At £78bn, HMOs represent a ‘significant force’ in the national rental market, says COHO Founder and CEO, Vann Vogstad (pictured).

According to analysis by the HMO platform, there are around 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 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%).

The average value of an HMO is £293,197, which means the nation’s entire HMO stock has an estimated market value of just over £78 billion.

London top of the table

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

The average annual HMO rental income is £29,715. The entire HMO sector is therefore generating a total rental income of over £6.3 billion a year.

Unsurprisingly,  London HMOs generate the most income, with an average annual rent of £40,169, which equates to a capital-wide income of £2.5 billion per year. The East Midlands, on the other hand, has the lowest income at an annual average of £20,223.

HMO landlords are actually leaving a huge amount of money on the table.”

Vann Vogstad says: “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 mean landlords are going to improve the standard of living and thus benefit from stronger rental income.”