The UK’s Houses in Multiple Occupation (HMO) sector is expanding rapidly, with new data showing a 40% increase in license applications since 2018.
Landlords are increasingly turning to shared accommodation to meet the growing demand for affordable, quality rental options as well as achieve higher profit margins.
research from landlord onlyBased on freedom of information requests to local councils, it shows that annual HMO applications have increased from 41,162 in 2018 to 57,725 last year.
like city edinburgh, oxfordAnd bristol The UK has major HMO hotspots, while emerging investment areas such as sandwell And west lancashire Applications have seen an increase of nearly 1,000%.
Areas with highest annual application rates
- Edinburgh – 5,158
- Oxford – 2,458
- Bristol – 1,491
- Southwark – 1,412
- Tower Hamlets – 1,394
Sandwell in the West Midlands recorded the highest rate of growth, with applications increasing by 964%, from 28 in 2018 to 298 in 2024.
Areas with Highest Application Growth
- Sandwell – 964%
- West Lancashire – 886%
- Tower Hamlets – 750%
- Guildford – 742%
- Waltham Forest – 481%
Clark Ross, managing director of Just Landlords, commented: “We are seeing a huge growth in the UK rental market. An increasing number of landlords are moving away from traditional rentals in favor of HMOs to help meet the growing demand for flexible, affordable housing solutions.”
“We are also seeing an interesting geographical shift in investment. While London remains the cornerstone of the market, there has been huge growth in the Midlands and the North, with some areas seeing application numbers increase by almost 1,000% since 2018.”
As the sector grows, the data also points to an increasing focus on quality and compliance. Across the UK, council inspections of HMOs have increased by 83% since 2018, while enforcement actions, including improvement notices and prosecution, have increased by 180%.
areas of improvement
While the national picture is one of growth, the data also identifies areas where the market is still adjusting to the new regulations.
More than half of annual applications were refused in areas such as Blackpool and Fenland, while landlords in Lewisham, Wandsworth and Liverpool saw a higher than average number of enforcement actions.
Areas with highest application rejection rates
- Blackpool – 70%
- Fenland – 51%
- Sandwell – 48%
- Armagh – 26%
- Norwich – 24%
Areas with highest number of annual enforcement actions
- Lewisham – 288
- Wandsworth – 146
- Liverpool – 141
- Denbighshire – 141
- Camden – 117
For professional landlords, the growing demand for shared accommodation presents a significant opportunity, particularly in high-demand university towns and growing regional investment centres. With the right licensing, compliance and insurance, HMOs remain one of the most flexible and high yielding sectors of the rental market.
Ross said: “While our findings reveal an environment of tight regulation, this should be seen as a positive step forward for the market. High standards protect the reputation of the sector and ensure that dedicated, professional landlords are not being undermined by sub-standard operators. As the sector continues to grow, the most successful landlords will be those who regard their compliance and insurance as the cornerstone of their business strategy.”