England’s HMO market is shrinking

England’s HMO market is shrinking despite a widespread need for more affordable rent

The latest market analysis by specialist property lending experts, Octane Capital, has shown that the number of Houses in Multiple Occupation (HMOs) available across England has continued to fall, down by a further -2.4% annually, having already seen a -1.7% drop the previous year.

The latest figures show that the number of HMOs in England is still on the decline. In 2019/20, there were an estimated 510,776 HMOs across the rental market.

By 2020/21, this number had fallen by -1.7%, to a total of 501,993, and it has continued to fall over the last year.

In fact, the latest figures show that with a further -2.4% annual decline, there are now some 489,701 HMOs across England

This means that, in the space of two years, England’s HMO market has shrunk by over 21,000 properties.

The East Midlands has seen the largest reduction, with HMO stock levels down -26.1% in a single year.

In the North East, HMO stock has declined by -15.8%, while the South East (-6.7%), London (-5.2%), and North West (-1.6%) have also recorded drops.

However some regions have seen an increase, with HMO stock levels climbing over the last year across the West Midlands (+16.9%), Yorkshire and the Humber (+11.2%), the South West (+0.6%) and East of England (+0.6%)

Despite a decline in overall stock levels, London remains home to the greatest proportion of HMO rental homes, accounting for 29.7% of England’s total stock. This equates to an estimated 145,615 properties.

The South East is home to 14.1% of the national HMO total, while Yorkshire & Humber accounts for 11.1% and the South West accounts for 10.2%.

The North West (10.1%) has the next largest proportion, followed by the West Midlands (9.1%), East of England (7.6%), East Midlands (4.4%), and North East (3.5%).

CEO of Octane Capital, Jonathan Samuels, commented:

“HMO stock levels have continued to slide since the introduction of tighter licensing rules by the government at the back end of 2018 and there are now some 21,000 less HMOs available across England than there were just two years ago.

While any attempts to raise living standards for the nation’s tenants should be welcomed, it’s imperative that we also incentivise investors to remain within the sector.

Failing to do so will only see the level of available rental properties continue to fall, driving the cost of renting ever higher in the process, at the expense of the nation’s renters.”