HMO (House in Multiple Occupation)

A House in Multiple Occupation (HMO) is broadly defined under the Housing Act 2004 as any property occupied by three or more people forming two or more separate households, who share one or more basic amenities (kitchen, bathroom, toilet).

For property investors, HMOs are typically terraced houses or larger properties where individual rooms are let separately to unrelated tenants. Each tenant has their own room and shares communal areas. This model typically generates significantly higher gross yields than single-let properties (10-15% versus 6-8%), because multiple room rents exceed the single-let rent for the same property.

Operating an HMO involves additional legal requirements: potential licensing obligations, fire safety compliance (fire doors, interlinked alarms, emergency lighting), minimum room size standards, and in many areas planning permission to convert from single-let use.

The complexity of HMO management (higher tenant turnover, communal space maintenance, compliance) means HMOs suit experienced landlords who have systems in place, or investors who use specialist HMO management agents.