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Are we seeing the end of the line for HMOs?

By Stephanie Taylor, Co-Founder of HMO Heaven and Rent 2 Rent Success

We are in uncertain times and some forecasters are suggesting that the ongoing nature of Covid-19 plus a likely recession means that it is the end of the line for HMOs (Houses of Multiple Occupancy, also known as house shares).  

Is this the case?  I don’t believe so. Indeed, there is good evidence that the opposite is true.

Let’s look at some of the myth that you might have heard about the property rental market for HMO:

The myth: House sharing will become unpopular 

In our experience, even during the current pandemic, people are continuing to choose to move into HMOs. 

Most of our young professional housemates that I rent to could easily afford a one-bedroom flat, but they tell me they’d prefer to live in a house share for these main reasons: 

1) to meet new people, particularly if they are moving to a city where they don’t know anyone. House shares are a great way to make friends and have a ready-made social life. 

2) for affordability. Often people are saving to buy their own home and love the affordability of HMOs because they can save more each month than they would if they rented on their own.

3) For convenience. Everything is set up and there is fast service if anything goes wrong.

4) For flexibility. We live in a much more mobile society than ever before. Many people move around the country for work, whether it’s to find a better job, or within their existing position. So being tied to a place isn’t very appealing. HMOs make it easy for them to commit for short periods only. 

All in all, we’re seeing the demand for HMOs increasing, not decreasing.  

The myth:  A recession will cause the demand for HMOs demand to collapse 

If we are heading for the market dip many financial commentators are forecasting, then it’s likely demand for HMOs will grow, as past evidence has shown that residential rental demand increases in recessions. More people prefer to rent rather than buy in recessions. 

In 2017 home ownership in England was at a 30 year low according to the English Housing Survey, the lowest since 1935.   Research by the Royal Institute of Chartered Surveyors (RICS) showed that following the 2008 recession there was a continued rise in tenant demand.[1]  

So, although many people state, as though it’s a universally accepted fact, that getting into rental in a recession is bad, they are wrong. Recessions see growing demand for rental property and especially affordable rental property, such as HMOs.

The myth: The market for HMOs is totally saturated

There is a shortfall in affordable housing. A National Housing Federation and Crisis report conducted by Heriot-Watt University reveals that the UK needs to build 340,000 new homes every year until 2031 to meet housing demand. And at least 145,000 of those homes need to be what’s termed ‘affordable’.[2]

With a strong demand for affordable housing, and house building is not keeping up, it means HMOs are becoming ever more popular. 

In 2018 the UK Government estimated that there are around 4.5 million people in England housed in around 497,000 HMOs in England and Wales.[3]  It’s therefore easy to see how HMOs can contribute towards alleviating the housing shortage. However, many councils have introduced Article 4. This means that a planning application has to be submitted to the relevant council to change a house to an HMO, even if it will only house for 3 or 4 people, which under the national legislation wouldn’t require planning permission. 

It is therefore is becoming more difficult for landlords to create a new HMO. So, the number of available HMOs is not growing as fast as it used to, and yet demand is on the increase. 

In my experience, the people claiming the HMO market is saturated have sub-standard properties in the wrong areas or don’t have any HMOs at all – just unsubstantiated opinion. To me, it is clear that the HMO market is buoyant not saturated.

So, if you have an HMO or are planning to buy one or convert an existing property, what do you need to do to be successful?

How to be successful with your HMO

Arrange an attractive work area

Now that people are more likely to be working from home, having a desk, an attractive work area and fast broadband is important. If necessary, add extra lights to ensure the workspace is well lit, and ask an electrician to add a few extra sockets if needed so laptops, phones and other work paraphernalia can be plugged in and kept charged. 

Expand storage space wherever possible

  • In bedrooms and elsewhere

While you can’t change the size of a house without major works, you can increase the storage and make it feel more spacious. Simple fixes like having two wardrobes, or adding shelving (for example, above doorways can be a great way to add a bit of extra storage space) can make a big difference. No one wants all their ‘stuff’ on display, so provide somewhere for them to tidy it away. 

  • In the Kitchen

Ensure there are enough kitchen units to provide suitable storage and include a fridge and freezer. It’s surprising how many landlords don’t supply enough kitchen cupboard space. So, if your kitchen is small, look at clever ways to maximise the storage space – there are loads of ideas from places like the NRLA and IKEA. Thinking about the little things that make life easier can make a huge difference to your tenants. 

Provide top quality service

This is the one that will make your properties stand out. From the first viewing to moving in, be proactive and attentive. Show your tenants you care about giving them a great place to live. Once they have moved in, don’t think that’s your job done! Look after them, make the experience of living in your property one they will remember and cherish. This helps housemates stay longer and also leads to more referrals.

It takes some time and effort to create an excellent HMO but it worth doing. Your tenants will appreciate what you’ve done, and you’ll develop a successful and profitable HMO business.


Stephanie Taylor is Co-Founder of HMO Heaven and Rent 2 Rent Success. She started HMO Heaven along with her sister Nicky and has grown the property management business to contracts of over £2m in just three years. Her goal is to inspire others to believe bigger, be bolder and be gamechangers for good through the power of ethical property businesses. Her focus is on using property to do good in our community and in the world.





[1] https://www.savills.com/research_articles/255800/300939-0/how-uk-residential-rents-behave-in-a-downturn

[2] https://www.showhouse.co.uk/news/uk-needs-to-build-340000-new-homes-a-year-until-2031

[3] http://researchbriefings.files.parliament.uk/documents/SN00708/SN00708.pdfmarket.