If your 3 storey property houses 5 or more tenants in two or more households at any point from the date that licensing is introduced, you have to apply for a mandatory licence.  So long as you house a smaller number of tenants you do not have to apply for a licence even though the property may be capable of housing 5 or more.  If your property houses 5 or more but then you decide to let to fewer tenants you can ask the local housing authority to revoke the licence if you wish although the local housing authority does not have to agree to this request.

If you are renting to less than 5 tenants and your local housing authority is operating an additional licensing scheme for HMOs which are not in the mandatory scheme you may be required to have a licence under that.  Check with the local housing authority in which your property is situated.