HMO Properties: What’s in Best Demand in London’s Current Market?

As the housing market in London continues to thrive, more and more investors are turning their attention to HMO (House in Multiple Occupation) properties. HMO properties provide an excellent opportunity for landlords to maximize their rental income and profit margins, especially in London’s highly competitive rental market.

In our past 10 years’ experience we have identified which HMO rooms in London are the most suitable. By this I mean, which rooms have the highest demand, bring the most optimal income for landlords and investors and have the least number of voids.

Photo by Towfiqu Barbhuiya

Drum roll please… so the most profitable rooms in London are: En-suite rooms pretty much anywhere in London. If this would be 4 years ago, I would add that the property should be within maximum 15 minutes’ walk to the underground, but now when many people are working from home part of the week, the en-suite rooms further than 15 minutes’ walk still gets rented with first viewings.

Photo by Sylwia Bartyzel

The demand for en-suite rooms in HMO properties is driven by tenants who are willing to pay a premium price for their own private, modern bathroom. Tenants are willing to pay up to £1000 per month for an en-suite room, which includes all bills. These are well maintained, renovated, modern and quality en-suite rooms. These rooms rent quickly within days, and landlords experience no void periods and these are responsible tenants who are capable of looking after the property.

However, not all HMO rooms need to have a private bathroom to rent quickly. Rooms without en-suites are still in high demand but will be rented out at a lower rate than those with en-suites. These rooms still offer landlords the opportunity to earn a good income, but landlords will need to offer a lower rental price.

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Another trend we have seen in the HMO market is the installation of kitchenettes in the rooms. Landlords who choose to do this can charge a higher rental rate, often exceeding £1100 per month. However, our experience shows that these rooms are in much less demand. This is because most tenants are looking for a budget within £1000 and they are happy to prepare their meals and eat in the shared kitchen.

Photo by Tina Witherspoon

It is important to note that HMO properties require compliance with specific regulations set by the local authority. These regulations must be followed to ensure the safety and welfare of tenants. As an HMO landlord, it is essential to understand and adhere to these regulations.

As the population in London continues to grow, there is a significant increase in the demand for rental properties. The average rent for a one-bedroom flat in London is over £1,400 per month in zone 4 or further and around £1800 zone 2, making it challenging for many tenants to afford their own space. This has led to an increase in demand for shared accommodation, making HMO properties an attractive option for many fantastic and responsible tenants.

Photo by Joseph Chan

Finally, it is worth mentioning that landlords must ensure that their HMO properties are managed efficiently. This includes regular maintenance, cleaning, and ensuring that all appliances and facilities are in good working order. Good property management is essential for attracting and retaining tenants, and landlords who do not manage their properties effectively risk losing tenants and rental income.

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In conclusion, good quality en-suite rooms are the winners in the London HMO market and are the most preferred among tenants today.

Photo by Giorgio Trovato