The HMO Investment Blueprint: Top 10 Tips for Unbeatable Returns!

The realm of property investment is vast and varied, but one segment that has consistently caught the eye of savvy investors is Houses in Multiple Occupation (HMOs). These properties, distinguished by their ability to house multiple tenants under one roof, offer a compelling proposition for both seasoned property magnates and newcomers to the investment scene. The appeal is clear: multiple streams of rental income from a singular asset, often yielding returns that outpace traditional single-occupancy properties.

Now, more than ever, the stars seem aligned for potential HMO investors. As urban centres continue to swell and the quest for cost-effective housing solutions intensifies, HMOs stand out as a practical solution. Their adaptability, catering to diverse demographics from students to working professionals, ensures a consistent and robust demand, making them a resilient choice in an ever-shifting market landscape.

Looking ahead during this decade, the trajectory for HMOs appears steeped in opportunity. Technological innovations may usher in a new era of ‘smart’ HMOs, replete with cutting-edge facilities tailored for the modern tenant. As urban sprawl continues and cities become more congested, centrally-located HMOs that offer convenience and community living will likely see a surge in demand. Couple this with a globally mobile population seeking flexible housing options, and it’s evident that HMOs are not just a trend but a future-forward investment strategy.

Here are our top 10 tips for any HMO Investor looking to maximise their returns:


Tip 1: Choose the right Location

The mantra ‘location, location, location’ resonates deeply in the world of property investment, and for good reason. The geographical positioning of an HMO can be the linchpin in its success or lack thereof.

At the heart of this is the undeniable link between location and rental desirability. A well-situated property in a vibrant neighbourhood or close to academic hubs will invariably draw a steady stream of interested tenants. This not only ensures a consistent rental income but also provides the leeway to set a premium rental rate. On the flip side, an HMO in a less accessible or less popular area might find it challenging to maintain consistent occupancy without resorting to discounted rents.

Beyond the immediate rental implications, location plays a long game in terms of capital growth. An HMO nestled in areas earmarked for future growth or upcoming infrastructural developments stands a better chance of appreciating in value. Such foresight can yield twofold rewards: a reliable rental yield in the present and a potential profit upon sale in the future.

The cherry on top is the undeniable influence of local amenities on tenant decisions. Today’s discerning tenant places a premium on ease and accessibility. An HMO a stone’s throw away from key establishments like offices, medical centres, or universities is bound to be a hot favourite. Add to this the bonus of nearby recreational spots like fitness centres, retail outlets, and entertainment hubs, and the property becomes almost irresistible. In a nutshell, an HMO’s location, when aligned with the contemporary rhythms and preferences of potential tenants, can be a goldmine for savvy investors.


Tip 2: Tailor the Design for Your Tenants

The design and layout of the property can be a game-changer. Striking the right balance between tenant comfort and maximising profitability is both an art and a science.

The layout of an HMO plays a pivotal role in determining its appeal. To maximise income, landlords might be tempted to convert every available space into a bedroom. However, this can be counterproductive. Tenants, especially those who commit to longer leases, seek a harmonious blend of private and communal spaces. Therefore, it’s essential to design a layout that offers both. By ensuring that each room is adequately sized and well-lit, landlords can command higher rents while ensuring tenant satisfaction.

Balancing co-living areas with individual living spaces is crucial in HMOs. Co-living spaces, such as shared kitchens, lounges, or dining areas, foster a sense of community and make the property feel more spacious. However, it’s equally important to ensure that individual rooms offer a sense of privacy and personal space. This can be achieved by soundproofing walls, providing en-suite facilities where possible, or even just ensuring that each room has ample storage.

To make an HMO stand out and be more desirable, landlords should consider incorporating features that resonate with tenants. High-speed internet is a must in today’s digital age. Additionally, energy-efficient appliances, modern decor, secure entry systems, and even small luxuries like a coffee machine and definitely a smart TV in communal areas and bedrooms can make a significant difference. For those targeting student tenants, dedicated study spaces or desks in each room can be a necessity.

