Southampton Unlicensed HMO Penalty: Fines, Prosecution and Rent Repayment Orders

Operating a licensable HMO in Southampton without a licence is a criminal offence under Section 72 of the Housing Act 2004. The council has two enforcement routes — civil penalties and criminal prosecution — and your tenants have a third: rent repayment orders. All three can hit at the same time.

Civil Penalty Notices

Under Section 249A of the Housing Act 2004, Southampton City Council can issue a Civil Penalty Notice as an alternative to criminal prosecution. The maximum is £40,000 for offences committed on or after 1 May 2026 and £30,000 for earlier offences. The penalty applies to three distinct offences:

• Section 72(1): Operating or controlling an unlicensed HMO
• Section 72(2): Knowingly permitting an HMO to be occupied by more people or households than the licence allows
• Section 72(3): Failing to comply with any condition attached to an HMO licence

The council can issue penalties against both the property owner and the managing agent simultaneously. If you own the property and your agent is running it without a licence, both of you can receive separate civil penalty notices.

Criminal Prosecution

Instead of a civil penalty, the council can pursue criminal prosecution. A summary conviction in the Magistrates' Court carries an unlimited fine. For severe or repeat offenders, the court can impose additional sanctions — including placement on the national Database of Rogue Landlords and Managing Agents, and formal Banning Orders that prohibit the person from letting property or acting as an agent.

The council chooses between the civil and criminal route on a case-by-case basis. It cannot do both for the same offence, but it can use civil penalties for some offences and prosecution for others relating to the same property.

Rent Repayment Orders

Your tenants do not need the council's cooperation to take action. Under Section 40 of the Housing and Planning Act 2016, tenants can apply directly to the First-tier Tribunal (Property Chamber) for a rent repayment order against a landlord who has been operating an unlicensed property. For offences committed on or after 1 May 2026, the tribunal can order repayment of up to 24 months' rent; for earlier offences, the maximum is 12 months.

The local authority can also apply for a rent repayment order on behalf of Housing Benefit or Universal Credit payments made during the unlicensed period.

Tenants in Southampton are increasingly aware of this route. The council publishes a public HMO register, and tenants who cannot find their property on it know exactly what to search for next.

Section 21 and Licensing After 1 May 2026

Section 21 no-fault eviction notices were abolished for private tenancies from 1 May 2026. Before that date, Section 75 of the Housing Act 2004 prevented a landlord from serving a valid Section 21 notice for a licensable HMO while it was unlicensed and no duly made application or Temporary Exemption Notice was in place. A notice served during that unlicensed period was invalid, even if the licensing issue was later resolved. For current possession action, landlords must use the applicable statutory grounds and procedures under the Renters' Rights Act 2025.

Possession proceedings already started before 1 May 2026 under a valid Section 21 notice may continue under transitional rules.

The Late Fee on Top

Enforcement discovery does not just mean penalties. When the council finds an unlicensed property through enforcement action, any subsequent licence application attracts the late fee of £1,618 — £665 more than the standard rate. So the financial exposure is the penalty itself, plus a higher application fee, plus any rent repayment order.

How to Protect Yourself

Submitting a duly made licence application gives you immediate protection under Section 72(4). Once the council has a completed form, valid declarations, all required safety certificates and your Stage 1 fee payment, you cannot be prosecuted for operating an unlicensed HMO during the processing period, and tenants cannot pursue rent repayment orders for that period.

The key word is "duly made." An incomplete application — missing a certificate, missing a declaration, missing the fee — does not provide this protection.

For a step-by-step process to get your application duly made and avoid enforcement exposure, see our Southampton landlord licensing guide.

See more England guides →