Setting Up an HMO: Planning, Conversion Costs, Ground 4A

What changed under the Renters’ Rights Act 2025

Section 21 abolished. Fixed-term assured tenancies abolished. Ground 8 threshold raised to 3 months. Information Sheet required for every tenancy by 31 May 2026. Read the full guide.

Setting up a House in Multiple Occupation involves three regulatory streams running in parallel: planning permission, building regulations, and HMO licensing. Each has its own approval process and consequences. This page sets out the planning use classes (C3, C4, sui generis), Article 4 directions, building regulations Approved Documents, realistic conversion costs (typically £20,000-£40,000 for a four-to-five bedroom conversion), insurance requirements, and the new Ground 4A possession ground for student HMOs introduced by the Renters’ Rights Act 2025.

Three regulatory streams to think about

Setting up an HMO involves three regulatory streams that operate in parallel. Each has its own approval process, its own timescales, and its own consequences for getting it wrong. Treating them as one undifferentiated mass is the most common reason HMO setups overrun budget and timeline.

Planning permission determines whether the property can lawfully be used as an HMO at all. The starting question is whether permitted development rights apply or whether full planning permission is required.

Building regulations determine whether the physical works to convert or refurbish the property meet construction standards — fire compartmentation, escape routes, electrical safety, energy efficiency, structural integrity.

HMO licensing determines whether the property can lawfully be let to multiple occupiers — covered in detail in our HMO licensing guide.

A property can have planning permission and not be safe for occupation. It can satisfy building regulations but not be licensable as an HMO. It can be licensed as an HMO but lack planning permission. All three streams must be properly addressed.

Planning permission: C3, C4, and sui generis

The planning use class system distinguishes three relevant categories for residential property:

C3 (dwelling house) covers a property used as a single dwelling by a person, persons living together as a family, or up to six people living together as a single household. A typical family home is C3.

C4 (small HMO) covers an HMO used by between three and six unrelated occupiers from two or more households who share basic amenities. A four- or five-bedroom property let to sharers is typically C4.

Sui generis (large HMO) covers HMOs with seven or more occupiers. There is no use class for these — they are sui generis (“of its own kind”) and always require full planning permission for any change to or from this use.

Permitted development rights

In most areas of England, change of use from C3 to C4 (small HMO) is permitted development. This means a landlord can convert a single-family home into a small HMO without applying for planning permission. The Town and Country Planning (General Permitted Development) (England) Order 2015 grants this right.

Two important limits. First, the right does not apply to changes of use to sui generis large HMO — those always require full planning permission. Second, local authorities can remove the C3-to-C4 permitted development right in designated areas through an Article 4 direction.

Article 4 directions

Article 4 directions are local-authority-made orders that remove specified permitted development rights in defined geographic areas. They are most commonly used to remove C3-to-C4 conversion rights in areas with high HMO concentrations, where local authorities want to control further HMO growth.

Article 4 directions are typical in:

University towns and cities — Loughborough, Leeds, Newcastle, Nottingham, Manchester, Bristol, Brighton, and most cathedral cities with significant student populations have Article 4 directions covering some or all of their HMO-heavy wards.
Inner-city areas with established high HMO concentrations.
Areas where the local plan identifies HMO over-concentration as a planning issue.

In an Article 4 area, any change of use from C3 to C4 requires full planning permission. The local authority can refuse permission where, in its planning judgment, the change would harm the character of the area or contribute to existing HMO over-concentration. Refusal rates in busy Article 4 areas are commonly 40-60% of applications.

Always check the Article 4 position before committing to an HMO conversion. The local planning authority’s online planning policy maps usually show Article 4 areas. If you are buying a property to convert, make this check before exchange of contracts. A property in a busy Article 4 area where planning permission is unlikely to be granted is not a viable HMO project, regardless of the property’s physical suitability.

When planning permission is required

In summary, planning permission is required for HMO use when:

The HMO will have seven or more occupiers (sui generis change of use).
The property is in an Article 4 area, and the conversion is from C3 to C4.
The HMO involves external alterations requiring planning permission (extensions, dormer windows, change to the front elevation in a conservation area).
The property is in a conservation area or is listed, where additional planning controls apply.

Outside these cases, change to small HMO (C4) is usually permitted development and no planning permission is required. The licensing requirements are separate and still apply regardless.