In essence, while maximising profitability is essential, it should not come at the expense of tenant comfort. A well-designed HMO that caters to the needs and desires of its occupants will not only ensure consistent occupancy but also foster long-term tenant relationships, leading to sustained and even increased income for landlords.


Tip 3: Prioritise Regular Maintenance

Maintenance isn’t just about fixing what’s broken; it’s about preserving and enhancing the value of your HMO investment. Neglecting this crucial aspect can have cascading effects on both the property’s worth and its appeal to potential tenants.

If maintenance takes a backseat, the immediate consequence is the depreciation of the HMO’s asset value. Properties that show signs of wear and tear, or have unresolved issues, can see a significant drop in their market value. Moreover, a poorly maintained HMO can deter quality tenants. High-calibre tenants, who are often willing to pay a premium for a well-kept property, might opt for alternatives if they perceive the HMO to be below par. This can lead to reduced rental values and, in some cases, prolonged vacancies.

On the flip side, regular maintenance makes HMO more appealing which in turn attracts higher quality tenants, and therefore rent. A well-maintained property signals to potential occupants that the landlord is attentive and proactive.


Tip 4: Thoroughly Screen Tenants

One of the most critical steps in ensuring the success of an HMO investment is selecting the right tenants. While a property might be in a prime location and impeccably maintained, the tenants play a pivotal role in determining the overall experience for both the landlord and other occupants.

Successful landlords leave no stone unturned when it comes to tenant screening. A comprehensive process often begins with credit referencing. This provides insights into the tenant’s financial history, ensuring they have a track record of meeting financial obligations. A positive credit score can be a strong indicator of a tenant’s ability to pay rent consistently and on time.

However, financial stability is just one piece of the puzzle. Previous landlord references can offer a wealth of information about the tenant’s behaviour, reliability, and how they treated their past accommodations. Were there any disputes? Did they maintain the property well? Such references can paint a vivid picture of what to expect.

Employer references further solidify the tenant’s profile. They not only confirm the tenant’s current employment status but also provide insights into their stability and reliability. A consistent employment history can be reassuring for HMO landlords.


Tip 5: Keep Abreast of Regulations

Regulations surrounding Houses in Multiple Occupation (HMOs) in the UK are dynamic, reflecting the evolving needs of the housing sector and the broader societal context. While there isn’t a fixed frequency for changes, it’s not uncommon for updates to occur every few years. This underscores the importance for landlords to stay informed and regularly review any amendments to the regulations.

The approach to policing HMOs can vary significantly across different local authorities. Some may adopt a more stringent stance, conducting regular inspections and demanding rigorous compliance, while others might take a more lenient approach. This disparity is often influenced by local housing demands, the prevalence of HMOs in the area, and the specific challenges faced by each local authority. As a landlord, understanding the nuances of your local authority’s stance is crucial to ensure smooth operations.

Non-compliance with HMO regulations can have severe ramifications for landlords. Penalties can range from hefty fines to, in extreme cases, imprisonment. Moreover, landlords might find themselves facing legal actions, which can tarnish their reputation and make future ventures in the property market more challenging. In some cases, local authorities have the power to reclaim up to 12 months of rent if the HMO is not managed correctly. Thus, ensuring adherence to all regulations is not just a matter of legal obligation but also a sound business practice to safeguard one’s investments and reputation.


Tip 6: Harness Technology

In today’s fast-paced digital world, the UK’s property management scene is evolving, thanks to user-friendly software and tools designed with HMO tenants in mind. There are plenty of platforms and tech tools available but would be wrong of us to promote any here!

For Landlords: Embracing these tools feels like having an extra pair of hands. They help landlords keep everything tidy and in one place, from tenant details to financial records. No more sifting through piles of paperwork or missing out on rent reminders. Plus, with built-in messaging systems, it’s like having a direct line to each tenant, making communication smoother and more personal. And let’s not forget the peace of mind that comes from knowing you’re on the right side of HMO regulations.

