Section 68(6) of the Housing Act 2004 is nine words long: “A licence may not be transferred to another person.” That sentence changes what you are buying when you buy a licensed HMO, because the licence in the sales pack belongs to the seller, and for your purposes it dies on completion day.
The building transfers. The licence does not. What the seller’s licence proves is that the council licensed this building once, on that operator’s application, on conditions written for that operator. What it cannot do is make you the licence holder.
Licences are personal, by statute
An HMO licence under Part 2 of the Housing Act 2004 is granted to a person, runs for up to five years, and ends early if it is revoked or the holder dies. Section 68 makes non-transferability explicit, and we checked the current text at legislation.gov.uk on 1 August 2026. There is no assignment mechanism, no novation route and no grace period written into the section.
The consequence is mechanical. From the moment a licensable HMO changes hands, the new owner is a person in control of an HMO that is required to be licensed and is not.
The offence starts on completion day
Section 72(1) of the Act makes it an offence to manage or be in control of a licensable HMO without a licence, and since 1 May 2026 it also reaches the landlord or licensor of the occupiers. Two statutory defences exist. Under section 72(4), no offence is committed while a duly made licence application or a section 62 notification is still effective. Section 72(4A) adds a reasonable excuse defence, but that is argued in court after the event, so the application is the only protection you control in advance.
The application defence is the entire game plan. If your application is in before you take control, you are covered from day one. If your plan is to sort the licence out during your first month of ownership, you are operating an unlicensed HMO in the meantime and relying on the council’s patience instead of the statute’s protection.
Apply on or before completion
Prepare the application during conveyancing and lodge it on the day you complete, or earlier where the council accepts applications from incoming owners. You will need fit and proper person details, the proposed management arrangements, floor plans and safety certificates, so the preparation is a legals-stage task rather than a moving-day one.
Keep the acknowledgement. Evidence that the application was duly made is what engages the defence, and a card payment receipt is not the same thing as a validated application. Chase the council for confirmation in writing and file it.
The £40,000 penalty regime
The stakes rose on 1 May 2026, when the Financial Penalties (Housing Offences and Breach of Banning Orders) Regulations 2026 raised the maximum civil penalty for housing offences from £30,000 to £40,000 per offence by amending section 249A of the 2004 Act. Prosecution with an unlimited fine remains the alternative route. Rent repayment orders in England now reach further as well: the Renters’ Rights Act 2025 doubled the recoverable period from twelve to twenty-four months of rent with effect from 1 May 2026, under sections 44 and 45 of the Housing and Planning Act 2016 as amended. The cap in Wales stays at twelve months.
Many council websites still quoted £30,000 months after the change, which is a lesson about sources rather than a comfort: the statute is the authority, and the statute says £40,000. On a portfolio purchase the exposure multiplies per property, which is why the licensing position belongs in the price negotiation, not the completion checklist.
New licence, new conditions
Your application is assessed fresh. The council tests whether you and your proposed manager are fit and proper, and it can attach conditions different from the seller’s, including works with deadlines attached. Read the seller’s licence for what it reveals about the building, then check the council’s public HMO register for the licensing history and any pending enforcement before you offer.
Do not assume the occupancy numbers carry across either. A licence for six occupants granted on the seller’s management arrangements is not a promise that the council will license six occupants for you on yours.
Selective licensing works the same way
The same principle runs through selective licensing under Part 3 of the Act: licences are personal to the holder and do not pass with a sale. In a selective licensing area, an ordinary buy-to-let purchase triggers the same day-one application logic as an HMO does in a mandatory area. Check the council’s designation map on every purchase, because schemes arrive and lapse by local decision, and our note on rising licensing costs explains where fees are heading.
What this means for property investors
Build the licence into the deal timetable. Before offering, pull the register entry, the current licence with its conditions, and any enforcement history. During legals, prepare your application and the fit and proper file. On completion day, lodge the application and keep the proof. The sequence costs almost nothing and removes a £40,000 class of risk from your first months of ownership.
Price it too. Application fees, any conditioned works and the management standards the council expects are real acquisition costs on licensed stock. Do not let a seller’s licence in the data room read as a transferable asset, and do not let a missing licence pass without asking whether the building needed one at all. Our guide to Article 4 directions and HMO investing covers the planning side of the same purchase.
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