Landlord licensing confusion is rising as Liverpool and neighbouring councils tighten selective and HMO rules
Liverpool’s expansion of selective and HMO licensing is reshaping how brokers like Jen Highton of The Mortgage Lady talk to landlord clients, and catching many of them off guard.
“A lot of landlords don’t know about it,” Highton said. Even experienced investors often learn about licensing obligations only when a mortgage application is underway. “If you’re writing their business and you say, ‘Have you checked whether you’re in a selective licensing area?’, that’s the first they’ve heard of it.”
What Liverpool and nearby councils are doing
Liverpool City Council operates a selective landlord licensing scheme covering designated wards, requiring landlords to confirm if a property falls within the area and obtain a licence before letting it out.
Directly to the north, Sefton Council runs both selective and additional HMO licensing schemes through to 2028, covering private lets in certain zones and shared housing types, even self-contained units in some cases.
Despite their proximity, the two councils enforce notably different licensing rules. “Liverpool’s not massive, and there are several councils. It’s very strange. You can have neighbouring councils and they’ll treat things differently,” Highton said.
This fragmented landscape is prompting brokers to raise licensing issues much earlier in the process. “You’ve got to go on the government website and look for the licensing… It doesn’t highlight anywhere on the application.”
Landlords still catching up with licensing risks
Highton points to a case involving a limited-company buy-to-let in a block of six flats. Each unit was fully self-contained, with no shared amenities. Yet the council required an HMO licence for the building. “I hadn’t heard of anything like that. I said, ‘This isn’t real. It isn’t an HMO,’ and they told me they’d put this in place, but nobody knew about it.”
She also cites a long-standing HMO landlord who was recently told to prove compliance retrospectively, despite holding the correct licence for years. “That risk that the rules can change and be applied backwards, that’s a big risk to take on as an investor.”
Cases like these are prompting some clients to reconsider their strategies altogether. “If the hoop you’ve got to jump through is too much… you’d rather just go for a normal single-unit buy-to-let.”
Even owner-occupiers can find themselves affected. “It’s hitting people who live in the flats too,” Highton says. “If a certain percentage of flats in a block are tenanted, the whole building can be flagged, and the owners — not just landlords — end up footing the bill for a licence.”
Licensing issues emerge late in the process
For brokers, licensing rarely shows up at the application stage. “It doesn’t really affect us when we submit,” Highton said. “If a lender wants anything on licensing, you don’t find out until it goes to the solicitor.”
Still, it’s becoming a standard part of early discussions. “It wasn’t that widespread at first. Now it’s just part of the conversation: ‘Have you made sure you’re on top of your licensing?’”
While it hasn’t reduced lender appetite yet, it’s changing how landlords think about future-proofing their portfolios. “One of my clients recently said, ‘I might just get rid of this and buy two other ones that are easier.’”
Early checks, not formal policing
Highton collects all documentation upfront on HMO and multi-let cases to avoid delays or rekeying with specialist lenders.
Licensing is now a standard part of her early conversations with clients, though she stops short of doing the checks herself. “I’ll raise it, but I leave the actual checking up to them… I’m not sitting on government websites for every case.”
As licensing schemes expand across the UK, some argue brokers should treat local policy as core to investment advice. Highton agrees it’s an important factor, but not a formal responsibility. “It hasn’t impacted my lending directly. It would stop something from completing, not from going to offer,” she said. “We’re not giving legal advice, but we do treat local policy as a key assumption behind the mortgage strategy.”
Room for better industry awareness
Highton also sees a role for other parts of the industry. “Estate agents could help by putting on the advert that it’s in a landlord licensing area, just to start the conversation. That alone would help raise awareness before anyone even gets to us.”
The same goes for standardisation across councils. “Different councils have different guidelines for the same issues,” she said. “It’s hard to advise clients definitively when every council treats things differently.”
Licensing is no longer a side issue for brokers or landlords. It has become a core consideration in mortgage advice, especially for HMO and multi-let strategies. Early conversations, local scheme awareness, and upfront budgeting for licence costs are now essential parts of deal-readiness.
But for existing HMO investors, the deeper concern is unpredictability. “If the council tightens rules again, what’s the plan B?” Highton says. “It’s hard to future-proof a strategy when licensing rules can shift under your feet.”
That uncertainty makes early due diligence more valuable than ever. Brokers who treat local licensing as a strategic variable, not just a legal formality, can help clients make better-informed investment decisions and avoid surprises that derail completions.