For Tenants: Tenants benefit from the convenience and transparency offered by these platforms. Online portals simplify tasks such as rent payment, maintenance request submissions, and direct communication with landlords and/or agent. Furthermore, access to crucial documents like rent agreements and payment histories is helpful. Tenants should also feel assured that these systems are keeping their data secure.


Tip 7: Provide Competitive Amenities

In the increasingly competitive HMO market, offering distinctive amenities can be a game-changer in attracting and retaining tenants. As the HMO market becomes more competitive, so do tenant preferences. To ensure your HMO stands out, it’s crucial to understand and cater to these changing desires.

Distinct amenities that can set your HMO apart include en-suite bedrooms, dedicated workspaces (especially important in the era of remote work), smart home features such as programmable thermostats, TVs and lighting, and eco-friendly installations like solar panels or green roofing. Additionally, communal spaces that foster a sense of community, such as shared gardens, lounges, or even small gyms, can be a unique selling point.

Contemporary tenants, particularly the younger demographic, are increasingly seeking properties that align with their lifestyle and values. High-speed internet connectivity is no longer a luxury but a necessity. We’ve had plenty of tenants that aren’t bothered by a toilet not working but as soon as the internet goes down it’s the end of the world!

Similarly, eco-conscious features, bike storage facilities, and pet-friendly policies are amenities that resonate with today’s market. Furthermore, convenience-driven amenities, such as in-house laundry facilities, package receiving services, and proximity to public transport or essential services, are highly sought after.

To truly differentiate your HMO in today’s market, it’s imperative to offer a blend of modern, eco-friendly, and convenience-driven amenities that cater to the contemporary tenant’s needs.


Tip 8: Determine Fair and Competitive Rent Prices

Navigating the HMO market as a new investor can be both exciting and challenging. One of the pivotal decisions you’ll face is setting the right rent price for your property. It’s a delicate balance between ensuring a good return on your investment and making sure the rooms are attractive to potential tenants.

The size of a room plays a significant role in determining its monthly rental price. Generally, larger rooms command higher rents. However, it’s not just about square footage. Facilities, especially ensuites, can considerably elevate a room’s value in the eyes of potential tenants. An ensuite can be a game-changer, often allowing landlords to charge a premium. After all, the allure of private bathroom facilities is undeniable for many tenants.

However, setting a rent price is not just about maximising income. It’s essential to consider the saleability of the room at the chosen price point. A room might be worth a high rent on paper, but if it remains vacant for months, the potential income is lost. It’s a classic case of weighing the benefits of a higher rent against the risk of prolonged vacancy.

When setting room prices, consider the amenities that tenants value most. Based on market trends and tenant feedback, the priority often goes as follows:

Having an ensuite: As mentioned, private bathroom facilities can significantly boost a room’s appeal.

Size of the bedroom: A spacious room offers tenants comfort and the flexibility to personalise their space.

Amount of communal space: Shared areas like kitchens, living rooms, and gardens can enhance the living experience, especially in an HMO setting.

Additional facilities: Features like games rooms, gyms, or cinema rooms, though not always expected, can set an HMO apart and justify a higher rent.

It’s crucial to have a deep understanding of your local market, tenant preferences, and the unique selling points of your property. Setting a fair and competitive rent price is a blend of market research, understanding tenant priorities, and a touch of intuition. Always remember, a room rented at a slightly lower price today is often better than a room vacant for months at a higher price.


Tip 9: Cultivate Strong Landlord-Tenant Relationships

For both budding and seasoned HMO investors, understanding the dynamics of landlord-tenant relationships is paramount. The rapport you establish with your tenants can significantly influence the success and longevity of your investment.

There’s a spectrum of approaches when it comes to setting the tone for landlord-tenant interactions:

The Familiar Approach: Some landlords opt for a more personal touch, frequently visiting the property, sending birthday cards, or even gifting Christmas presents. This approach aims to foster a familial atmosphere and close-knit relationships. While unique and appreciated by some, it’s worth noting that this isn’t the typical expectation or preference for many tenants.

