The Merton Small HMO Rule: Planning and Licensing for Landlords

Letting a house to a group of sharers has long been one way landlords in south-west London make the numbers work. In Merton, the rules for doing that changed significantly in 2026, and I am still meeting landlords who have not heard. If you own a family house in the borough and you are thinking of letting it room by room, or to three or more people who are not one family, read this first.

There are two separate systems to think about: planning, which decides whether you may use the house as an HMO at all, and licensing, which decides the standards you must meet and whether you need a licence to let it. They overlap, but they are not the same thing.

What counts as a small HMO

In planning terms, an ordinary family home is use class C3. A small house in multiple occupation is use class C4: a home shared by between three and six unrelated people who share facilities such as a kitchen or bathroom. Larger HMOs, with more than six people, have always needed planning permission.

Normally, switching a house from C3 to C4 is "permitted development", which means it does not need a planning application. That is what has changed in Merton.

The Article 4 direction: what it does

An Article 4 direction lets a council remove a permitted development right in a defined area. Merton has used one to remove the right to convert a family home into a small HMO without planning permission.

• Since 17 November 2022, the rule has applied in seven wards: Colliers Wood, Cricket Green, Figge's Marsh, Graveney, Lavender Fields, Longthornton and Pollards Hill.
• Since 24 March 2026, a second direction has covered the remaining thirteen wards: Abbey, Cannon Hill, Hillside, Lower Morden, Merton Park, Ravensbury, Raynes Park, St Helier, Wandle, West Barnes, Wimbledon Park, Wimbledon Town and Dundonald, and Village.

Taken together, that means planning permission is now needed to turn a family home into an HMO anywhere in the borough, whatever its size. That includes Wimbledon and Raynes Park, where many landlords assumed the rule did not reach.

The council says it wants to use the planning process to look at things like room sizes, rubbish storage and parking. An application is not a formality. It may be refused, or granted with conditions.

What it does not do

• It does not, by itself, stop an existing family from renting a whole house as a single household. That stays in C3.
• It is not a licence. Getting planning permission does not mean you have the right licence, and having a licence does not mean you have planning permission.
• If a house was already in lawful use as a small HMO before the relevant direction took effect, its position is different from a new conversion. If that is your situation, gather the evidence of when the use began (tenancy agreements, council tax records, licence history) and take planning advice. A certificate of lawfulness from the council is the formal way to confirm it.

Licensing in Merton today

Licensing is the second system, and in Merton there are three layers. This is the position on Merton's own website as at 11 October 2026.

• Mandatory HMO licensing, borough-wide. An HMO with five or more people forming more than one household needs a licence wherever it is in Merton.
• Additional HMO licensing, seven wards. An HMO with three or four people forming more than one household needs a licence if it is in Colliers Wood, Cricket Green, Figge's Marsh, Graveney, Lavender Fields, Longthornton or Pollards Hill. The designation came into force on 24 September 2023 and ends on 23 September 2028 unless revoked sooner.
• Selective licensing, four wards. A home let to a single household needs a licence if it is in Figge's Marsh, Graveney, Longthornton or Pollards Hill. That scheme also started in September 2023.

Merton has signalled that it may extend licensing more widely. A Cabinet report in February 2026 set out a provisional timetable, with a public consultation planned for early 2027 and any new scheme starting no earlier than late 2027 if it goes ahead. Check the council's licensing pages before you let, even if your ward is not listed above today. Letting a licensable property without the right licence is an offence, and councils take it seriously.

A checklist before you let to sharers in Merton

1. Check the use. Is the house currently C3, C4 or something else? Find the evidence.
2. Check planning. If you are converting from a family home to an HMO, you need planning permission first. Do not let the rooms and apply afterwards.
3. Check licensing. Count the people and households, check the ward, and apply for any licence before the tenants move in.
4. Check the standards. Room sizes, fire safety, kitchen and bathroom facilities and waste storage all matter for both planning and licensing. Ask the council what it expects.
5. Check the mortgage and insurance. Many lenders and insurers have their own HMO conditions.
6. Check the tenancy. Since 1 May 2026 the Renters' Rights Act rules apply to all assured tenancies, including most room lets in shared houses where the landlord does not live in. Make sure your paperwork reflects that.
7. Keep records. Dates, plans, certificates, licence documents and correspondence with the council. If anything is ever questioned, records are your protection.

What I would say to a landlord thinking about it

An HMO can still work in Merton, but it is now a planning project, a licensing project and a lettings project, in that order. The landlords who get into difficulty are usually the ones who start with the lettings and work backwards.

If you already let to sharers and are not sure whether you are covered, do not panic. Gather the facts, check the dates and get it put right properly.

This is general information, not legal or planning advice. Always check the current position with London Borough of Merton before you let.