HMO market valued at £78 billion

COHO’s analysis of ONS dwellings data* shows that there are an estimated 182,554 HMO properties in England & Wales. 74% of these are ‘small; HMOs, shared by three or four tenants, while 26% are ‘large’ with five tenants or more.

London is home to the largest proportion of HMOs, accounting as it does for 33.9% of the national total, followed by the South East (13.6%), South West (10.7%), North West (8.4%), and Yorkshire & Humber (7.4%).

HMO market size by total stock value

The average value of an HMO in England & Wales sits at £293,197 which means the nation’s entire HMO stock has an estimated market value of just over £78 billion.

In London, where the average value of an HMO property sits at £660,227, the total stock has a combined value of almost £40.9 billion

The South East is home to an average HMOs price of £436,146, creating a total regional value of £10.8 billion.

Meanwhile, HMO stock in the South West has an estimated combined value of £7.9 billion, followed by the North West at £4 billion.

HMO market size by rental income

The average annual rental income for an HMO in England & Wales sits at £29,715. Across the nation’s 182,554, the entire HMO sector is generating an estimated total rental income of over £6.3 billion a year.

In London, HMOs generate an average annual rental income of £40,169, which means the capital’s entire stock creates an annual rental income of £2.5 billion.

While London has the largest combined HMO rental income, individual properties actually generate the most rental income in the South East, where each HMO averages £46,042. This gives the region a combined rental income of more than £1.1 billion.

In the South West, the HMO market generates rental income of £747.3 million, and in the North West it’s £419.2 million.

While the Yorkshire & Humber region is home to the lowest average HMO value (£196,014) and second-lowest average rental income (£21,208), its large market means that it outperforms Wales and the North East for both combined stock value and combined rental income due to the latter two regions having HMO markets less than half the size of Yorkshire’s.

Meanwhile, the East Midlands commands the lowest average annual rental income per property (£20,223) but due to a healthy average HMO value of £236,779, its total stock value of £2.9 billion is higher than Yorkshire & Humber, Wales, and the North East.

COHO Founder and CEO, Vann Vogstad, commented:

“HMOs are a significant force on the national rental market, generating a combined rental total of well over £6 billion every year.  But while this sounds like a strong number, HMO landlords are actually leaving a huge amount of money on the table.

As the leading HMO management platform and co-living specialist, we have previously found that tenants are willing to pay as much as 10% more in rent in exchange for a heightened HMO experience, not least the opportunity to live with housemates whose personalities and lifestyles are a good match for their own.

Further premiums can likely be commanded for HMO properties that are altogether more considered and thought-through than your average, such as high quality finishes, strong landlord communication, efficient financial processes, and speedy maintenance management.

As such, the HMO market’s value is going to keep increasing not only because of the constant and growing demand from a variety of tenant demographics, but also because rising tenant expectations means landlords are going to improve the standard of living and thus benefit from stronger rental income.”

Data tables and sources

• *HMO dwelling numbers in England & Wales sourced from the Office for National Statistics
• *Average HMO value and rental income sourced from Landlord.io
• Full data tables and sources can be viewed online, here.