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HMO Yield Calculator
Calculate room-by-room income, gross and net yields, and monthly cash flow for any House in Multiple Occupation.
Rooms (5)
Monthly Costs
Gross Yield
15.8%
Net Yield
12.1%
Monthly Rent
£2,625
Monthly Cash Flow
£1,270
Occupancy
5/5 (100%)
Avg Rent/Room
£525
Annual P&L
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Frequently Asked Questions
What is an HMO property?
A House in Multiple Occupation (HMO) is a property rented by three or more people from two or more separate households who share facilities such as kitchens or bathrooms. HMOs with five or more people from two or more households require a mandatory HMO licence from the local council.
What yield should I target on an HMO?
Most experienced HMO investors target a minimum 10% gross yield and at least £200 net cash flow per room per month after all costs including mortgage. Below 8% gross and the additional complexity of HMO management rarely justifies itself over a single-let alternative in the same area.
Do I need planning permission to convert a house into an HMO?
In many areas, yes. Councils with Article 4 directions require planning permission to convert a standard dwelling (C3) to a small HMO (C4). Always check with the local planning authority before purchasing. In areas without Article 4, conversion for up to 6 people does not require planning permission.
Who pays the bills in an HMO?
In most HMO arrangements, the landlord pays all utilities (gas, electricity, water, broadband) and includes these within the room rent. This simplifies billing for tenants and is standard practice in the market. It does, however, mean the landlord bears the risk of rising energy costs and usage by tenants.
What are the licensing requirements for HMOs?
Mandatory HMO licensing applies to properties with 5+ people from 2+ households sharing facilities. Many councils also operate additional or selective licensing schemes covering smaller HMOs. Failure to license can result in an unlimited fine, a Rent Repayment Order (tenants can reclaim up to 12 months' rent), and a banning order.
Disclaimer: This calculator provides estimates for illustrative purposes only. Results are based on simplified assumptions and should not be relied upon for financial decisions. Actual costs, returns, and outcomes will vary. Always consult a qualified professional before making property or financial decisions.
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Why HMO Yields Are Higher Than Standard Buy-to-Let
Houses in Multiple Occupation (HMOs) generate higher yields than single-let properties because you rent each room individually rather than the whole house to one household. A 5-bed property in a typical Midlands city might achieve £400/month as a single let, but £350-£450 per room as an HMO — delivering £1,750-£2,250 in total monthly rent from the same building.
Gross HMO yields of 10-15% are common in cities like Nottingham, Derby, and Birmingham. Single-let buy-to-let in the same areas typically yields 4-7% gross. That difference compounds significantly over a portfolio.
HMO Expenses to Factor In
HMOs have higher running costs than single-lets. As the landlord you typically pay all utilities (gas, electric, water, broadband) and include these in the room rent. Management fees are higher — often 12-15% with specialist agents vs 8-10% for single-let. Maintenance is more frequent with more tenants. Licensing fees (mandatory for large HMOs and in Article 4 areas) range from £250-£1,500 depending on the council.
What Is a Good HMO Yield?
Most experienced HMO investors target a minimum 10% gross yield and at least £200 net cash flow per room per month after all costs including mortgage. Below 8% gross and the extra complexity of HMO management rarely justifies itself over a well-located single-let. Use this calculator to test those thresholds before committing to a deal.
Article 4 Directions and HMO Licensing
Many councils have introduced Article 4 directions that require planning permission to convert a family home (C3) to an HMO (C4). Always check the local planning authority before purchasing. Mandatory HMO licensing applies to properties with 5 or more people from 2 or more households sharing facilities — failure to license carries an unlimited fine and a Rent Repayment Order risk.