Everything You Need to Know About C4 Use Class and C3 to C4 Change of Use

Is your property living up to its full potential? Investors know that analysing asset performance isn’t a one-time event but an ongoing part of a winning strategy. If you haven’t considered the impact of a change in use from C3 (family home) to C4 (House in Multiple Occupation), you might miss out on a valuable opportunity. Switching to an HMO could mean a significant increase in passive income. Or is scaling back to a single-family home what aligns better with your current goals?

Whether you’re looking to boost returns or streamline management, the reasons for changing your property’s use are as unique as your investment strategy. It’s your property and your call. To help you get the whole picture, we’ve broken down the key elements of C4 and the move from C3 to C4, from permitted development to planning permission, and more.

THE BASICS OF C3 AND C4 USE CLASSES

The UK planning system uses various classifications to describe the permitted uses of buildings. The C3 and C4 use classes are about the type of residential property you’re dealing with. C3 is where we find family homes or properties typically occupied by a single household. In contrast, C4 is about shared accommodation—essentially, your classic HMO.

To identify investment opportunities and what’s required when converting properties from one class to another, we must become familiar with the following C3 and C4 elements and principles.

KEY FEATURES OF USE CLASS C3

Class C3, as defined by the planning system, indicates that a building is used primarily as a dwelling house. This use class refers to properties where people live together as a single household, typically sharing the same living spaces, kitchen, and other communal areas. The core idea behind this classification is that it applies to traditional family homes and similar residential arrangements.

The types of properties that fall under Class C3 are pretty varied, but they comply with the essential condition: they are designed to be occupied by a single-family unit. This arrangement may look like:

• Family Homes: Traditional houses where families of varying sizes live together. These properties can be the typical detached, semi-detached, or terraced houses.
• Homes for Couples: Properties where a couple lives together, such as large or small detached or semi-detached houses, flats, or apartments.
• Single-Person Accommodations: Properties intended for individuals, like studio apartments or smaller flats, where one person is the sole occupant.

Another important aspect of Class C3 is its occupancy limit, which aims to ensure that properties under this group maintain the characteristics of a traditional household. Generally, properties under C3 are intended to accommodate up to 6 people.

This occupancy limit is significant for maintaining compliance with planning laws and safety regulations, and landlords must also ensure they don’t exceed it, which would violate laws related to overcrowding. Overcrowding occurs when a property has fewer rooms than required for a given family or household size or when existing rooms are too small to accommodate residents comfortably. Allowing overcrowding contravenes safety regulations and can lead to legal penalties. If you’re a landlord, you must be aware of the occupancy limits and the proper use of Class C3 properties to avoid legal risks and maintain compliance with local planning laws.

If you plan to use a C3 property in a way that involves different households living together, e.g., running it as an HMO, you may need planning permission or follow a change of use from C3 to Class C4; we’ll cover this below.

KEY FEATURES OF USE CLASS C4

Class C4 holds great appeal for property investors and developers as it relates to HMOs, which remain a popular model in the property market. This class allows properties to be used as residences by small groups of people from different households who share common facilities like kitchens, bathrooms, and living rooms.

You’ll often find Class 4 properties in areas with high demand for shared accommodation —think university towns or bustling urban centres. There are some examples of how this plays out:

• Student Accommodations: These are properties where students, often from the same university or college, live together while sharing amenities like kitchens and bathrooms. They are popular for their affordability and the social environment they offer.
• Young Professional Shared Houses: These properties cater to young professionals and provide a cost-effective living arrangement in the cities or towns where they work. It’s a convenient setup offering flexibility and a built-in social network for individuals, for example, at the start of their careers.
• Co-Living Spaces: A modern twist on traditional HMOs, co-living spaces are designed for people who prefer shared living for social or financial reasons. These setups often come with additional amenities and a focus on creating a community-driven atmosphere.

Class C4 also has a specific occupancy limit, allowing between 3 and 6 people from different households to live together and share common spaces. This distinction is, again, crucial as it differentiates C4 from C3 (meant for single households also accommodating up to 6 people). The cap in Class C4 ensures these properties don’t cross into larger-scale HMOs, which fall under the Sui Generis category and typically require additional planning permission and compliance measures.

The occupancy limit also plays a critical role in ensuring a balance in shared living spaces and preventing overcrowding. So, if you intend to increase the number of occupants beyond 6, you likely need planning permission for a compliant change and to explore a different use class, Sui Generis, for Large HMOs (7-bed and up).

Beyond these criteria, there are other considerations for properties under Class C4, including the possibility that HMOs may be affected by other controls, such as licensing requirements and Article 4 Direction —more on these ahead.

 

CHANGE FROM C3 TO C4 USE CLASS

Would you rather have one or multiple sources of income from a single asset? Multiple streams of income sound a lot more appealing, right? That’s the beauty of HMOs. With an HMO, you could have several tenants, each paying rent, turning one property into a steady flow of income. It’s a solid way to maximise a single investment.

Class C4 properties offer attractive opportunities for investors, including:

• Rental Yields: Higher returns per room compared to traditional family homes.
• Tenant Demand: Steady interest among students and young professionals, with growing interest among other groups.
• Capital Growth: These properties often appreciate well in prime areas with high demand for shared accommodation.
• Void Periods: Reduced impact, less reliance on a single source. When one tenant leaves, rental income doesn’t go down to zero.

But there’s a lot to consider before jumping into a change of use from a family home (C3) to an HMO (C4). Beyond the financial benefits, there’s the added responsibility of managing multiple tenants and meeting strict regulations. It’s about weighing the pros and cons to find what aligns with your investment strategy and goals.

