What Is an HMO (House in Multiple Occupation)?
An HMO is a rental property where three or more unrelated people share facilities like kitchens or bathrooms. These setups are common in urban areas where affordability and flexible living options are in high demand.
With over 475,000 registered HMOs across the UK and a market value exceeding £75 billion, HMOs are a major part of the UK rental landscape.
Why invest in HMOs: Yields, demand & reduced voids
HMOs offer some of the highest rental yields in the UK – often between 8% and 15%. This is significantly higher than traditional buy-to-let returns. Because each room is let individually, total rental income per property is maximised.
They also naturally reduce risk: if one tenant moves out, you still receive income from the remaining tenants.
HMO market size & growth trends in the UK
The HMO sector continues to grow, driven by:
- Rising demand for affordable, shared housing
- Increasing urbanisation and job clustering in cities
- Professional operators entering the market with higher standards
In 2025, the average HMO yield across the UK is over 10%, with the most lucrative regions seeing yields above 12%.
Best UK regions for HMO investment
Regions offering the best returns for HMOs include:
- North East – Highest average yields
- Yorkshire and North West – Consistently strong demand and rental growth
- Midlands – Balanced affordability and tenant demand
- University cities – Ideal for student HMO strategies
The right location will depend on your target demographic – whether young professionals, students, or low-income renters.
The demographics of HMOs
Your target tenant demographic should guide your location choice. For young professionals, look for areas with:
- Strong employment markets, particularly in sectors attracting graduates
- Good transport links to major business districts
- Vibrant social scenes and amenities
- Affordable living costs relative to local salaries
If targeting students, focus on:
- Proximity to universities and colleges
- Student-friendly amenities and entertainment
- Safe, well-lit neighbourhoods
- Good public transport connections
Our platform lets you filter sites by demographics in addition to planning constraints, helping you find properties that align with your target tenants.
What to look for in an HMO property
When sourcing or converting property for HMO use, look for:
- Minimum room sizes (6.52m² for single, 10.23m² for double)
- Room layouts that support communal living
- Space for multiple bathrooms and a large shared kitchen
- Fire safety features and escape routes
- Adequate soundproofing between rooms
Searchland’s platform helps you filter opportunities by these characteristics.
Licensing & legal requirements for HMOs
Most HMOs require mandatory licensing, particularly if:
- The property houses 5 or more tenants from more than one household
- The building has multiple storeys (in many local areas)
Some councils also enforce additional licensing rules. These can include stricter space standards, limits on the number of HMOs in a given area, and specific fire safety regulations.
Before purchasing, always check:
- Local council licensing rules
- Article 4 directions limiting permitted development
- Compliance with national housing standards
Managing an HMO: Costs and considerations
HMOs are high-yield, but they require proactive management. Key considerations:
Tenant Management:
- Individual agreements
- Rent collection per room
- Conflict resolution and rules for shared spaces
Property Maintenance:
- Weekly cleaning and regular safety checks
- Planned upgrades and seasonal maintenance
- Utility management and cost-sharing
Financial Planning:
- Budgeting for voids, repairs, and licensing
- Insurance and tax compliance
Using technology to source the best HMO opportunities
Modern investors use platforms like Searchland to:
- Identify areas with strong HMO demand and low competition
- Filter properties by licensing zones, planning restrictions, and demographics
- Find off-market opportunities and contact owners directly
- Track local yields, rental rates, and occupancy trends
This data-driven approach helps investors make confident, fast decisions.
The future of HMO investment
The HMO sector is professionalising fast. With more competition and higher tenant expectations, future success will rely on:
- High property standards
- Better management practices
- Adapting to regulatory changes
- Embracing data-led decision making
Premium HMOs – those with high spec finishes and better communal living – are increasingly preferred by young professionals and students.
Ready to start? Discover HMO sites with Searchland
Whether you’re an experienced investor or just exploring your first HMO opportunity, Searchland gives you the tools to stay ahead.
Book a demo to see how you can:
- Pinpoint the best locations
- Analyse demand and competition
- Filter sites by licensing and planning constraints
- Reach owners directly before properties go to market
