HMO market booms with surge in licence applications – London Wallet

The UK’s House in Multiple Occupation (HMO) sector is expanding rapidly, with new data showing a 40% rise in licence applications since 2018.

Landlords are increasingly turning to shared housing to meet growing demand for affordable, quality rental options, as well as achieve higher profit margins.

Research from Just Landlords, based on Freedom of Information requests to local councils, reveals that annual HMO applications have jumped from 41,162 in 2018 to 57,725 last year.

Cities such as Edinburgh, Oxford, and Bristol are the UK’s leading HMO hotspots, while emerging investment areas like Sandwell and West Lancashire have seen applications soar by nearly 1,000%.

Areas with the Highest Annual Application Rates 

1. Edinburgh – 5,158
2. Oxford – 2,458
3. Bristol – 1,491
4. Southwark – 1,412
5. Tower Hamlets – 1,394

Sandwell, in the West Midlands, reported the highest rate of growth, seeing applications jump by 964%, from 28 in 2018 to 298 in 2024.

Areas with the Highest Application Growth

1. Sandwell – 964%
2. West Lancashire – 886%
3. Tower Hamlets – 750%
4. Guildford – 742%
5. Waltham Forest – 481%

Clark Ross, managing director of Just Landlords, commented: “We’re witnessing a major evolution in the UK rental market. An increasing number of landlords are moving away from traditional lets in favour of HMOs, to help meet the growing demand for flexible, affordable housing solutions.”

“We’re also seeing an interesting geographical shift in investment. While London remains a cornerstone of the market, there has been huge growth in the Midlands and the North, with some areas seeing application numbers increase by nearly 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 risen by 83% since 2018, while enforcement actions, including improvement notices and prosecutions, have jumped by 180%.

Areas for Improvement 

While the national picture is one of growth, the data also identifies areas where the market is still adjusting to new regulations.

Areas like Blackpool and Fenland saw over half of their annual applications refused, while landlords in Lewisham, Wandsworth and Liverpool saw higher than average numbers of enforcement actions.

Areas with the Highest Application Refusal Rates 

1. Blackpool – 70%
2. Fenland – 51%
3. Sandwell – 48%
4. Armagh – 26%
5. Norwich – 24%

Areas with the Highest Number of Annual Enforcement Actions 

1. Lewisham – 288
2. Wandsworth – 146
3. Liverpool – 141
4. Denbighshire – 141
5. Camden – 117

For professional landlords, the growing demand for shared accommodation presents a significant opportunity, particularly in high-demand university cities and growing regional investment hubs. With the right licensing, compliance, and insurance in place, HMOs remain one of the most resilient and high-yielding areas of the rental market.

Ross added: “While our findings reveal an environment of tightened regulation, this should be seen as a positive step for the market. Higher standards protect the reputation of the sector and ensure that dedicated, professional landlords aren’t being undercut by sub-standard operators. As the sector continues to grow, the most successful landlords will be those who treat their compliance and insurance as the bedrock of their business strategy.”