Before February 2005, an HMO (House in Multiple Occupation) was defined as "a house which is occupied by persons who do not form a single household" by section 345 of the Housing Act 1985.

Since the passing into law of the Housing Act 2004 (sections 254 & 257), the definition of an HMO has become more focussed.  There are now 3 'tests', if any 1 of the 3 tests are met, the building is a House in Multiple Occupation as prescribed by the Housing Act 2004.

The 3 Tests:

The Standard Test (s254(2)); A property is an HMO under this test if it is occupied by persons belonging to more than 1 family, who share any basic amenities such as living space, toilets, washing or cooking facilities.  This test essentially identifies HMOs that are shared houses.

The Converted Building Test (s254(4)); A property is an HMO under this test if it contains 1 or more units of accomodation, that are not self contained flats (see s257), and any of those units of accomodation share or lack any basic amenities.  This test identifies houses divided into bedsits as HMOs.

The Self Contained Flat Test (s254(3)); A property is an HMO under this test if it is an individual flat that is occupied by persons belonging to more than 1 family, who share basic amenities within that flat.  This test identifies a flat in multiple occupation.

In Addition:

Buildings converted solely into Self-Contained Flats are classed as HMOs if they do not meet the 1991 Building Regulations, or later revisions depending on their date of conversion.  However there are many exemptions from this definition of an HMO, which can be found with reference to the full text of the Housing Act 2004, obtainable from www.hmso.gov.uk.  

Two of the  simplest exemptions are:
Buildings containing only two flats, which together are occupied by only two people.
Buildings converted into self contained flats, of which at least two thirds are owner occupied, or occupied on leases in excess of 21 years remaining.

Local Authorities are also able to make an HMO Declaration about a building that is partly occupied by persons as their only or main residence, but is also partly occupied otherwise.  For example, where a building is operated as a Bed & Breakfast establishment, but also takes long term guests as their only or main residence, Local Authorities are able to declare the building to be an HMO, and treat it as such under the Housing Act 2004.  Owners of such buildings may appeal the LA's decision at a Residential Property Tribunal.