Unlicensed HMO Rent Claims

Tenants living in shared houses that should have an HMO licence but do not may now be able to recover up to two years’ rent from their landlord. Bromley Council highlighted the issue on 5 November 2026 after revealing that a landlord had received a £27,500 penalty for operating an unlicensed HMO in Bolton Gardens, Bromley.

The warning is relevant to landlords across England, not just those in the London borough. Changes introduced by the Renters’ Rights Act 2025 came into force on 1 May 2026, increasing the maximum Rent Repayment Order (RRO) from 12 months to 24 months’ rent for qualifying offences committed from that date.

The changes also extend potential liability to superior landlords, including property owners involved in rent-to-rent arrangements. In addition, councils can now issue civil penalties of up to £40,000 for relevant offences, compared with the previous maximum of £30,000.

Landlords who own, manage or sublet shared properties should understand how the updated rules work, whether their properties require a licence and what financial consequences they could face if they fail to comply.

Key points for landlords and tenants

• Bromley Council issued a £27,500 civil penalty to a landlord operating an unlicensed HMO in Bolton Gardens. The landlord’s appeal was struck out, and the council is now seeking to recover the money.
• For qualifying offences committed from 1 May 2026, tenants can claim up to 24 months’ rent through an RRO, compared with the previous 12-month limit.
• Tenants now have two years from the offence to apply to the First-tier Tribunal, rather than one year.
• The maximum council civil penalty for an unlicensed HMO has increased from £30,000 to £40,000 for relevant conduct from 1 May 2026.
• Where a landlord has already been convicted or received a final financial penalty for the offence, the tribunal must generally award the maximum RRO unless exceptional circumstances apply.
• These changes apply to England only.

What happened in Bromley?

On 5 November 2026, Bromley Council published a warning reminding landlords of their responsibilities under HMO licensing and planning rules.

The council highlighted a case involving a landlord who was fined £27,500 for operating a licensable HMO without the required licence at a property in Bolton Gardens, Bromley.

Although the landlord challenged the penalty, the appeal was struck out. Bromley Council confirmed that it is now taking steps to recover the amount. The penalty was issued under Parts 1 and 2 of the Housing Act 2004, covering housing conditions and HMO licensing.

The council also encouraged tenants to check whether their accommodation is properly licensed by using its public register. Anyone living in an unlicensed HMO may be entitled to apply for an RRO and recover up to two years’ rent.

Bromley also stressed that planning permission and HMO licensing are two separate requirements. An Article 4 Direction has removed permitted development rights for HMO conversions in the borough since 1 September 2022. This means landlords generally need planning permission before changing a property to HMO use. Having an HMO licence does not remove that requirement.

What is a Rent Repayment Order?

A Rent Repayment Order is issued by the First-tier Tribunal (Property Chamber) under Part 2, Chapter 4 of the Housing and Planning Act 2016.

It requires a landlord who has committed certain housing offences to repay rent to a tenant. Where rent has been paid through Universal Credit, the council may claim the relevant amount instead.

Operating a licensable HMO without a licence is an offence under Section 72(1) of the Housing Act 2004 and can lead to an RRO.

Other offences that may result in an order include:

• Operating a property without the required selective licence.
• Failing to comply with an improvement notice.
• Unlawful eviction or harassment.
• Breaching a banning order.
• Certain offences involving the misuse of possession grounds, added under the Renters’ Rights Act.

There are several important points for landlords to understand. A tenant does not need to wait for the landlord to be prosecuted or fined before applying for an RRO. However, the tribunal must be satisfied beyond reasonable doubt that the relevant offence took place.

Tenants cannot personally recover rent paid through Universal Credit or Housing Benefit. The local authority can apply for the portion covered by these payments.

How the Renters’ Rights Act changed the rules

The updated RRO provisions under the Renters’ Rights Act 2025 took effect on 1 May 2026 through SI 2026/421. The increased maximum civil penalty came into force on the same date under SI 2026/319.

The main changes are:

The date of the offence is important when determining which rules apply.

For example, if a property was operating without a licence before 1 May 2026 and continued to do so afterwards, the new 24-month limit does not apply retrospectively to the earlier period. The higher repayment limit only covers qualifying offending from 1 May 2026 onwards.

Rent-to-rent arrangements are also affected

The updated rules have increased the potential exposure for property owners involved in rent-to-rent agreements.

