Question 1

What is an HMO?

Accepted Answer

A House in Multiple Occupation (HMO) is a UK rental property let to three or more tenants from more than one household, who share facilities like a kitchen or bathroom. Larger HMOs (typically 5+ tenants) require a mandatory licence from the local council.

Question 2

How do you calculate HMO yield?

Accepted Answer

Gross HMO yield is the annual rent (number of rooms × rent per room × 12) divided by the total project cost (purchase price + refurb + buying costs), expressed as a percentage. Net yield uses annual cash flow after operating costs and mortgage instead of gross rent.

Question 3

What costs should I include in an HMO deal?

Accepted Answer

Typical HMO operating costs include all utility bills (gas, electric, water, broadband), council tax, lettings/management fees, ongoing maintenance, void allowance, insurance, HMO licence fees and any compliance costs (fire safety, gas/electrical certificates).

Question 4

What is a good HMO ROI in the UK?

Accepted Answer

Most UK HMO investors target a cash-on-cash ROI of 12–20%+, well above standard buy-to-let. Anything below 8% is generally considered weak for the extra management workload, while 18%+ is typically a strong HMO deal.

Question 5

Is an HMO better than a standard buy-to-let?

Accepted Answer

HMOs usually generate higher gross rent and yield than single-let buy-to-lets, but they carry more cost, regulation, management workload and licensing. Whether an HMO is 'better' depends on your local market, time available and risk appetite.