Why Experienced HMO Landlords Are Doubling Down While Others Exit

The Great Divide: The Two Sides of the UK HMO Market

The UK’s property market is in a state of unprecedented flux, and nowhere is this more apparent than in the House in Multiple Occupation (HMO ) sector. The UK’s HMO investment market is now worth an estimated £78 billion as of early 2025, generating around £6.3 billion in annual income . But behind these figures lies a story of two very different types of landlord.

On one side, a mass exodus. A significant number of landlords are fleeing the market, overwhelmed by a perfect storm of rising costs, tightening regulations, and the looming threat of the Renters’ Rights Bill. They see a market in crisis, a legislative minefield where profits are squeezed and risks are escalating.

On the other side, a cohort of experienced, savvy investors are not just holding their ground – they’re doubling down. They see a market ripe with opportunity, a landscape where the departure of amateur landlords is creating a space for professional, high-quality operators to thrive. They understand that in this new era of property investment, the old rules no longer apply. Success is no longer about simply buying a property and collecting rent; it’s about creating a high-quality, tenant-centric product that meets the demands of the modern renter.

This article is for those who want to be on the right side of this divide. It’s for the discerning investor who understands that with the right strategy, the right team, and the right location, the current market represents not a threat, but a once-in-a-generation opportunity.

The Amateur Exodus: Why So Many Landlords Are Getting It Wrong

The flight of amateur landlords is not a sign of a failing market; it’s a sign of a market that is maturing. For too long, the HMO sector has been a playground for those seeking a quick and easy return. But the game has changed. The challenges that are forcing so many to exit are, in fact, the very factors that are creating a more professional and profitable market for those who remain.

The Regulatory Tsunami

The government’s drive for higher standards in the private rented sector is a long-overdue and welcome development for tenants. But for landlords who have failed to keep pace, it’s a tsunami of new legislation that threatens to swamp their portfolios. The upcoming deadlines for Energy Performance Certificate (EPC) ratings, for example, will require significant investment in older properties to meet the new minimum standards . For landlords with a portfolio of tired, poorly maintained properties, the cost of compliance is simply too high.

The End of “No-Fault” Evictions

The anticipated abolition of Section 21 “no-fault” evictions is another major concern for many landlords . While the new legislation will provide greater security for tenants, it will also make it more difficult to remove disruptive or anti-social tenants. In a shared living environment, where tenant compatibility is crucial, this is a significant risk. For landlords who lack the expertise to manage tenant relationships effectively, the prospect of being unable to remove a problem tenant is a major deterrent.

The Compliance Minefield

HMO licensing has always been a complex area, but with local authorities stepping up enforcement, the risks of non-compliance are greater than ever. Many HMOs currently on the market fail to meet the required standards for room sizes, amenities, and fire safety. For inexperienced landlords, the cost and complexity of bringing a non-compliant property up to standard can be overwhelming.

The Savvy Investor’s Playbook: How to Win in the New HMO Market

While amateur landlords are running for the hills, savvy investors are calmly and confidently expanding their portfolios. They understand that the key to success in the new HMO market is not to fight the changes, but to embrace them. By focusing on quality, compliance, and professional management, they are creating a product that is in high demand and that delivers exceptional returns.

The Tenant-Centric Approach

The modern HMO tenant is not a student looking for a cheap room to rent. They are a discerning consumer who is willing to pay a premium for a high-quality, well-managed home. The State of Shared Living 2025 report by COHO reveals that % of tenants consider compatibility with housemates important, and 47% would pay more for it . This is a clear indication that the market is shifting towards a more professional and curated approach to shared living.

The Power of Professional Management

In this new landscape, professional management is not a luxury; it’s a necessity. A specialist HMO management company like EPO can provide the expertise and resources you need to navigate the complex regulatory environment, manage tenant relationships, and ensure that your property is always compliant and profitable. With a proven track record of 90%+ occupancy, EPO provides landlords with the peace of mind that their investment is in safe hands.