Under the amended Section 72(1)(b), a superior landlord can also be guilty of the HMO licensing offence. This means the owner of a property may face an RRO even where another party has taken responsibility for letting and managing it.

There are possible defences. A superior landlord may argue that they did not know, and had a reasonable excuse for not knowing, that the property was being used as an HMO. They may also rely on having taken all reasonably practicable steps to secure a licence or having another reasonable excuse.

Simply including a clause in the agreement that prohibits HMO use will not automatically protect the property owner.

How much could a landlord have to repay?

Although the law now allows tenants to claim up to 24 months’ rent, this does not mean every successful application will result in the maximum award.

Under Section 44(3) of the Housing and Planning Act 2016, the amount cannot exceed the rent paid during the relevant period, less any Universal Credit paid towards it.

The tribunal must also consider several factors under Section 44(4), including:

• The conduct of both the landlord and tenant.
• The landlord’s financial circumstances.
• Any rent the tenant received from subletting the property.
• The landlord’s previous convictions, financial penalties and Rent Repayment Orders.

How the tribunal calculates an award

The Upper Tribunal explained the approach in Acheampong v Roman [2022] UKUT 239 (LC).

The process involves four main stages:

1. Calculate the rent: Establish the total rent paid during the period covered by the application.
2. Deduct relevant bills: Remove the cost of utilities that benefited the tenant, such as gas, electricity and internet. The landlord must provide evidence of these expenses.
3. Assess the seriousness of the offence: Consider how serious the breach was compared with other RRO offences and similar cases. This determines the starting proportion of rent to be repaid.
4. Make further adjustments: Increase or reduce the amount after considering the other factors set out in Section 44(4).

The Upper Tribunal has made clear that ordering the full amount of rent in a case that is not among the most serious examples of its kind may indicate that the calculation has not been carried out correctly.

This is why the maximum repayment figure should not be treated as the amount every landlord will automatically have to pay.

What could increase or reduce the award?

Government guidance identifies several issues that may influence the tribunal’s decision.

Problems that could increase the repayment amount include missing fire doors, inadequate smoke alarms, delays in dealing with damp or leaks, faulty heating arrangements, missing gas or electrical certificates and harassment.

On the other hand, landlords may benefit from evidence of prompt repairs and proper safety documentation. The tenant’s own conduct may also be considered, including rent arrears, property damage and anti-social behaviour.

When a previous fine could lead to the maximum RRO

Landlords should pay particular attention to Section 46.

If a landlord has been convicted of the offence or received a financial penalty that can no longer be appealed, the tribunal must generally order the maximum repayment amount. An exception applies where there are exceptional circumstances.

The same principle can apply where the landlord has a previous conviction, financial penalty or RRO for the same type of offence, including one recorded elsewhere.

Unlicensed HMO offences and unlicensed selective-licensing offences are treated as the same type of offence for this purpose.

This means that an unsuccessful appeal against a council penalty could have further financial consequences if a tenant subsequently makes an RRO application.

Example: calculating the potential repayment

Consider a five-bedroom HMO occupied by five tenants, each paying £750 per month. The total monthly rent is £3,750.

If the property has been operating without a licence for 12 months, all within the period covered by the new rules, the maximum potential RRO would be £45,000.

Assume that 20% of the rent was paid through Universal Credit. The tenants could claim up to £36,000, while the council could apply for the remaining £9,000.

If the tribunal then deducts 10% for utilities and applies a further 40% reduction based on the circumstances and conduct involved, the estimated award would fall to £24,300.

Adding a £27,500 civil penalty, matching the amount issued in the Bromley case, would bring the potential combined bill to approximately £51,800.

However, if the civil penalty becomes final before the tribunal hearing, the rules under Section 46 could require the full £45,000 RRO. Combined with the penalty, the total could reach £72,500.

The figures illustrate how significantly the outcome can vary depending on the circumstances of the case.

If the same property remained unlicensed for 24 months, with the entire period falling after 1 May 2026, the maximum RRO would rise to £90,000 before any civil penalty. A prosecution under Section 72 could also result in an unlimited fine.

These examples are for guidance only. The tribunal makes its decision based on the evidence and individual circumstances of each case.

Does your property need an HMO licence?

Mandatory HMO licensing in England applies to properties that meet the description set out in the 2018 Prescribed Description Order.

