HMO market in England shrinks by 21,000 properties

England’s house in multiple occupation (HMO) market is still shrinking despite a growing need for affordable rental accommodation, a survey reveals.

The latest figures from Octane Capital show that the number of HMOs has shrunk dramatically by 21,000 properties in the last two years with landlords leaving the sector and tighter licensing regimes being potential reasons for the fall.

The lender says that in 2020/21 there was a -1.7% fall in HMO numbers, and this decline has accelerated with the latest figures showing a -2.4% fall.

The data shows there are 489,701 HMOs in England, down from 2019’s figure of 510,776.

‘HMO stock levels have continued to slide’

Octane Capital’s chief executive, Jonathan Samuels, said: “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.”

He added: “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.”

HMO stock levels down

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

The North East saw its HMO stock decline by 15.8%, while the South East (-6.7%), London (-5.2%), and North West (-1.6%) have also recorded drops.

There has been some good news as some regions have seen an increase with HMO stock levels rising over the last year, with numbers in the West Midlands increasing by +16.9%, Yorkshire and the Humber (+11.2%), the South West (+0.6%) and the East of England (+0.6%).

London remains home to the greatest proportion of HMO properties, accounting for 29.7% of England’s total stock, or 145,615 properties.