The HMO Boom: Why More Landlords Are Turning to Shared Housing in 2025

The UK HMO (House in Multiple Occupation) market is experiencing a significant surge—and it's not just a trend, but a strategic shift in the buy-to-let landscape. From increased yields to changing tenant behaviour and new legislation, HMOs are proving to be an attractive option for savvy landlords.

Here's what's driving the boom—and what landlords need to consider from an insurance and risk management perspective.

Why HMOs Are on the Rise

1. High Rental Yields

HMOs continue to outperform traditional single-let properties:

Average HMO yields in 2025: 7.5%–8.5%

Standard buy-to-let yields: Around 3.6%

More tenants per property = higher income potential.

2. Cost-of-Living Pressures

With private rents increasing by over 7% year-on-year, tenants are increasingly turning to shared living to reduce monthly costs. HMOs offer affordable options without compromising on location or amenities.

3. Portfolio Diversification

More landlords with 1–3 properties are diversifying into HMOs to balance risk and increase returns. It's not just professional landlords anymore—small investors are leading the charge.

4. The Conversion Craze

Investors are converting single-let properties into HMOs, especially in the North of England, where purchase prices are lower and licensing schemes are more accessible.

What Today's Tenants Want

Modern HMO tenants are looking for more than just a room:

  • En-suite bathrooms and private facilities
  • Stylish interiors with modern kitchens and communal spaces
  • High-speed broadband as a basic expectation
  • Longer tenancies, leading to reduced turnover and more consistent income for landlords

2025 Regulatory Shifts to Know

Renters' Reform Bill

Bans “no-fault” evictions under Section 21

Introduces minimum housing standards for shared properties

Requires stronger justification for ending tenancies

Licensing & Local Authority Crackdowns

Tightened rules on minimum room sizes, fire safety, and occupancy levels

Many councils increasing enforcement and inspections—non-compliance could mean heavy fines or licence removal

Why Insurance Matters More Than Ever

With higher occupancy, stricter legislation, and greater risk exposure, HMO landlords need robust, specialist insurance cover. A standard landlord policy won't provide adequate protection.

At LBH Insurance, our HMO Landlord Insurance can cover:

  • Property damage (fire, flood, vandalism)
  • Landlord's contents
  • Loss of rent
  • Legal expenses (including eviction and disputes)
  • Employers' liability (if staff are employed)
  • Public liability
  • HMO licensing and compliance support

Considering the HMO Market?

Whether you're expanding your portfolio or converting your first property, we'll help you protect your investment with a tailored insurance solution.

Call us on 01702 347889 for a no-obligation, competitive quote—and peace of mind that your cover reflects both your risk and your reputation or email enquiries@lbhinsurance.co.uk.