HMOs can provide these increased yields because they provide rent by letting individual rooms, providing multiple income streams, and higher yields overall compared with letting to a family. Large HMOs automatically need a licence from the council and need to meet certain standards for fire safety. In some areas, all HMOs require a licence. You should check with your local authority. Government regulation states that an HMO has at least three unrelated tenants living in a home sharing a toilet, bathroom or kitchen facilities. It becomes a ‘large HMO’ if it has more than five tenants and is over more than two floors.