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London landlords hold tight grip on HMOs

Owners of London HMOs rarely put them up for sale, meaning investors likely need to convert a residential home into an HMO to get into the market.

The research comes from property lender Octane Capital which has compiled data on the levels of HMO stock across different regions of England, as well as the amount being sold.

London has by far the most HMOs in England, reflecting the fierce nature of the rental market in the capital. Across the capital there are some 83,900 HMOs, accounting for 38.7 per cent of the total in England.


However a very small proportion are actually for sale, as just 164 are currently listed on the market, a ratio of just 0.2%.

Properties split into different units are ideal for investors looking for a stronger return.

Previous Octane research  found that HMOs housing four tenants typically net investors a monthly rent of £593 per room or £2,372 per month. This brings average yields to 8.1 per cent, surpassing the 4.4 per cent achieved on a regular four bed property.

However finding a home that already operates as an HMO listed for sale can be challenging, even outside London. Indeed, across England only 1.6 per cent of the nation’s 217,000 HMOs are currently listed for sale.

If you’re an investor looking to purchase an HMO you’ve got a strong opportunity to find one for sale in the South East, where there are currently 654 listings, more than any other region, accounting for 19.4 per cent of all current HMOs listed for sale. 

The North West also ranks high in this respect with some 507 HMOs currently on the market, accounting for 15.1 per cent of national stock for sale, with the East Midlands ranking third with 448 current HMOs on the market. 

“London is by far the toughest region when it comes to finding a ready made HMO for sale. Yes, it may have a hefty supply of stock, but owners of HMOs are seemingly in it for the long haul in the capital, and are showing a lack of appetite to sell. As a result, you’re better off buying a residential or commercial property and converting it into an HMO in London, despite the challenge of gaining permissions” explains Jonathan Charles, chief executive of Octane. 

“Finding an HMO for sale can often feel like looking for a needle in a haystack, but you’ll have an easier time if you stick to regions like the South East, the North West and the East Midlands.”

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    Utter Rubbish I have a HM0 house standing idle because of the Renter’s Reform Bill, no security of Tenure then no Confidence.
    Of Course London have the most HMO’s are you Stupid, it wasn’t a choice it has been imposed on us since 2006 where have you been, many other parts of the Country are only getting their first one now. Did you need research to come up with that.

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    In London, I know of two boroughs that have brought in article 4 direction and forced landlords to get planning permission to convert to HMOs. Planning department aren’t handing out permissions. These 2 councils, Brent and Croydon now have a huge shortage of rooms for the workforce in the area.

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    Well I am aware of this but seems pointless now. The reasoning behind it was to have more accommodation available for Families (all on the system of course I don’t know any family renting that’s not on benefit) and didn’t need a License which was one of the
    main reasons for taking a family.
    Anyway some London Borough’s now require you to have a License regardless of whether its a Family or not as I know to my cost.

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    Right so Article 4 is to stop people from getting a HM0 license. Then why were we forced to get a license for houses rented as one and rooms not let out separately or on separate Contracts. Riddle me that ?.


    Yes. People also don't want HMO on their street. I saw a new HMO close to mine, within 6 months rubbish overflowing from the bins, people using the front garden as living room etc. So, I do understand the people not wanting HMOs.
    However the councils are desperate for rooms, a number of so called agents have contacted me and offered rents over and above market prices to house council tenants temporarily. Let the desperation kick-in and they may change their minds on HMOs.


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