The “Golden Triangle” of Opportunity: Stoke, Crewe, and Newcastle-under-Lyme

Location is everything in property investment, and for savvy HMO investors, the trio of Stoke-on-Trent, Crewe, and Newcastle-under-Lyme represents a golden opportunity. These areas offer a compelling combination of affordable property prices, strong rental demand, and significant growth potential.

• Stoke-on-Trent: With an average gross rental yield of over 7%, Stoke-on-Trent is a standout performer in the UK property market . The city is undergoing a major transformation, with ongoing regeneration projects attracting new businesses and residents .

• Newcastle-under-Lyme: This town offers attractive returns, with rental yields ranging from 6% to 6 .5% . The town benefits from its proximity to Keele University, a major employer and a source of high-quality tenants.

• Crewe: Despite the cancellation of the HS link, Crewe remains a key transport hub with excellent connectivity to Manchester and Birmingham. The government has reprioritized transport spending towards a wider range of regional and local projects, which is expected to benefit Crewe and the surrounding area

The EPO Advantage: Your Partner in Profit

In a market that rewards expertise and professionalism, partnering with the right team is crucial. As specialists in HMO management in Stoke-on-Trent, Crewe, and Newcastle-under Lyme, we provide a comprehensive, hands-off service that allows our clients to reap the rewards of HMO investment without the day-to-day hassle. Our deep understanding of the local market, combined with our commitment to quality and compliance, makes us the ideal partner for both new and experienced investors.

Our services include:

• HMO Sourcing and Acquisition: We identify and acquire properties with high potential for HMO conversion, ensuring they meet all the necessary criteria for a successful investment.

• Project Management and Refurbishment: We manage the entire refurbishment process, from initial design to final sign-off, ensuring that all work is completed to the highest standards and in full compliance with all regulations.

• Licensing and Compliance: We navigate the complex world of HMO licensing and regulations, ensuring that your property is fully compliant from day one.

• Tenant Finding and Management: We find and vet high-quality tenants, manage all aspects of the tenancy, and ensure that your property is well-maintained and your rental income is maximized.

By partnering with EPO, you are not just investing in a property; you are investing in a team of experts who are dedicated to your success.

Frequently Asked Questions (FAQs)

Q1:  Are HMOs still a good investment in 2025?

Absolutely. For investors who are willing to adapt to the new landscape and focus on providing a high-quality product, HMOs offer some of the best returns in the property market.

Q2: What are the biggest risks for HMO landlords in 2025?

The biggest risks are non-compliance with regulations, rising operational costs, and void periods. It is crucial to stay up-to-date with the latest requirements for EPC ratings, licensing, and fire safety.

Q3: How can I ensure my HMO is compliant with all the regulations?

The best way to ensure compliance is to work with a specialist HMO management company like EPO. We have a deep understanding of the regulatory landscape and can ensure that your property meets all the necessary standards.

Q4:  What are tenants looking for in an HMO in 2025?

Tenants are looking for more than just a room; they are looking for a home. They want high-quality, well-maintained properties with good amenities, including high-speed internet. They also value a sense of community and are willing to pay a premium for properties that are well-managed and have a positive living environment.

Q5:  Is it better to buy a new-build HMO or convert an existing property?

Both options have their pros and cons. A new-build HMO will be fully compliant with all the latest regulations and will require minimal maintenance in the short to medium term. However, it will also be more expensive to purchase. An existing property may be cheaper to buy, but it will likely require a significant investment to bring it up to the required standards.

Q6: How can I maximize my rental income from an HMO?

To maximize your rental income, you need to focus on providing a high-quality product that meets the needs of your target tenants. This means investing in a high-quality refurbishment, providing good amenities, and ensuring that your property is well-managed.

Q7: What are the benefits of using a specialist HMO management company?

A specialist HMO management company can save you time, money, and stress. They have the expertise to navigate the complex regulatory landscape, find and manage high-quality tenants, and ensure that your property is well-maintained.

Q8: Why should I invest in Stoke-on-Trent, Crewe, or Newcastle-under-Lyme?

These three areas offer a unique combination of affordable property prices, strong rental demand, and significant growth potential. They are all undergoing a period of regeneration and are well-connected to major employment hubs.