The threshold, and why it surprises people
A licence is required in Scotland where a property is the only or main residence of three or more people who are not all members of the same family, and they share a toilet, washing facilities or a kitchen.
England sets that at five people from two or more households. So a three bedroom flat let to three students needs a licence in Glasgow, Dundee or Aberdeen and needs nothing in Manchester. This is the single most common mistake made by landlords who buy in Scotland after letting in England, or who read English advice online.
What counts as a family
Members of the same family do not count towards the three. Broadly that covers close relatives, partners and their children. Three friends do count. Two friends and a partner count. A couple and their adult child, letting together, generally would not.
If you are near the line, ask the council before you let rather than after. The consequences of guessing wrongly fall on you, not on your agent.
What a licence costs
Fees are set by each council and vary considerably. Dundee's published bands start at around one thousand two hundred and ninety pounds for three to five people and rise steeply for larger properties, with an additional inspection fee on top. Perth and Kinross determines applications through its licensing team and can take up to twelve months, consulting planning, environmental health, Police Scotland and the fire service.
Budget for the lead time as much as the money. An application that takes months is an application that delays your first tenancy, and the rent you lose while waiting usually exceeds the fee.
A licence can be refused outright
This is the part that catches investors, and it has nothing to do with the condition of your property.
Dundee applies Policy HMO2, which refuses applications that would take licensed houses in multiple occupation above twelve and a half percent of residential stock in a census output area, and the same test is applied on the licensing side. In practice, a perfectly suitable flat in a street that has reached the cap will not get a licence.
Check the concentration in the area before you buy, not after. It is the difference between a student investment and an ordinary flat with a student-sized mortgage.
Planning permission is separate
A licence is not planning permission, and having one does not give you the other. Dundee's Policy HMO1 requires planning permission for more than five unrelated people in a house, or four or more in a flat. Other councils set their own tests.
England handles this differently again through Article 4 directions, which is why the Manchester page carries a warning that planning permission is needed anywhere in that city to create even a small three to six person share.
What a good agent does here
Several agencies on this site treat licensing as a core service rather than an add on. Cairn in Glasgow has run West End student and HMO property since 2000. Premier Property Management in Dundee is an HMO specialist with property factor registration alongside. One Dundee agency publishes a specific price for the work, at four hundred and fifty pounds to project manage an initial application and three hundred for a renewal, which is skilled work fairly priced.
What no agent can do is take on the liability. If the property is unlicensed, you are the one prosecuted. Ask a prospective agent how many licensed properties it currently manages, and whether it has ever had an application refused on concentration grounds. The answers separate specialists from generalists quickly.
Common questions
Is the Scottish HMO threshold really three people?
Yes, where they are not all members of the same family and the property is their only or main residence. This catches an ordinary three bedroom flat let to three friends or students, which in England would need no licence at all.
What happens if I let an unlicensed HMO in Scotland?
It is a criminal offence with a maximum fine of fifty thousand pounds. Councils also have powers to revoke a licence where the holder or the agent is no longer a suitable person, or where the accommodation is no longer suitable.
How long does an HMO licence last?
Up to three years. Watch the expiry convention, because it is not the anniversary of your grant. In Dundee every licence expires on 30 September regardless of when it was issued, so a licence granted late in the cycle is short.
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