Houses in Multiple Occupation (HMOs): A Comprehensive Guide
Houses in Multiple Occupation (HMOs) have become a key feature of the UK’s rental landscape, especially in cities with high demand for affordable housing, such as London, Manchester, Birmingham, and university towns like Oxford and Leeds. But investing in or converting a property into an HMO involves navigating a complex web of planning rules, building regulations, licensing requirements, and financial considerations. This article explores all of these in detail.
What Is an HMO?
A House in Multiple Occupation (HMO) is a property rented out by at least three people who are not from one household (i.e., not a family) but share facilities such as the bathroom and kitchen. The most common types of HMOs include:
• Shared student houses
• Bedsits
• Hostels
• Some converted flats
Planning Permission for HMOs
Use Classes and Permitted Development
Properties in the UK are classified under Use Classes:
• C3 – Residential dwelling (e.g., family home)
• C4 – Small HMO (3–6 unrelated individuals sharing amenities)
• Sui Generis – Large HMO (7+ individuals)
Planning permission is required when:
• You want to convert a C3 property to a C4 or Sui Generis.
• The local authority has implemented an Article 4 Direction, which removes the permitted development rights for change of use from C3 to C4.
Article 4 Directions
Many councils (e.g. in Manchester, Nottingham, Leeds, and Brighton) have implemented Article 4 Directions in areas where there is already a high concentration of HMOs. This means:
• You must apply for planning permission even for small HMOs (C3 to C4).
• It is often difficult to get permission if your property is in a saturated area.
Tip: Always check with the local planning department before making any changes.
Building Regulations for HMOs
HMO conversions or new builds must meet stringent Building Regulations, with special attention to:
Fire Safety
• Interlinked smoke alarms in all bedrooms, hallways, and kitchens
• Fire doors (typically FD30-rated) on bedrooms and kitchen
• Escape routes must be protected and unobstructed
• Larger HMOs may require fire detection panels and emergency lighting
Room Sizes (Minimum Standards)
As per The Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018:
• Single room: At least 6.51 m²
• Double room (2 people): At least 10.22 m²
• Children under 10: Room must be at least 4.64 m²
Amenities and Facilities
• Sufficient number of bathrooms, toilets, and kitchen facilities for the number of occupants
• Proper ventilation, insulation, and waste disposal
• Electrical systems must be inspected every 5 years
Council Licensing Requirements
There are three main types of HMO licences:
1. Mandatory Licensing
Applies to all HMOs with 5 or more occupants forming 2 or more households, regardless of property size.
2. Additional Licensing
Some councils introduce this to capture smaller HMOs (3–4 people). It varies by location.
3. Selective Licensing
Not HMO-specific, but applies to all rental properties in certain areas. This is used to tackle anti-social behaviour or poor housing standards.
Licensing Conditions Include:
• Providing annual gas safety certificates
• Installing and maintaining smoke alarms
• EPC (Energy Performance Certificate) rated E or above
• Submitting Electrical Installation Condition Reports (EICR)
• Clear tenancy management practices
Penalties for non-compliance include:
• Unlimited fines
• Rent Repayment Orders (RROs)
• Criminal prosecution
Rental Yields: The Financial Perspective
Why HMOs Appeal to Investors
• Higher gross yields than single-family lets (often 8–12%+)
• Multiple income streams from one property
• Strong demand in student, working professional, and social housing markets
Example Comparison (London):
Property Type Rent PCM Annual Gross Yield*
Single-let (2 bed) £1,600 ~4.5%
HMO (4 tenants @ £700) £2,800 ~8.5%
*Based on property purchase of £375,000
Key Yield Influencers:
• Location (near universities, hospitals, city centres)
• Quality and size of rooms
• Local licensing and Article 4 restrictions
• Occupant profile (students vs professionals vs DSS tenants)
Note: While HMOs offer high returns, they also come with higher running costs, such as:
• Utilities (often included in rent)
• Maintenance of communal areas
• Management fees
• Licensing renewal and compliance costs
Challenges and Risks
• Regulatory Complexity: Licensing, planning, and building compliance must all align.
• Void Periods: More tenants mean higher potential for turnover.
• Management Intensity: More admin, more repairs, more tenant issues.
• Mortgage Restrictions: Specialist HMO mortgages are required.
• Insurance Costs: Higher than standard BTL properties.
Final Thoughts
HMOs offer an attractive investment opportunity—especially in a market where demand for shared housing is robust. But success requires deep understanding of local regulations, strict compliance, and active management.
Investor Checklist:
• Check Article 4 status of the area
• Determine if planning permission is required
• Understand room size and amenity standards
• Apply for the correct HMO licence
• Comply with all fire and safety regulations
• Calculate realistic yield with costs factored in
Resources
• Local Council HMO Guidance (varies by borough)
• RICS and NRLA for landlord legal updates
Disclaimer: This article is for general informational purposes only and does not constitute legal or professional advice. Always consult relevant professionals and local authorities before undertaking any development or change of use.