HMO and definition of a household

Tenancy Types and Management

Hi, apologies if covered already, I'm sure it will have been. 
Long story short, moved away from HMO and will still let but to a family. 
To be honest I'm struggling to really understand the definition of what it constitutes a household. I will be contacting my local council but wanted your take on this.

A married couple (Mr and Mrs) with their newly born twins want the house but also want the Mrs blood related sister to live with them too. Is this a straightforward family or does it fall into the two household definition.

I thank you in advance

Phil