Building regulations

Building regulations control the construction quality of the works to set up the HMO. The relevant Approved Documents are issued by the government and updated periodically. The most relevant for HMO conversions are:

Approved Document B (Fire Safety) — the most demanding for HMOs. Sets out requirements for fire compartmentation between rooms and floors, fire-resisting construction of walls and doors, escape route design, and detection and alarm systems. Approved Document B is the source of the FD30 fire door requirement, the protected escape route requirement, and the structural fire resistance requirements that drive most HMO conversion costs.

Approved Document P (Electrical Safety) — covers electrical installations. New consumer units, new circuits, new sockets in kitchens and bathrooms must be installed by competent persons and certified.

Approved Document G (Hygiene) — covers water supply, sanitation, and hot water provision. Relevant where bathrooms, en-suites, or kitchens are added to a converting property.

Approved Document L (Energy Efficiency) — covers insulation, glazing, and energy performance. Relevant where significant works affect the property’s thermal performance.

Approved Document M (Access) — covers accessibility. Relevant where significant works affect access to or within the property.

Building regulations approval is a separate process from planning permission. The conversion works require either a full plans submission to the local authority’s building control department, or a building notice (suitable for smaller works), or use of an approved inspector. The works are inspected at key stages and a completion certificate issued at the end.

Operating an HMO without building regulations approval for required works is unlawful. Local authorities can require the works to be undone (taking out non-compliant fire doors, removing additional bathrooms) or upgraded to compliant standard. Disruption costs in retrospective compliance routinely exceed the cost of doing the works correctly first time.

Realistic conversion costs

Converting a four-bedroom family home into a five- or six-bedroom HMO involves substantial works. The major cost categories:

Fire safety upgrade. Replacement of all internal doors with FD30 fire doors and frames including intumescent strips and self-closers; installation of mains-wired interlinked smoke alarms throughout with heat detector in kitchen; emergency lighting on protected escape routes if relevant; closing off any non-compliant openings between rooms and the escape route. Typical cost: £6,000-£12,000.

Additional bathroom or en-suite installation. If the property has fewer bathrooms than the local standard requires, an additional bathroom must be added. A loft conversion en-suite, ground-floor shower room conversion, or new bathroom on the first floor typically costs £4,000-£10,000 each.

Kitchen reconfiguration. Many family kitchens are inadequate for five or six occupiers. Larger units, additional cooker, additional refrigeration, additional worktop space — typical cost £3,000-£8,000.

Electrical upgrade. Old consumer units and circuits may not support HMO loads. A new consumer unit, additional circuits, additional sockets in bedrooms (each bedroom typically needs at least four sockets), EICR certification — typical cost £2,000-£5,000.

Bedroom alterations. Some rooms may need partition adjustment to meet minimum sizes; others may need built-in storage to make small rooms practical. £1,000-£4,000.

Energy efficiency. Bringing the property to EPC E or above (the legal minimum for new tenancies, with C and B being incoming standards). Insulation, draught-proofing, glazing, heating efficiency. £2,000-£10,000 depending on the existing condition.

Furniture and fittings. Beds, mattresses, desks, chairs, wardrobes, kitchenware, white goods. For a five-bedroom HMO furnished to a reasonable standard, £4,000-£8,000.

Professional fees. Architect or designer (if substantial layout changes), planning consultant (if planning permission required), fire risk assessor, inventory clerk, lettings agent setup. £1,500-£5,000.

Total typical cost for a four-bedroom-to-five-bedroom HMO conversion: £20,000-£40,000. Larger conversions (bedrooms added through loft conversion, complete refurbishment of older property) routinely run £40,000-£75,000.

These figures are illustrative and vary with location, property condition, and finish standard. Get three quotes from contractors with HMO experience before committing.

Insurance

Standard residential building insurance does not cover HMO use. A landlord operating an HMO under residential insurance is uninsured for any HMO-related loss — including fires, water damage caused by tenants, public liability claims, and legal expense claims arising from HMO operation.

A specialist HMO policy is essential. Specialist insurers underwrite HMO risk and provide:

Buildings cover that contemplates multiple-occupier use.
Contents cover for landlord-supplied furnishings (essential for furnished HMOs).
Public liability — typically £2 million minimum, with £5-£10 million increasingly standard.
Loss of rent cover for periods following insured events.
Legal expenses cover for landlord-tenant disputes.
Malicious damage by tenants — historically excluded from standard buy-to-let policies but increasingly included in specialist HMO policies.

Specialist HMO policy premiums are typically £400-£1,200 per year for a five-bedroom HMO. The cost is recoverable in months if it ever pays out — and most HMO landlords do, eventually, claim for some incident.

