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What’s an HMO Property? A Guide for Peterborough Landlords

Name: What’s an HMO Property? A Guide for Peterborough Landlords
Brand: Progressive Lets
Rating: 4.9 (505 reviews)

By Wayne Beecham | Created on 7th April 2025

What is an HMO property, and what does it mean? Your property is a House in Multiple Occupation (HMO) if you rent out to at least three tenants from multiple households, with shared kitchen, bathroom or toilet facilities.

Shared houses are in demand in areas of Cambridgeshire and Northamptonshire, but are you confident in how to buy an HMO – and how to manage one?

We’ve compiled our ultimate guide to HMO property to get you started. Read on to hear about HMO licences, the benefits and challenges, and their profitability.

What is an HMO?

In England, an HMO can be a shared house, a property containing several bedsits, student halls of residence, staff accommodation, or a hostel or refuge. The property type often determines the kind of tenants. Some HMO landlords focus on students, while others prefer renting to professionals, long-term contractors or social housing tenants.

Most tenants have an HMO tenancy agreement or Assured Shorthold Tenancy (AST), usually for a minimum of six months. Each tenant signs an individual lease – unlike a traditional buy to let where one agreement is signed by or on behalf of all residents, usually members of the same family.

You must register, but exemptions are made for live-in nannies, up to two lodgers, asylum seekers, registered social housing landlords, boarding schools and religious buildings. Local authorities can set their own rules, so always check. Other than some of the changes we discuss, many of the requirements are the same as for standard landlords, like following tenancy deposit protection rules and getting the right safety certificates.

Different types of HMO property

What defines an HMO is that 3 or more tenants from multiple households share facilities, but the exact paperwork you need relies on the type of property you rent out – some types of HMO need planning permission too.

A smaller HMO with fewer than 5 tenants may not need a licence, unless your council operates an additional licensing scheme. If there are 5 of more tenants, your property is classed as a large HMO. You must contact the local council for a mandatory HMO licence, and carefully ensure you meet their criteria.

Why invest in HMO property?

HMOs can be more lucrative than a traditional buy to let investment with more tenants paying rent, but it’s not that simple – you need to know exactly what you’re doing to become a successful property investor for HMO property.

The rent paid by each tenant is lower, and there are additional costs for an HMO rental, e.g. the HMO licence, council tax and utility bills. Management fees are usually higher, thanks to multiple references, rent collections, etc.

So, what can your profits look like? It’s not surprising to see a 12% yield with an HMO. Turn the same property into a standard buy to let and yields could halve to just 6%.

Peterborough’s demand and relatively low property prices (£20,000 below the national average by Zoopla estimates) can make HMO properties a good investment. Though of course, this depends on market trends and your choice of property.

Want to be a more informed landlord? Consider whether a buy-to-let is a good investment, what to do if your tenant stops paying rent, and what happens when a tenant has a pet without permission.

Are HMOs in demand in Peterborough?

Peterborough is attractive to young professionals and students, fuelling demand for HMOs.

Anglia Ruskin University’s Peterborough campus plans to expand capacity to 12,500 students in the next 5 years, while Time Out ranked Peterborough as London’s cheapest commuter town in 2024, also benefitting from speedy rail services to King’s Cross.

Do I need a licence for my HMO in Peterborough?

Following the Housing Act 2004, which came into effect in 2006, landlords of HMOs must obtain a licence from their local authority before renting out any rooms. In Peterborough, landlords need a mandatory HMO licence if least 5 tenants live there, forming more than one household (a single person or members of a family who live together, including people in same sex relationships), and share toilet, bathroom or kitchen facilities. Some councils also require selective licences, but Peterborough isn’t one of them.

The HMO licence application costs £1,100, rising to £1,300 if the council request it for an unlicenced property. You’ll need mortgage details, photo ID (e.g. passport), proof of address, a Fit & Proper statement, floor plan, and a copy of your gas safety certificate and EICR. Read our article for more details on HMO licences in Peterborough.

What properties are suitable for HMO lettings?

On top of the property’s condition, location, estimated yield and potential property value, landlords buying an HMO property must establish whether it can be converted. You also need to establish whether you need planning permission.

Other unique considerations include sufficient communal areas and bathrooms, and whether room sizes are appropriate. It’s a good idea to get a building survey, and an independent valuation from an industry professional who will know how to value the property accurately.

What are the special regulations for HMOs?

Local authorities set their own stipulations, but there are broad rules for Houses in Multiple Occupation in England:

Health and safety

HMO health and safety regulations are tight. Arrange a gas safety inspection annually, keep energy and water supplies in good condition, fit carbon monoxide detectors and fire alarms, follow fire safety measures and obtain an Electrical Installation Condition Report (EICR). You should also arrange portable appliance testing (PAT) for the appliances you provide.

Minimum room sizes

The minimum allowable HMO bedroom size is 4.64 m square for one child under 10, 6.51 square meters for tenants over 10, and 10.22 square meters for two tenants over 10.

Number of bathrooms

HMO landlords should supply one bathroom per 4 four tenants, and facilities must be kept in good working order. Ensuites aren’t a legal requirement but can be attractive to tenants.

Right to Rent checks

Are your tenants legally allowed to rent in the UK? Right to Rent checks are the landlord’s responsibility – ensure you know who’s staying at your property.

Find out more about the special rules and regulations in our article on HMO requirements.

HMO risk assessments

The local authority has 5 years to carry out a Housing Health and Safety Rating System (HHSRS) risk assessment after you make an application for an HMO. This ensures the property is safe for tenants.

Who pays council tax and utility bills for an HMO?

The landlord pays the utility bills and council tax in a typical HMO. However, if tenants know each other and rent as a group, council tax may be their responsibility.

Should I convert a house into an HMO?

Landlords require planning permission from the local council to convert a house into an HMO. The rules depend on whether it’s a small HMO (3-6 unrelated tenants sharing) or a large HMO (7 or more unrelated individuals sharing).

What are the Pros and Cons of HMOs?

HMOs can be profitable and offer their own benefits, but they come with unique financial and practical challenges:

Why invest in an HMO?

Renting by room can be more lucrative than renting one single property
HMO rents are more affordable, so demand is typically robust
Fewer void periods as the remaining rooms generate income when one tenant leaves
It’s easier to evict a non-paying or disruptive tenant
More tax-deductible expenses such as utility bills and council tax payments. Find out more about your landlord tax return here.
A diversified tenant base means you’ll still receive income if one tenant moves out
There’s increasing demand for good HMO accommodation due to the high cost of living

Want to be a more informed landlord? Brush up on the Renters’ Rights Act, the best way to collect rent, and what’s involved in inheriting a house.

Challenges when investing in HMOs

Legislation is tighter, causing increased costs and workload
Additional work means higher property management fees
Most HMOs are rented fully furnished, raising initial outlay and replacement costs
Wear and tear is usually heavier with multiple occupants, and it can be harder to identify a culprit for damage to communal areas
The landlord is responsible for council tax (though rent should cover it)
Tenant turnover tends to be higher than for a typical buy-to-let

If you’re considering becoming an HMO landlord in Peterborough, Stamford, Spalding or Corby, contact your local letting agent to discuss your plans. Contact Progressive Lets today to find out how we can help.

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Wayne Beecham

Wayne is East Midland’s answer to property management. His hard work and high standards of service have gained him a fierce reputation within the regional lettings market. He knows what it takes to own and manage a profitable portfolio himself, because he is not only a successful investor and landlord, but co-founder and “hands on” managing director of Progressive Lets.

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