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Multiple Occupancy (HMOs) vs. Single Lets – What’s The Difference?

Often generating higher rental profits than single-lets, Houses in Multiple Occupation (HMOs) are an attractive prospect for many landlords.


However, with far greater management demands and more complex rules and regulations associated with HMOs vs single-lets, they’re not for everyone.


In this handy guide, we cover the key things you need to know to decide which is the right type of let for you as a landlord.


Firstly, What Exactly Is An HMO?

An HMO, or House in Multiple Occupations, typically refers to properties where three or more tenants reside, forming more than one household (i.e., they are unrelated) and sharing toilet, bathroom, or kitchen facilities.

Large HMOs are categorised when there are five or more tenants, necessitating a mandatory licensing requirement.


Can Any Property Be Let To Multiple Occupants?

In theory, any residential property can be rented out on a single-let basis, unless it is a leasehold property with specific clauses prohibiting subletting. However, not every property can be rented as an HMO. This is primarily due to considerations around population density, which may not be appropriate for every area. In some cases, you may also find that the community objects to HMOs due to the perceived lifestyle associated with occupants of a multi-let.

For these two key reasons, the local council has the authority to determine whether a property can be designated as an HMO.


Well-presented bedroom in a single-let property in Chester managed by Currans Homes Estate Agency.

Licensing and Planning for Rental Properties

In England, if you have a single-let property, neither you nor your property requires a licence. However, for multi-lets, while national law mandates licensing only for large HMOs, local authorities retain the authority to require licensing for smaller HMOs.

You may also need to apply for planning permission to change the property’s use class. Residential properties fall into three primary use classes:


  • C3: Single-family homes or up to six people living together as a single household.
  • C4: HMOs housing between three and six unrelated individuals.
  • Sui Generis HMO: Properties accommodating seven or more unrelated individuals.


If you’re letting a residential property to a single household, there is no need to apply for planning permission. Even if the property used to be let as an HMO.

For HMOs, while not every local authority mandates a planning application to move from C3 to C4, some do. For instance:
  • In Oxford, any property classed as an HMO must be licensed. And landlords need to apply for planning permission if they want to change the use class.
  • In Bournemouth, only the national licensing regulations apply, and there’s no need to obtain planning permission for HMOs below six occupants.


Since licensing and planning regulations vary by council area, it’s crucial to consult your local housing department before investing in an HMO. This ensures you understand and comply with local rules, enabling you to let the property as desired.


Stylish living area in a multiple occupancy property (HMO) in Chester marketed by Currans Homes Estate Agency.

Fire Safety

All rented properties must meet specific health and safety standards, with higher requirements for HMOs. Particularly concerning fire safety.


For all lets:
  • Risks must be assessed.
  • Furniture and furnishings supplied must have ‘fire safe’ labels.
  • Tenants must have clear access to escape routes.
  • There must be a smoke alarm on each floor, tested at the start of each tenancy.


Additional regulations for HMOs include:
  • A smoke alarm must be installed in each individual unit (i.e. each bedroom/bedsit).
  • A mains-powered, interconnected fire alarm system must be in-situ.
  • A fire extinguisher must be provided on each floor. And;
  • You must have a written risk assessment if the property is licensed.


Note: In addition to these national requirements, each local authority can impose additional requirements so it is essential to check your compliance with your local housing department.

Regardless of whether you have a single let or an HMO, demonstrating that you’ve taken all reasonable steps to ensure tenant safety is crucial. We recommend arranging for a local Fire Safety Officer to visit the property to confirm compliance with legal requirements and give guidance on further best practices for peace of mind.

 Bedroom in a multiple occupancy let (HMO) in Chester managed by Currans Homes Letting Agents.

Finance and insurance

When seeking a mortgage for a single-let rental property, you’ll find a wide array of buy-to-let products to choose from. However, if you’re purchasing an HMO—whether it’s an existing multi-let or a property you’re planning to convert—you’ll need a more specialised mortgage, offered by a limited number of buy-to-let and commercial lenders.