However, some councils operate additional or selective licensing schemes. These can cover smaller shared properties or a wider range of rented homes, so landlords should check the requirements in their local area.

A property may require an HMO licence if:

• Five or more people live there.
• The occupants form at least two separate households. A single person, a couple or a family each count as one household.
• The residents share facilities such as a kitchen, bathroom or toilet.
• The property meets the relevant building or conversion criteria. Certain purpose-built flats in blocks of three or more flats are excluded.
• There is no current licence recorded for the property on the local council’s register.
• The property is covered by an additional or selective licensing scheme.
• The existing licence has not expired. Bromley, for example, issues HMO licences lasting five years.
• The number of occupants does not exceed the limit stated on the licence.
• Any necessary planning permission is in place. This is particularly important in Article 4 areas such as Bromley.

Landlords involved in rent-to-rent arrangements should also make sure they have seen evidence that the person responsible for the property has obtained the correct licence.

What landlords should do now

The increased penalties and repayment limits make it important for landlords to review their properties and licensing arrangements.

Here are some practical steps to consider:

1. Check the number of occupants

Review every shared property and establish how many people live there and how many separate households they form. Remember to account for partners who have moved in and any additional lodgers.

2. Apply for the required licence

If a property needs an HMO licence, submit an application as soon as possible. Under Section 72(4), a valid application that is still being considered can provide a defence to the licensing offence. This can prevent further exposure from growing while the application is being processed.

3. Make sure the property meets safety standards

Check that the accommodation complies with the council’s HMO requirements. Bromley’s standards include suitable fire doors, an alarm system tested annually, emergency lighting, an Electrical Installation Condition Report (EICR) no more than five years old and a gas safety record no more than one year old.

4. Review rent-to-rent agreements

Property owners should check that anyone responsible for letting or managing their property has obtained the necessary licence. Ask for written evidence and carry out your own inspections rather than relying solely on contractual assurances.

5. Keep accurate records

Maintain copies of safety certificates, repair records, tenant communications and details of what is included in the rent, particularly utility bills. This information could be important if the tribunal needs to assess the landlord’s conduct or calculate deductions.

6. Seek advice before challenging a council penalty

If you receive a penalty notice, consider obtaining professional advice before deciding whether to appeal. A financial penalty that becomes final could trigger the requirement for the maximum RRO, so it is important to understand the potential consequences.

Frequently asked questions

How much rent can tenants claim back from an unlicensed HMO?

For qualifying offences committed from 1 May 2026, tenants can apply to recover up to 24 months’ rent for the period the property was unlicensed. Any Universal Credit or Housing Benefit paid towards the rent is excluded from the amount tenants can personally claim, although the council may apply for that portion. The previous limit was 12 months.

Can tenants apply for an RRO after moving out?

Yes. Tenants can apply after leaving the property, provided they meet the relevant application deadline. The deadline is two years from the offence for qualifying offences from 1 May 2026, compared with one year under the previous rules. The landlord does not need to have been prosecuted or fined before an application can be made.

What is the maximum penalty for operating an unlicensed HMO?

For relevant conduct from 1 May 2026, a council can issue a civil penalty of up to £40,000. The previous maximum was £30,000. If the council chooses to prosecute instead, the offence can carry an unlimited fine. A landlord cannot be both convicted and fined for the same conduct.

Can a property owner face an RRO under a rent-to-rent agreement?

Yes. Since 1 May 2026, qualifying superior landlords can be held responsible for HMO licensing offences and may face an RRO, even if the tenant paid rent to another party. Letting and managing agents cannot be named as respondents under these provisions.

How can tenants check whether a property in Bromley has an HMO licence?

Tenants can search Bromley Council’s online public HMO licence register. Other councils in England maintain their own registers. If a property does not appear on the register and meets the relevant occupancy requirements, tenants may wish to contact the council to check whether it is operating without the required licence.

Final thoughts

The changes to Rent Repayment Orders increase the financial risks for landlords who fail to meet HMO licensing requirements. With tenants now having a longer period to make claims and the potential repayment limit doubled, checking that properties are properly licensed is more important than ever.

Landlords should review their portfolios, keep safety documentation up to date and make sure any rent-to-rent arrangements are properly monitored. A licence application and good record-keeping could make a significant difference if a dispute or enforcement action arises.

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