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HMO calculator

What the same house earns let by the room, once the extra work is priced in

A house let to one family and the same house let to five sharers are two different businesses with two different cost bases. The room-by-room rent is roughly double and so is almost everything else: the bills are yours, the wear is heavier, the licence is mandatory above a threshold, and the fire strategy is not optional. This prices both and shows the gap that is actually left.

For: An HMO, a student let or a professional house share

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The house
£
Five or more people from two or more households requires a mandatory licence everywhere in England. Below that, many councils operate additional licensing anyway.
£
Bills included at this rent, which is why they appear as a cost below. An en suite typically adds £75 to £150 a room.
£
The comparison that matters. Get it from the same agent who gave you the room rents.
En suite to every room?
Shared bathrooms. Cheaper to build, and it narrows the tenant pool and lengthens the voids.
Who lives there
Rolling occupancy, steadier income, and rooms let one at a time all year.
%
This is the number that decides it. 92% is about 0.4 rooms empty at any time. Ninety two per cent is a well-run professional house; anything above 95% is optimistic.
Running it
This is where the extra gross rent goes. Every line here is larger than the single-let equivalent.
%
12% to 18% plus VAT on an HMO against 12% plus VAT on a single let, and far fewer agents will take it on. Running it yourself is a genuine part-time job.
£
Gas, electricity, water and broadband, all included in the rent and all yours. Assume tenants do not turn heating off, because they are not paying for it.
£
Since 2023 most HMOs are banded as a single dwelling rather than room by room, and on a licensed HMO the liability sits with the landlord. Check with the council: this is the line most often missed.
%
Ten to fifteen per cent against five to ten on a single let. More people, more doors, more of everything, and a communal kitchen takes a hammering.
£
Fortnightly at a minimum. It is not a luxury: an unclean communal kitchen is the single commonest reason good tenants leave.
£
HMO cover costs two to three times a standard landlord policy, and a standard policy is void if the property is let as an HMO without telling them.
£
£900 to £2,000 in most London boroughs and less elsewhere, and some councils charge per room. Check your own council: the variation is enormous.
yr
£
Gas safety yearly, EICR every five, fire alarm servicing and emergency lighting tests every six months, PAT testing, and the fire risk assessment reviewed annually.
Finance
%
Seventy five per cent is reachable on an HMO with a specialist lender, and seventy is more common. A large HMO may be valued commercially, on the income rather than on comparable houses, which changes everything about the refinance.
%
HMO products price about 0.25 to 0.75 points above a standard buy to let, and the lender list is much shorter.
Extra income from letting by the room, after everything+£5,123 a yearThe gross rent is £17,712 higher than a single tenancy, and 29% of that survives to the bottom line. Net yield of 6.6% against 4.2% on the same house let to one family. £427 a month more, for a job that is several times the work.
6.6%HMO net yield
4.2%Single let net yield
£451/moClear after mortgage
£8,166One room empty all year
Net to you45%Management15%Bills16%Repairs and cleaning18%Licence, insurance, safety5%
Let by the room
Gross rent£30,912
5 rooms at £560 a month, at 92% occupancy. That is about 0.4 rooms standing empty at any time.
Management£4,637
Bills£5,100
£85 a room a month, and the tenants pay the council tax. On a single let none of this is yours.
Maintenance and cleaning£5,629
Licence, insurance and safety£1,680
Licence at £1,400 spread over 5 years, HMO insurance, and the certificates an HMO needs that a single let does not.
Net income, HMO£13,866
A 6.6% net yield against 14.7% gross.
Let as one house
Gross rent£13,200
£1,100 a month.
Running costs£4,457
Agent at 14.4%, maintenance at 8%, four weeks of void, insurance and certificates. The tenants pay every bill.
Net income, single let£8,743
A 4.2% net yield.
The comparison
Extra gross rent£17,712
Extra costs£12,589
What actually survives£5,123
29% of the extra gross rent. The rest is the cost of running a house with 5 households in it rather than one.
Net income per room£2,773
On these figures it takes 3.2 rooms to match what the same house earns let to one family. Below that, the extra work is buying you nothing.
Clear after the mortgage, as an HMO£5,413
£451 a month, on a £147,000 loan at 5.75% interest only.
Clear after the mortgage, as a single let£290
If it goes badly
One room empty all year£8,166
£5,700 off the net income, and the bills for that room carry on. This is the single likeliest thing to happen and the one most often left out.
Against the single let in that year-£577
Behind the single let with one room empty. That is a thin margin for several times the work, and it means the occupancy assumption is doing all the heavy lifting.
Where these figures come from

Management. 12% to 18% plus VAT on an HMO, against 12% plus VAT on a single let. Far fewer agents take HMOs at all.

Yields. Industry sources put gross HMO yields at 7% to 10% against 4% to 6% for an equivalent single let. Manchester HMO yields have been quoted around 12.2% against 4.4% for a standard buy to let, which is at the very top of the published range.

Licensing. Mandatory licensing applies to five or more occupants from two or more households. Most London boroughs charge £900 to £2,000 per property for additional or selective licensing, and some charge per room. Fees vary enormously between councils.

Council tax. Since 2023 most HMOs are banded as a single dwelling rather than room by room, and on a licensed HMO the liability sits with the landlord rather than the tenants.

Single let comparison uses full management at 12% plus VAT, maintenance at 8% of rent, four weeks of void, £285 of insurance and £200 of certificates.

Before income tax. Occupancy is the number that decides this and the one people overstate: a five bed house with one room permanently empty is a four bed house with a five bed cost base. An HMO needs a licence above the mandatory threshold and often below it, and in an Article 4 area it needs planning permission to become one at all, which is eight to thirteen weeks and a real risk of refusal. The fire strategy, the room sizes and the amenity ratios are inspected against a published standard, and the penalties for operating without a licence include a rent repayment order covering up to twelve months of rent. A large HMO may be valued commercially on its income rather than by comparison with houses nearby, which changes both the refinance and the exit. An estimate, not advice.

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