Some changes to a property can be made without planning permission. These are called permitted development rights. An Article 4 direction is a council taking some of those rights away in a particular area, so work that would normally go ahead without permission now needs it.
If you're thinking about an HMO, it's the first thing to check.
Normally you can turn a family house into a small HMO, for three to six people who aren't related, without applying for planning. That's a change from use class C3 to C4 and it counts as permitted development. But a lot of councils have brought in Article 4 directions to stop that, usually near universities or in areas where they think there are already too many HMOs. In those areas the same change needs full planning permission.
Larger HMOs, for seven or more people, need planning permission everywhere, Article 4 or not.
Being in an Article 4 area doesn't mean you'll be refused. It means you have to apply. What decides the outcome is the council's own HMO policy, and that's where most applications come unstuck.
Most councils that have brought in Article 4 also run some kind of concentration limit. The usual version is a cap on how many HMOs can sit within a set distance of the property, often something like no more than 10% of homes within 50 or 100 metres. Some also refuse anything that would leave a family home with an HMO either side, which gets called sandwiching. The thresholds and the distances vary a lot between councils, so you need to read the actual policy rather than assume it's the same as the last borough you looked at.
Working out whether you'd pass is harder than it sounds. Councils hold a register of licensed HMOs and some publish it or will tell you what's nearby if you ask. It won't be perfect, because smaller unlicensed HMOs may not show up, but it's the best guide you'll get before applying. If the street already looks full of them, that tells you something too.
There are other standards that catch people out even where concentration isn't an issue. Room sizes, kitchen and bathroom provision for the number of tenants, bin storage, and parking in areas where it's tight. Licensing has its own minimum room sizes in England, 6.51 square metres for one adult and 10.22 for two sharing, and anything smaller can't be counted as a bedroom. It's worth checking those before you plan the layout rather than after.
If a house was already being used lawfully as an HMO before the direction came in, it can usually carry on. You'll want evidence though. A lawful development certificate is the cleanest way to prove it, and a buyer's solicitor or a lender may well ask for one.
It isn't only about HMOs either. Councils use Article 4 for other things, like stopping offices and shops being turned into flats without permission, or controlling windows, doors and extensions in conservation areas. Worth knowing what's in place even if you're not doing an HMO.
Checking is usually easy enough. Most councils list their Article 4 directions on their website, often with maps, and the planning department will tell you if you ask. I wouldn't rely on the estate agent knowing.
Planning permission and licensing are separate as well. Getting one doesn't give you the other. Any HMO with five or more tenants from more than one household needs a mandatory licence, and plenty of councils run additional schemes covering smaller ones.