Recent research suggests that more landlords than ever are switching from standard private rentals to HMOs, with a 40% increase in licence applications since 2018 and 57,000 applied for in the last year alone.
The trend isn’t surprising. The Renters’ Rights Act has prompted many landlords to reassess portfolios and, for many, the growing demand for flexible, affordable housing solutions makes HMOs an attractive option. Many are adding HMOs to broaden their rental risk, creating a wider portfolio of options than just standard lets.
HMO advantages
HMOs offer several advantages over traditional rentals, such as greater income certainty than a standard tenancy, since cash flow is spread across multiple tenants rather than just one. The combined income is also typically higher than that of a standard let, resulting in higher rental yields.
However, switching to become an HMO landlord isn’t simple. While HMOs do offer multiple benefits, they also have different requirements and you must be prepared for the extra work they entail.
Have you got the right licence?
A mandatory licence is required for HMO properties occupied by five or more people from two or more households who share facilities such as a kitchen, bathroom or toilet. Landlords must apply for the licence from their local council.
However, many councils – including Peterborough – are also rolling out Additional Licensing schemes for smaller HMO properties too. This means that HMO properties containing three or four people also require a licence.
In Peterborough, this has been applicable since 26 January 2026. Operating without the correct HMO licence could result in a civil penalty of up to £40,000, or prosecution and a limited fine, as well as potential rent repayment orders of up to 24 months if convicted.
Are you complying with fire safety rules?
HMOs carry specific fire safety requirements including the need for fire risk assessments, interlinked smoke alarms and carbon monoxide alarms. Fire escape routes must be clearly marked and be accessible at all times in case of emergency, with emergency lighting fitted in HMOs of more than two storeys. Fire doors must also be fitted.
Do you meet the minimum room sizes?
For an HMO licence to be granted, the property must not breach overcrowding rules, which includes minimum bedroom sizes. This includes at least 4.64 sq m in size for a child under 10 years old, up to at least 10.22 sq m for two people aged 10 or over.
You must also ensure there are adequate cooking and washing facilities for the number of people in the property.
How will you cover increased tenant turnover?
HMO properties tend to attract more transient tenants, who are often strangers at the start. These two factors can mean that tenant turnover can be higher than in a traditional let. Although rental income will be higher, you will need to budget for the potential risk of more frequent tenant voids.
Have you the time for more intensive management?
Managing multiple tenants in a property brings its own challenges. In addition to accounting for potential rental voids, you will need to consider the extra time required to find, vet and sign new tenants.
You will also need to refresh rooms more often in between tenants and invest in durable fixtures and fittings throughout the property, as well as having enough storage space for multiple tenants in key areas such as the kitchen.
Although you aren’t legally required to manage disagreements between your tenants if they do fall out, you will want to encourage harmonious living, which may require additional input.
We Can Help
At Progressive Lets, we are experts in the rental market in the Peterborough area and help landlords find and manage properties within a 50-mile radius. We are also an HMO specialist. Get in touch to find out more.
