HMO regulations driving decline in supply
A constant barrage of regulations, restrictions, responsibilities and Selective Licencing has driven an overall decline of supply in England’s HMO sector by 3% from 511,278 properties in 2019/2020 to 497,884 in 2020/21. These figures come from market analysis performed by Octane Capital.
In 2018, the UK government introduced new regulations which insist that a Houses of Multiple Occupancy (HMO) licence is required for all properties that are occupied by five or more people who are not members of one family. Previously, a licence was only required for properties of three storeys or more in which five or more people live and are not members of one family. What’s more, in order to obtain a licence, all rooms in an HMO must exceed a minimum size and can only sleep a certain number of people over 10 years old.
As a result of this and many further regulations each of which can command a fine of up to £30,000, the number of HMOs on the market has decreased with many landlords choosing to offload their buy-to-let stock instead of negotiating yet more hurdles due to legislative changes.
This overall national decline has been driven by the London market where the level of total HMOs has declined by -13% – by far the biggest reduction of all regions.
In the capital, 11 different boroughs have reported a drop, with the biggest coming in Ealing where HMOs have declined by -59%, followed closely by a -58% decline in Lambeth. Redbridge has seen its numbers halved, and Barnet’s decline sits at -37%. The number of HMOs has also declined considerably in Greenwich (-34%), Enfield (-30%), Wandsworth (-18%), Croydon (-13%), Hillingdon (-10%), Merton (-2%), and Tower Hamlets (-1%).
| Table shows estimated number of HMOs in England for years 19/20 and 20/21 alongside annual % change | |||||
| Region | Est number of HMOs 2019-20 | Est number of HMOs 2020-21 | Change 2019-20 vs 2020-21 | ||
| East Midlands | 24,417 | 29,440 | 21% | ||
| West Midlands | 35,508 | 37,646 | 6% | ||
| North West | 47,489 | 50,084 | 5% | ||
| South East | 70,757 | 74,053 | 5% | ||
| North East | 20,395 | 20,581 | 1% | ||
| South West | 49,156 | 49,584 | 1% | ||
| East of England | 37,128 | 37,298 | 0.5% | ||
|
Yorkshire and The Humber
|
53,618 | 49,016 | -9% | ||
| London | 172,810 | 150,182 | -13% | ||
| England | 511,278 | 497,884 | -3% | ||
| Table shows estimated number of HMOs in London for years 19/20 and 20/21 alongside annual % change | |||||
| Location | Est HMOs 2019-20 | Est HMOs 2020-21 | Change 2019-20 vs 2020-21 | ||
| Barking & Dagenham | 192 | 800 | 317% | ||
| Kensington & Chelsea | 4,000 | 8,244 | 106% | ||
| Bexley | 1,200 | 1,930 | 61% | ||
| Hammersmith & Fulham | 3,000 | 3,700 | 23% | ||
| Newham | 9,500 | 10,450 | 10% | ||
| Havering | 267 | 286 | 7% | ||
| Bromley | 2,074 | 2,215 | 7% | ||
| Richmond upon Thames | 97 | 102 | 5% | ||
| Brent | 16,984 | 16,984 | 0% | ||
| Camden | 8,000 | 8,000 | 0% | ||
| City of London | 100 | 100 | 0% | ||
| Hackney | 4,717 | 4,717 | 0% | ||
| Haringey | 6,000 | 6,000 | 0% | ||
| Harrow | 1,200 | 1,200 | 0% | ||
| Hounslow | 1,850 | 1,850 | 0% | ||
| Islington | 400 | 400 | 0% | ||
| Kingston upon Thames | 4,800 | 4,800 | 0% | ||
| Lewisham | 6,000 | 6,000 | 0% | ||
| Southwark | 5,020 | 5,020 | 0% | ||
| Sutton | 1,200 | 1,200 | 0% | ||
| Waltham Forest | 5,951 | 5,951 | 0% | ||
| Westminster | 9,539 | 9,500 | 0% | ||
| Tower Hamlets | 10,000 | 9,900 | -1% | ||
| Merton | 2,040 | 2,000 | -2% | ||
| Hillingdon | 5,000 | 4,500 | -10% | ||
| Croydon | 3,000 | 2,600 | -13% | ||
| Wandsworth | 820 | 670 | -18% | ||
| Enfield | 10,000 | 7,000 | -30% | ||
| Greenwich | 7,500 | 4,916 | -34% | ||
| Barnet | 5,930 | 3,760 | -37% | ||
| Redbridge | 4,000 | 2,000 | -50% | ||
| Lambeth | 12,000 | 5,027 | -58% | ||
| Ealing | 20,429 | 8,360 | -59% | ||
| London | 172,810 | 150,182 | -13% | ||
HMO estimates data sourced from Gov.UK – Local Authority Housing, and Local Authority Housing Statistics 2019-20
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Member Since April 2017 - Comments: 163 - Articles: 1
1:37 PM, 10th May 2022, About 4 years ago
Yes. Minimum room sizes meant that two of our properties had one room under 6.51m. Always let out, constantly occupied for years. So do we leave it empty (illegal to rent out, while legal to sleep on a street) or sell up? We sold, evicting 8 previously happy tenants. With minimum room size requirement, fewer low cost rooms available, so they have to either pay more nearby, or commute further. Any attack on landlords is an attack on tenants
Member Since October 2019 - Comments: 400
5:27 PM, 10th May 2022, About 4 years ago
The fines are a killer £30,000 – unlimited! It’s not worth the stress/worry – I sold!
Member Since September 2018 - Comments: 3538 - Articles: 5
10:32 AM, 13th May 2022, About 4 years ago
Reply to the comment left by Ross Tulloch at 10/05/2022 – 13:37
ditto!
Member Since March 2016 - Comments: 163 - Articles: 1
12:22 PM, 1st July 2022, About 4 years ago
Reply to the comment left by Ross Tulloch at 10/05/2022 – 13:37
I have a spreadsheet of 3 bedroom houses for sale in my key postcodes. Of the 824 on my list, where the size of the bedrooms is listed, 323 have a 3rd bedroom which is smaller than 4.62m2 which is 39.2% of properties with an unlettable 3rd bedroom.
There are 239 houses with a room between 4.64 and 6.5m2 (29.2%) which can only be let to a child under 10.
There are 222 houses with a 3rd bedroom between 6.51 and 10.21m2 (27%) which can only be let to a single adult.
There are 37 houses with a 3rd bedroom over 10.22m2 (4.5%) suitable for a couple.
The average cost per m2 of these houses is £4,938 and the average size of their 3rd bedroom is 4.2m2 so that’s £20,739 of value/investment sitting empty per property, or £1,594,974 of unlettable space just in the small area I monitor.
Member Since April 2017 - Comments: 163 - Articles: 1
12:27 PM, 1st July 2022, About 4 years ago
Extremely useful larger survey. Thank you. Where is this approximately? It is as if the attack on landlords and tenants is aimed at those renting the most affordable rooms
Member Since March 2016 - Comments: 163 - Articles: 1
12:29 PM, 1st July 2022, About 4 years ago
Reply to the comment left by Ross Tulloch at 01/07/2022 – 12:27
Specific sections of CR0 and CR7 postcodes (Croydon & Thornton Heath).
Member Since June 2021 - Comments: 80
4:24 PM, 17th August 2022, About 4 years ago
Interesting. Yet councils can put people up in hotels for weeks, months, years in less than adequate living conditions