The Distant Approach: On the opposite end, some landlords maintain a hands-off approach, rarely interacting with tenants or addressing concerns promptly. Surprisingly, this method can work for certain tenants, especially if the rent is priced below market averages. For these tenants, the appeal of a bargain often outweighs the desire for proactive landlord engagement. Meanwhile, the landlord enjoys a more straightforward management experience.

The Balanced Approach: Most successful landlord-tenant relationships strike a balance between the two extremes. This involves implementing robust processes, leveraging technology for maintenance management, scheduling regular inspections, and, in many cases, enlisting the expertise of property agents. With this approach, consistency is key. When tenants communicate concerns, especially regarding maintenance, addressing them promptly is crucial. This not only ensures the property’s upkeep but also builds trust and demonstrates a commitment to tenant well-being.

In all examples don’t forget that where you start to have a relationship issue with a tenant it can cause cashflow issues, like tenants not paying rent, agreeing a rent reduction to resolve the issue or a tenant moving out leaving a void and a new tenant find fee to resolve the situation.

In conclusion, the relationship between a landlord and tenant is multifaceted and can be tailored to suit individual preferences and market dynamics. However, for the majority of HMO investors, a balanced approach that combines efficient processes with timely communication tends to yield the best results. Remember, a harmonious landlord-tenant relationship is a cornerstone of a thriving HMO investment.


Tip 10: Choose the Right HMO Strategy

For HMO investors, both new and seasoned, the strategy you adopt can significantly influence the success and sustainability of your investment. Central to this strategy is understanding the diverse tenant types available and aligning them with the local market’s dynamics. Each tenant type comes with its unique set of advantages and challenges.

Professionals: These are typically employed individuals or couples in search of quality living spaces. When your property boasts a prime location and top-notch amenities, catering to professionals can be lucrative. They often seek comfort, convenience, and a touch of luxury. However, it’s essential to factor in council tax, which will be applicable for properties housing professionals.

Students: Catering to those in higher education often means prioritising properties close to universities or colleges. While there’s no council tax to worry about with student tenants, it’s crucial to remember that tenancies usually last for 11 months, leading to a potential one-month void. Additionally, rent payments tend to align with student loan disbursements, meaning they’re often quarterly rather than monthly. This periodicity should be considered in your cash flow planning.

Housing Benefit Tenants: These are individuals who receive financial assistance to cover housing costs. While properties catering to this group can be profitable, there are potential challenges to navigate. Issues like anti-social behaviour, property damage, or disputes among tenants might arise. Many landlords who opt for this strategy do so with a philanthropic intent, aiming to support those facing financial hardships.

Social Housing Leases: This strategy involves leasing properties to local councils or housing associations. It’s a model that offers multiple benefits: consistent cash flow, guaranteed rent (often spanning over seven years), and direct payments from governmental bodies. Moreover, landlords are typically free from maintenance responsibilities, management hassles, and utility bill payments. It’s an attractive proposition, but there’s a catch. Financing such properties can be tricky, with only a handful of lenders in the market offering mortgages for this strategy. As a result, many properties under this model are unencumbered.




HMOs are fantastic assets and have many advantages over traditional single lets or other investments. The UK property market, whilst there are swings in valuations, is (touch wood) largely robust which we attribute to the chronic shortage which is only set to continue. We have many contributing factors to why HMOs will burgeon in this decade that includes increased transient workers, more broken households, higher utility costs making HMOs more attractive over renting flats or houses, and high growth rates for most UK University intakes.

HMO is a great strategy. Once you have your property set, make sure to address the above top 10 tips to give it the very best chance of success.

If we can help in that journey then make use of our 14-year experience in the sector and reach out, we would love to hear from you!

Good luck and happy investing.


About the Author

I’m Gemma, I have been working in HMOs since 2009 from sourcing, development, financing, construction, tenanting, management, refinancing and exits. You name it I’ve done it. And don’t get me started on speaking to utility companies (*#$*!!). I set this business up to help other fellow HMO investors sell their HMOs in a manner that suits them – be that price, ease or speed. I aim to help as many HMO landlords as possible navigate the HMO sales process, if I can help you too please reach out, I would love to meet you.