It’s advisable to consult an independent mortgage broker who specialises in the HMO market. They can help you access all available products and find the most suitable deal. (If you’d like a recommendation, please feel free to get in touch; we work with several financial services partners).

Similarly, while most insurance companies provide landlord insurance for single lets, fewer providers cover HMOs. You’ll need to find a specialist insurer and be prepared for higher premiums due to the increased risk associated with renting to multiple unrelated tenants. However, if you own multiple HMOs you can often save money by opting for ‘portfolio insurance,’ allowing you to cover all your properties under one policy.


Managing Your Portfolio

Any rented property requires a certain level of management and maintenance. The property must be kept in good condition, necessary safety certificates secured, tenants checked in and out, and various communications handled during the tenancy.

However, if you’re letting by the room, the management and maintenance demands are significantly higher. Tenants will move in and out at different times, and house-share tenants also tend to move more frequently than single households renting an entire home. This results in more:

  • Advertising,
  • Enquiries
  • Viewings
  • Check-ins/check-outs

Additionally, since these tenants are from different households, you’ll likely receive a greater number of phone calls for various issues.

In terms of maintenance costs, the shared communal areas in an HMO are not the responsibility of any single tenant. You’ll need to provide cleaning and gardening services. Each rented room will also require cleaning between lets and check-in/check-out inventories.

Beyond maintenance, you must account for paying the council tax and utilities. Tenants in an HMO property also tend to expect high-speed wireless internet included. However, these costs should be reflected in the all-inclusive rent.


Homely living area in a single-let property managed by Currans Homes Estate Agency in Chester.

Benefits of Single Lets vs. HMOs

Lower Initial Costs: Your initial costs are usually much lower with single lets compared to multi-lets. As long as the property is in good condition, you might only need to secure gas and electrical safety certificates and fit smoke alarms. In contrast, converting a family home to an HMO often requires adding stud walls and extra bathrooms. Along with additional fire safety measures. You may also incur licensing and planning application costs, plus the cost of any necessary works, such as soundproofing required by planning departments.

Simpler Management: Single lets involve less management. With just one tenancy agreement and one household to deal with, administration is simpler and tenancy lengths are generally longer. Conversely, managing multiple unrelated tenants, especially when they are on separate tenancy agreements, can involve a significant amount of administration.

Better Capital Growth: Capital growth is typically better over time for single-household properties. They have more universal appeal than multi-lets and are often located in more desirable neighbourhoods. When selling an HMO, your buyers are likely to be other investors looking for a discount. Or possibly individuals seeking a family home, who may need to undertake substantial work to restore the property.


Benefits of HMOs vs. Single Lets

Higher Rental Income and Returns: Your rental income, yield, and net returns could be double what you would get compared to letting the same property to a single family, even taking into consideration additional costs. This significant potential for higher returns is the primary reason many landlords choose to invest in HMOs.

Reduced Risk of Voids: Letting rooms individually significantly reduces the risk of rental voids. With multiple tenants, the likelihood of having a month where your rental income doesn’t cover your costs is greatly diminished. In contrast, with a single let, any gap between tenancies results in no rental income during that period.

Tip: If budget allows, you might consider investing in both types of let, to diversify and balance your property portfolio. For example, you could invest in a couple of single-let properties that are likely to increase well in capital value over time, even if the rental profits are relatively small, as well as an HMO to significantly boost your monthly income.


A desk in a multiple occupancy property (HMO) let by Currans Homes Estate Agency in Chester.

Get In Touch

We’re always happy to speak with landlords about any aspect of property investment. Whether you’re just starting your landlord journey and need general advice, or you’re an experienced buy-to-let investor considering diversifying your portfolio. Please don’t hesitate to get in touch – a member of our team will get back to you right away. We look forward to hearing from you!