent or other payment is made for at least one of them
• two or more households share a basic amenity (toilet, washing facilities or cooking facilities), or lack one

"Only or main residence" matters. A guardian who has another home they mainly live in may not count. Students on a full-time course are treated as living there as their main residence (s.259). Some converted blocks of flats can be HMOs under a separate rule (s.257).

Guardian firms have argued that guardians are there to protect the building, so living there is not its "only use". The Upper Tribunal and the Court of Appeal rejected that for the buildings in those cases (2022; 2023). Our guide for guardians covers the test in more detail: is a guardian building an HMO?

When does an HMO need a licence?

• Mandatory licence

  Everywhere in England: 5 or more people in 2 or more households (2018 regulations).

• Additional licensing

  A council can require licences for smaller HMOs in all or part of its area (s.56).

• Selective licensing

  A council can require a licence for rented homes in an area (s.79). The same change applies to the offence for these houses (s.95).

Check which schemes your council runs. A building below 5 people can still need a licence.

Who must hold the licence?

The licence is held by the person having control of the HMO or managing it. In guardian cases that has been the firm that collects the guardians' fees (Upper Tribunal, 2022).

That has not changed. What changed is who can be guilty when there is no licence.

What changed on 1 May 2026 for owners

The Renters' Rights Act 2025 changed section 72 of the Housing Act 2004 and sections 40 to 44 of the Housing and Planning Act 2016. The changes came into force on 1 May 2026 (commencement regulations).

The offence. If an HMO needs a licence and has none, the offence is now committed by two groups (s.72(1), as changed by section 105 of the Act):

• anyone having control of or managing the HMO, and anyone who is the landlord or licensor of the people living in it
• any person who, as landlord under a tenancy or licensor under a licence to occupy, holds an interest or right in the HMO that is superior, directly or indirectly, to theirs

A building owner who lets or licenses the building to a guardian firm is above the firm in that chain. The wording does not depend on the owner running the building day to day. We found no reported decision yet that applies it to a guardian building owner, so how tribunals and courts will treat these arrangements is not yet tested.

Rent repayment orders. The tribunal can now make an order against "any superior landlord" who committed the offence, and the order can require them to pay the tenant rent that the tenant paid to someone else (s.40, as changed by section 103). "Tenancy" here includes a licence (s.56).

Before this, the Supreme Court had held that an order could only be made against the tenant's immediate landlord who received the rent (Rakusen v Jepsen, 2023). The 2025 Act changed that.

Penalties and rent repayment orders

• Prosecution

  A fine on conviction in a magistrates' court (s.72(6)), which GOV.UK describes as unlimited (GOV.UK).

• Council civil penalty

  A council can fine instead of prosecuting, if satisfied beyond reasonable doubt. The maximum is £40,000 (s.249A). It was £30,000 before 1 May 2026, and the new maximum does not apply to conduct before that date (2026 regulations, regs 2 and 4).

  A person fined this way cannot also be convicted for the same conduct (s.72(7B)).

• Rent repayment order

  The tribunal can make one if satisfied beyond reasonable doubt that the offence was committed, even without a conviction (s.43). A guardian can apply within 2 years of the offence (s.41). The council can also apply.

  The order can cover up to 2 years of rent for the period of the offence (s.44). The tribunal must consider conduct, finances and any earlier conviction, penalty or rent repayment order. If several landlords are ordered to pay, they are jointly and severally liable, so any one can be pursued for the whole sum (s.46A).

For how guardians claim, see rent repayment orders explained.

Does it reach the time before 1 May 2026?

Rent repayment orders: no. The changes to rent repayment orders have no effect on an offence committed before 1 May 2026. Where an offence ran continuously across that date, they have no effect for the part before it (commencement regulations, reg 11).

The £40,000 maximum: no, for the same reason, as above.

The offence itself: from 1 May 2026. The regulations make no specific rule for section 72, but no one can be guilty of an offence for conduct that was not an offence at the time (Article 7, European Convention on Human Rights). If a building was unlicensed before that date and still is, an owner can be liable for the time since 1 May 2026, so act now and ask a solicitor.

Section 138 of the Act, which amendments in the legislation text are marked "with s.138", is about the Crown's position ("Crown application"), not a rule on past conduct.

The defences

For an owner charged because of their superior interest, section 72 gives these defences. In each case "it is a defence for them to prove" it, so you carry the burden (s.72(4B)):

• Did not know, with a reasonable excuse

  You did not know, and had a reasonable excuse for not knowing, that the building or part of it was an HMO.

• All reasonably practicable steps

  You took all reasonably practicable steps to ensure the HMO was licensed.

• Another reasonable excuse

  You had some other reasonable excuse for failing to ensure it was licensed.

There is also a defence for anyone charged, including owners, if a licence application was "duly made" and is still effective (s.72(4)).

The Act does not define "reasonably practicable steps", and we found no ruling on it yet. The next section is a list of sensible checks, not a guaranteed defence.

Reasonable steps in practice: a checklist

1. 1

   Work out whether the building is an HMO

   Go through the tests above, and ask your council's HMO team whether it needs a licence under mandatory, additional or selective licensing.
2. 2

   Ask the firm for the licence number, and check it

   Then look at the council's public HMO register. Every council must keep one (s.232). Check the address, the holder's name, the maximum number of people and the end date. A licence lasts up to 5 years (GOV.UK).
3. 3

   If there is no licence, ask for the application

   A licence application duly made and still effective is a defence under s.72(4). Ask for the council's acknowledgement and keep it.
4. 4

   Ask for the safety paperwork

   The annual gas safety certificate, electrical safety certificates and proof the smoke alarms work: the council checks these for a licence (GOV.UK). Ask for a fire risk assessment too, as fire safety law covers the shared parts of an HMO (GOV.UK fact sheet).
5. 5

   Ask how many people live there

   Compare the number of guardians and households with the licence maximum. Ask for updates when it changes.
6. 6

   Put it in the contract, then check anyway

   Require the firm to hold and renew every licence and to send you evidence. Section 72(4C) means the clause alone will not protect you.
7. 7

   Diarise and keep records

   Note the licence end date, re-check before it, and keep dated copies of what you asked for and what you were sent.

If you are choosing a firm, see how we show firms' details on the companies page.

What tribunals have said

These cases are about the law before 1 May 2026, when owners were generally outside the offence. We found no reported decision yet under the new rules.

• Stamford Brook, Hounslow (Upper Tribunal, 2022)

  The tribunal held a guardian building was an HMO. Each of two linked firms was held to be a person having control or a person managing it, so the penalties and rent repayment orders stood (decision). The Court of Appeal upheld the HMO finding in 2023.

• Cottam (Upper Tribunal, 2023)

  The freeholder was a health service body that had let the building to a guardian firm. The tribunal held it was neither the person having control nor managing, because it had let the building to the firm, so it did not receive the rent and could not let at a rack rent (decision). The 2025 changes to section 72 can now reach owners in that position.

• Knoll House, Hove (First-tier Tribunal, 2025)

  The firm held a lease from the council. The tribunal found the firm was the person managing and in control, and the council was not. It said it would have ordered 70% of the rent, but the guardians' claim was made one day out of time (decision).

• Old Moselle School, Haringey (Upper Tribunal, 2025)

  The council owned the building and had an agreement with a guardian firm. The firm argued that the council was the person managing, so no offence had been committed. The tribunal dismissed the appeal and the guardians' rent repayment orders stood (decision).

Questions owners ask