You’ll need to know the HMO conversion process before changing the use of your property from C3 to C4. To kick things off, here are four key questions you need to cover:

1. Do I need C4 planning permission?

While in many areas, you can change the use of your property from a single household to an HMO without restrictions (thanks to permitted development rights), this isn’t always the case. Local authorities can implement further controls —such as Article 4— which effectively override permitted development in specific areas, thus making planning permission for HMOs mandatory.

• For mandatory licensing, you must submit an application outlining the proposed changes, including how the property will be used and any physical alterations. The council reviews the application to ensure it complies with local planning rules and doesn’t negatively impact the surrounding area.

2. Can Article 4 Direction block the change from C3 to C4?

Article 4 makes planning permission compulsory, but it’s often also a sign of more stringent conditions keeping HMO numbers under control and sometimes blocking a change of use entirely. Local authorities may restrict, for example, the conversion of Listed Buildings, but also the concentration of HMOs allowed to operate within an area and the proximity between HMOs.

• Discover the Top 3 Deal-Killer HMO Policies

3. Do I need to consider building regulations?

It’s almost certain a change of use from C3 to C4 will involve some alterations to the property, in which case building regulations should be top of mind. These regulations govern the design and construction of buildings to ensure safety, health, and environmental sustainability, so they will help you ensure that your HMO is safe and suitable for occupation.

• Building regulations cover a wide range of standards, from room sizes, ventilation, plumbing and sanitation to structural, electrical and fire safety.
• Adherence to building regulations involves crucial standards, including Fire Doors and Fire Risk Assessment, all of which are necessary to obtain a completion certificate—a mandatory requirement for HMO licensing.

4. Will I need to obtain HMO licensing?

That’ll depend on the number of occupants planned for your HMO and on the local authority. A licence is typically required when an HMO:

• Has 5 or more tenants (mandatory licensing)
• Has 3 or 4 occupants, AND the local council enforces licensing (known as selective licensing), meaning whether you need a licence depends on your local council’s policies—they might require a licence or not.

Since the requirements and enforcement can vary depending on the licensing category, and councils might have additional and stricter licensing rules, the golden rule is to confirm with the local authority to avoid penalties. This is why working with an experienced architect or builder who understands local and national regulations is so important. With a proactive approach, you can ensure HMO Compliance, designing your project to meet all required standards, regulations and best practices.

We’ve also explored the broader use class structure, with other possible transformations between use classes and plotted easy steps to identify your property’s potential.

CHANGE FROM C4 TO C3 USE CLASS

Some may wonder why, after considering the potential benefits and the work behind an HMO property, anyone would want to change their property’s use from HMO to a single-family home. Changing from Class C4 to Class C3 can occur for several reasons. It may happen through active intervention by the landlord or property owner or automatically. Here’s how this change can occur, along with scenarios in which some landlords, like you, might actively pursue the transition.

Automatic Change of Use from C4 to C3

A change of use from C4 to C3 can occur automatically under certain conditions, primarily when a property’s usage slides back to that of a single-family home. If an HMO classified under C4 has less than 3 unrelated occupants sharing the property, it might automatically transition to a C3 use class, losing its C4 privileges. Falling below HMO occupancy levels can happen if tenants move out and the remaining residents form a single household (for example, a couple).

Reversion to single-household use might be automatic, and this often depends on local council interpretation, so it’s always best to confirm with your local planning authority.

Active Change of Use from C4 to C3

Changing a property’s use from C4 (HMO) to C3 (single-family dwelling) can significantly alter your property’s purpose, leasing arrangements, and marketability. So, what might drive an active transition?

• Back to Family Housing: Aiming to market your property to families could mean remodelling it to better suit a single-family layout and concluding any existing HMO agreements. Doing so lets you look at a different set of potential tenants. With a sole tenancy agreement, for example, single-family homes require less management and typically see longer tenancy terms.
• Reducing Regulatory Requirements: HMOs come with various additional obligations, including licensing, fire safety measures, and compliance with other HMO-specific regulations. For landlords who find these compliance requirements too time-consuming or costly, switching to C3 can be a practical way to cut through the red tape.
• Preparing for Sale: If you consider selling a property due to market conditions or as part of your portfolio’s exit strategy, converting from C4 to C3 might make it more attractive to traditional buyers. If you want to sell an HMO, your buyers are usually other investors or families who will need to put in a lot of work to convert the property back to a traditional home.

C3 and C4 use classes represent different property types and serve unique roles in the housing market, each requiring different strategies for property investors. Understanding how to transition from C3 to C4 and harness the advantages of shared living can create lucrative opportunities. However, thorough research and planning are necessary if you want to find your way through complex regulations and maximise returns.

TAKEAWAYS

• The defining factor between C3 and C4 is the number of unrelated individuals living in the property.
• Class C3 covers a range of dwelling types, from family homes to individual accommodations, with a general occupancy limit of up to six.
• A C4 property must have three to six unrelated tenants sharing amenities. Larger HMOs with more than six residents fall under the sui generis classification.
• Due to their communal nature, C4 properties (HMOs) must adhere to specific safety, space, and amenities standards.
• A change of use class between C3 and C4 falls under permitted development, but many areas enforce Article 4 Directions, making planning permission necessary.
• Depending on the council policies, HMOs housing 3 to 4 people may or may not require licensing (selective licence). A mandatory licence applies for HMOs with more than five occupants.
• Before starting any conversion, it’s crucial to know the council’s policies on change of use and licensing.

NEED HELP WITH YOUR PROJECT?

When converting a property to attract the single-household market or eyeing the lucrative potential of shifting to an HMO —of any size, getting through the regulatory and building procedures can be time-consuming and complex.

At HMO Architects, we specialise in turning property development into success stories. We offer expert guidance and support to help you get the most out of your real estate investment so you can maximise your property’s return potential or bring your dream home to life. Ready to discuss your project and reveal the full potential of your property? Make your discovery call today.