Scotland HMO Licence Exemptions: Who Doesn't Need One

Most landlords with three or more tenants from more than two families sharing basic amenities as their only or main residence need an HMO licence. But sections 126 and 142 of the Housing (Scotland) Act 2006 provide specific exemptions and temporary orders — and understanding exactly where the boundaries sit can save unnecessary applications or, more dangerously, give false confidence that no licence is needed.

The Statutory Exemptions

Section 126 lists the categories of living accommodation exempt from Part 5 HMO licensing:

Resident owner-occupiers. If you own and live in the property, and the other occupants are members of your family or people from no more than two other families, the property is exempt. This protects the traditional "lodger" arrangement. The exemption ends when the occupants no longer fit that family limit; it is not determined by a fixed count of lodgers.

Care-registered accommodation. Accommodation provided as part of a care home service, independent health care service, school care accommodation service, or secure accommodation service registered under the applicable provisions of the Public Services Reform (Scotland) Act 2010 or National Health Service (Scotland) Act 1978 is exempt under section 126(1)(b). The inspection and regulation regime for care services is separate from HMO licensing.

Armed Forces accommodation. Crown-owned properties occupied only by members of the Armed Forces, alone or with their family members, are exempt.

Prisons and young offenders institutions. These fall outside Part 5.

Religious orders. Accommodation occupied by members who are fully maintained by a religious order whose main occupation is prayer, contemplation, education, or relief of suffering — plus no more than two other people — is exempt.

Antisocial behaviour transfers. Properties where landlord rights and duties have been formally transferred to a local authority under section 74 of the Antisocial Behaviour etc. (Scotland) Act 2004.

Co-operative housing associations. Properties owned by a co-operative housing association whose management is undertaken by its general meeting are exempt.

What Is Not Exempt

Several common assumptions about exemptions are wrong:

Using a letting agent does not create an exemption. The agent must be named on the HMO licence alongside the property owner, and both must satisfy the fit-and-proper person test. Operating through an agent maintains all licensing duties.

A joint tenancy does not avoid the threshold. The HMO test counts occupants and family groups, not tenancy agreements. Three people from more than two families on a single joint Private Residential Tenancy still constitute an HMO if they share the relevant basic amenities.

Student accommodation is not exempt by default. Section 125(4)(b) explicitly treats accommodation occupied during term time by a full-time further or higher education student as their only or main residence. Purpose-built student halls managed by universities may operate under separate regulatory arrangements, but private landlords letting to students in ordinary residential properties need an HMO licence when the property meets the HMO test.

Short-term lets have their own regime. Holiday lets and temporary accommodation fall under the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022 — a separate licensing scheme. An HMO licence does not cover short-term-let activity; check with the local authority if the property's use changes or includes guest accommodation.

Temporary Exemption Orders

Section 142 allows a local authority, on the owner's application, to grant a temporary exemption order for an unlicensed HMO. The application must specify steps the owner intends to take to make the property stop being an HMO that requires a licence, and the council must be satisfied those steps will have that effect. The order lasts three months; the council may extend it once, by up to three months, if exceptional circumstances justify the extension. The property does not require an HMO licence while the order is in force.

A first-time licence application alone does not authorize HMO occupation while it is pending. A temporary exemption order is a limited route for owners taking steps to stop the property being a licensable HMO, not a general grace period for continuing HMO operation. Separately, under section 135, if a valid renewal is submitted before the existing licence expires, the current licence remains in force until the council determines the renewal.

Change of Ownership

When a licensed HMO changes hands, the licence transfers automatically to the new owner under section 136 — but only if the new owner is registered on the Scottish Landlord Register. It would otherwise expire one month after the transfer date, but if the new owner applies within that month, the licence continues until the council determines the application. If the new owner is not on the Landlord Register, the licence expires immediately on the transfer date.

This is not an exemption but a transitional arrangement. A registered new owner must apply within the one-month window to keep the transferred licence in force while the council decides the application. If the new owner is not registered, the licence expires immediately and HMO use must stop unless and until the owner is authorized to operate.

Confirming Your Position

If you are unsure whether an exemption applies, the safest step is to contact your local authority's licensing team directly and describe the occupancy arrangement. The Scotland HMO Licensing Guide includes the full exemption analysis alongside an applicability flowchart that maps every common scenario to its statutory outcome.

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