HMOs (Houses in Multiple Occupation) generate higher gross yields than single-let property — but the cost profile is fundamentally different: bills are usually included, the HMO licence must be paid for, fire safety upgrades are mandatory, management intensity is higher, and lender ICR thresholds are tighter (125-175% depending on the lender). This calculator models the whole picture room-by-room, applies Section 24 to the after-bills profit, and compares the after-tax HMO outcome to an equivalent single-let baseline.
HMO Deal Analyser
Room-by-room economics with bills-included cost modelling, HMO-specific ICR and compliance overhead, plus a direct after-tax HMO-vs-single-let comparison.
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HMO headlines
Monthly net
£874
Annual after-tax
£3,826
Break-even occupancy
65.8%
ICR (145% req)
2.95×
Passes lender stress
Per-room weekly rent
Most variance lives here. Spot the under-priced room.
HMO vs single-let baseline
Delta: +£3,952 / yr for HMO vs single-let.
Monthly breakdown
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Related guides
Plain-English explainers for the rules behind this calculator.
Frequently asked questions
Answers to the questions UK property investors most often have about this tool and the underlying rules.
- What is the definition of an HMO in the UK?
- In England, a property is an HMO if rented to 3 or more people from 2+ households who share facilities (kitchen, bathroom). A "large HMO" — requiring a mandatory licence — has 5 or more people from 2+ households. Many councils operate Additional Licensing schemes that lower the threshold to 3+ people. Scotland and Wales have their own definitions.
- How much is an HMO licence in 2026?
- Set by individual local authorities, typically £500-£1,500 for a 5-year licence (the most expensive London boroughs charge £1,500-£2,000+). Add costs for mandatory upgrades — fire doors, smoke detectors, emergency lighting — which can total £3-10k for a previously single-let property converted to HMO.
- Are HMOs taxed differently from single-lets?
- No — same income tax / Section 24 treatment for individuals, same corporation tax for SPVs. The cost profile differs (bills-inclusive vs tenant-paid) which affects allowable expenses, but the tax mechanics are identical. The high-revenue / high-cost shape of an HMO P&L often pushes individual landlords harder into the Section 24 trap because more of the gross goes through the "deductible expenses" line.
- What is Article 4 direction?
- Article 4 of the Town and Country Planning Order removes permitted development rights in a specific area — meaning conversion of a C3 (single dwelling) to C4 (small HMO of 3-6 people) requires full planning permission. Around 100+ UK local authorities now have Article 4 directions covering HMO conversions. Check your specific postcode with the council before buying for conversion.