Ground 4A: the new mandatory ground for student HMOs

The Renters’ Rights Act 2025 introduced a new mandatory ground for possession — Ground 4A — specifically for HMOs let to full-time students. The ground was added to address a structural concern from student-let landlords: the abolition of Section 21 and fixed-term tenancies would, without intervention, have prevented the standard academic-year letting cycle from continuing.

Ground 4A allows a landlord to recover possession of an HMO let entirely to full-time students at the end of the academic year. The notice period is four months in the standard case, with a transitional two-month notice period for the 2026/27 academic year only.

Conditions for Ground 4A

To rely on Ground 4A, the landlord must establish:

The property is an HMO. The Housing Act 2004 definition applies — three or more occupiers, two or more households, sharing amenities.
All occupiers are full-time students. Evidence of student status is required for each occupier — typically a letter from the educational institution confirming current enrolment as a full-time student.
The let was made in line with the academic year. The tenancy must have begun at or near the start of an academic year, with the expectation of ending at or near the end of the academic year. Twelve-month tenancies running June to June can typically rely on Ground 4A; nine-month or term-time-only lets are unlikely to qualify because they sit outside the academic year structure.
The landlord intends to re-let to students for the next cycle. Evidence of marketing for the next academic year, expressions of interest from prospective student tenants, or a track record of student lettings supports this element.

How Ground 4A operates in practice

A typical student HMO let runs for a 12-month academic year — for example, 1 July 2026 to 30 June 2027. The landlord wants to recover possession at the end of June 2027 to allow refurbishment in July and re-letting to the next cohort from August or September.

Under Ground 4A, the landlord serves a Section 8 notice on or around 1 March 2027 — four months before the intended possession date of 30 June 2027 (transitional rules apply for the 2026/27 academic year, where two months’ notice is sufficient). The notice specifies Ground 4A and sets out the particulars: confirmation of student status, the academic-year nature of the let, and the intent to re-let.

If the tenants do not vacate by 30 June 2027, the landlord issues a possession claim at court. Ground 4A is mandatory — the court must grant possession if the ground is proved. The landlord typically has the property back, with vacant possession, in time for refurbishment in July before the next academic year begins.

The transitional 2-month notice period for the 2026/27 academic year acknowledges that landlords with existing tenancies will not have planned for the four-month notice and gives them a single year to adjust.

What Ground 4A does not cover

Ground 4A only applies to student HMOs let in line with the academic year. It does not apply to:

HMOs with non-student occupiers, even if some occupiers are students.
Twelve-month or longer tenancies that do not align with the academic year.
Single-let student tenancies (where the property is let to one student, not as an HMO).
Year-round HMOs that happen to have students among the occupiers.

Where Ground 4A does not apply, student-let landlords must rely on the other grounds for possession (Ground 1 for sale, Ground 1A for landlord occupation, etc.) with their attendant restrictions including the 12-month protected period.

Practical roadmap for setting up an HMO

A landlord setting up a new HMO should work through the following sequence:

Pre-acquisition (or pre-conversion) due diligence. Check planning use class. Check Article 4 directions. Check local HMO licensing scheme. Check council’s HMO standards document. Check insurance availability and indicative premiums. Check finance — most residential mortgages prohibit HMO use.

Planning and design. Engage an architect or designer if substantial layout changes are needed. Engage a fire risk assessor early — the assessment shapes the works. Get three quotes from contractors with HMO experience.

Approvals. Submit planning application if required (8-12 weeks for permitted development confirmation, 12-26 weeks for full planning permission). Submit building regulations application (full plans typically takes 4-8 weeks for approval). Submit HMO licence application (8-12 weeks).

Works. Carry out the conversion. Building control inspections at key stages. Final inspection and completion certificate.

Pre-occupation compliance. EICR certificate. Gas safety certificate. EPC. Fire risk assessment recorded in writing. Inventory and schedule of condition. Insurance in place.

Occupation. Tenancy agreements signed. Statutory written statement of terms provided to each occupier. Government Information Sheet served. How to Rent guide provided. Deposit protected and prescribed information served. Landlord’s contact details displayed in the property.

A complete HMO setup, from acquisition to first occupation, typically takes 6-9 months. Compressing the timetable below this is risky — corners get cut, approvals are delayed, and the eventual problems cost more than the time saved.

Authoritative sources

Town and Country Planning (General Permitted Development) (England) Order 2015 — permitted development rights.
Government planning guidance for HMOs (gov.uk).
Approved Documents (gov.uk) — building regulations technical guidance.
Renters’ Rights Act 2025 — including Ground 4A.
Your local authority’s HMO standards document and Article 4 maps.