The UK’s HMO market is accelerating rapidly with new data pointing to a sharp rise in landlord activity as demand for affordable shared housing continues to surge.
Research from Just Landlords shows HMO licence applications have climbed by 40% since 2018, reaching more than 57,700 in the last year alone – up from just over 41,000.
The figures point to a clear shift in landlord strategy, with investors increasingly turning to shared accommodation to maximise yields and meet growing tenant demand in a constrained rental market.
The trend is being driven by affordability pressures, particularly among younger renters, alongside strong demand in university cities and urban employment hubs.
FRAGMENTED MARKET
Edinburgh leads the way as the UK’s HMO hotspot, with an average of 5,158 applications annually, followed by Oxford (2,458) and Bristol (1,491).
London boroughs also feature prominently, with Southwark and Tower Hamlets recording some of the highest levels of activity.
However, the fastest growth is being seen outside traditional hotspots. Sandwell has recorded a 964% increase in applications since 2018, while West Lancashire (886%), Tower Hamlets (750%), Guildford (742%) and Waltham Forest (481%) have all seen substantial rises.
GOEGRAPHIC SPREAD
The data also highlights a widening geographic spread of HMO investment, as landlords look beyond core markets in search of stronger returns and lower entry costs.
At the same time, the sector is becoming more tightly regulated. Local authority inspections have risen by 83% since 2018, while enforcement actions – including improvement notices and prosecutions – have increased by 180%.
This growing oversight is exposing inconsistencies across the market. Blackpool (70%) and Fenland (51%) recorded some of the highest application refusal rates, while enforcement activity remains elevated in areas such as Lewisham, Wandsworth and Liverpool.
The findings suggest that while the HMO market is expanding, compliance and quality are becoming increasingly critical – particularly as councils step up scrutiny of landlords and property standards.
AFFORDABLE HOUSING SOLUTIONS
Clark Ross, Managing Director of Just Landlords, says: “We’re witnessing a major evolution in the UK rental market. An increasing number of landlords are moving away from traditional lets in favour of HMOs, to help meet the growing demand for flexible, affordable housing solutions.
“We’re also seeing an interesting geographical shift in investment. While London remains a cornerstone of the market, there has been huge growth in the Midlands and the North, with some areas seeing application numbers increase by nearly 1,000% since 2018.”
He adds “While our findings reveal an environment of tightened regulation, this should be seen as a positive step for the market.
“Higher standards protect the reputation of the sector and ensure that dedicated, professional landlords aren’t being undercut by sub-standard operators. As the sector continues to grow, the most successful landlords will be those who treat their compliance and insurance as the bedrock of their business strategy.”
