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The benefits to letting your property as a HMO

Posted 15/04/2024 by Alex Moore
Categories: Landlords/Lettings
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Most landlords let their property out in its entirety, but letting your rental property as a House in Multiple Occupation offers a different way to let.

A House in Multiple Occupation (HMO) is a property let to more than one household with shared amenities. A household can be an individual or members of the same family. A family includes:

  • Married or living together partners
  • Relatives or half-relatives
  • Step-parents and step-children

A HMO is classified as small if it has at least three tenants forming more than one household and large if it has at least five tenants forming more than one household.

Each household rents out bedrooms in the property and share communal spaces such as the kitchen or bathroom. To find out more about HMOs read our landlord guide.

The number of HMOs in the UK has decreased in recent years despite rental demand increasing, making now a good time to invest.

So what are the benefits to letting your rental property as a HMO?

Increased rental yield

Making multiple tenancy agreements with different households could lead to a higher rental yield than a single let property.

For example, you could let a three bedroom property to one household for £1,500 per month. Alternatively, you could let each bedroom to three different individuals at £550 per household per month, adding up to £1,650 in rental income each month.

You can also let rooms at different monthly rates where appropriate to increase your rental yield. For example, a main bedroom with an en suite could be let for more than the smallest bedroom in the same property.

Reduced void periods

A void period is the time in between tenancies when your rental property is left empty.

As a landlord you will want to avoid having extended void periods or it could start eating into your rental income. This is especially true if you rely on rent to pay your own mortgage.

Letting your property as a HMO could help reduce the length and impact of void periods.

As a HMO is let by individual bedrooms rather than the property as a whole, it is less likely that you'll end up with a completely empty property at one time.

You can also add to your tenancy agreement that the residing tenants have to make up the shortfall if one or more bedrooms are to be empty.

High demand in urban areas

HMOs provide a new rental option to young professionals and students who are in need of accommodation but are reluctant to make a long-term commitment.

They are providing tenants with a more cost-effective and less permanent solution in urban areas.

Typically, individuals looking to rent would have to consider roommates to make renting an entire property more affordable, which can be tricky when moving to a new city for work or education.

There has been a widespread shortage of student accommodation in the UK in recent years. As such, HMOs have become increasingly in demand in some university cities to compensate for the lack of student accommodation.

Converting a rental property into a HMO

Converting your existing rental property into a HMO takes time, effort and attention to detail as your property needs to be HMO-ready.

There are minimum room size requirements depending on how many people will be sharing each bedroom.

There are safety requirements your property will need to meet, such as the need for fire doors.

You will need a HMO licence if your HMO has at least 4 tenants forming 2 or more households.

Some local councils require a HMO licence for smaller HMOs too, so you should contact your local council for more information.

Are there any disadvantages to letting your property as a HMO?

The biggest challenge you'll face with a HMO is that you'll have to spend more time managing the property than you would with a traditional Buy to Let property.

Letting to one household means you can deal with tenants together as they have all signed one tenancy agreement.

Tenants in a HMO will have all signed separate tenancy agreements, so you could find managing the tenancies potentially more time-consuming.

Letting our local experts manage your HMO for you will make the process hassle-free. Our fully managed landlord service take the stress out of letting. Whatever you or your tenants need, we can take care of.


Curious how much your rental property could be making as a HMO? Book a free rental valuation to discuss your options with an expert adviser.

Book a free rental valuation

Alex Moore

Your Move E-Marketing Executive

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