Are HMOs Still Profitable After the Budget?

December 1, 2025

A Data Guided, Experience Driven Look at the Future of Shared Housing Investments

We have been in property for more than 33 years, and 23 of those have been spent working specifically with HMOs. In that time we have seen our fair share of budgets, policy shifts, market swings, and headlines predicting disaster. After three decades in the sector, one thing remains very clear. HMOs continue to be a profitable and stable investment when developed and managed correctly.

The recent autumn 2025 budget introduced a 2 percent increase for buyers who do not purchase through a company. This has caused a flurry of concern among new and experienced investors. In reality, this change does not affect a correctly structured HMO strategy. We always advise purchasing through a company structure anyway, because it provides tax advantages and improves long term financial efficiency. Investors who follow best practice will feel very little impact.

The Budget Has Not Changed the Fundamental Truth

Demand for HMOs is stronger than ever

There is a massive shortage of high quality, affordable accommodation across the UK. Renters continue to seek flexible shared housing that offers comfort, community and cost efficiency. HMOs meet this need better than almost any other property type. This demand has not shifted due to the budget, and there is no forecast that shows it slowing down.

If anything, the squeeze on single let landlords will push more people into shared housing. Living costs remain high, salary growth is slow, and renters want more value for money. HMOs fill that gap naturally.

The Future Belongs to High Quality, Professionally Managed HMOs

And the gap between professionals and hobby landlords is widening

What is very clear is that only high quality, code compliant, professionally operated HMOs will succeed in the years to come. The days of the hobby landlord are fading. Rogue or self managed HMOs that cut corners on safety, licensing or tenant experience will struggle to survive.

These properties will increasingly appear on the market, but investors should approach with caution. Buying a poorly run HMO can turn into a major compliance headache. The cost to correct licensing issues, improve fire safety, upgrade furnishings or fix previous mismanagement can be significant.

Working with established operators like Foot Forward avoids all of this. Our developments, compliance systems and tenant management processes have been refined over decades. HMOs remain profitable only when the people behind them know how to structure, refurbish and operate them properly.

Why HMOs Continue to Outperform Single Lets

Cashflow strength, margin buffers and long term resilience

Single lets are feeling the squeeze. Rising costs, static rents, tax pressure and void sensitivity create tight margins that leave very little room for error. HMOs, on the other hand, generate multiple income streams from a single asset. This natural diversification leads to:

  • Higher monthly cashflow

  • Better resilience against voids

  • Improved risk distribution

  • Greater profitability per square foot

Investors who compare the numbers often discover that the difference is significant. With the right team behind the investment, HMOs continue to deliver returns that outperform other residential strategies.

The budget has not changed the fundamentals. HMOs remain one of the strongest performing investment strategies when done correctly. Demand is high, rental appetite is strong and professionally managed properties continue to outperform the wider market.

For investors who work with experienced developers and management teams like Foot Forward, HMOs will remain a profitable and stable option for many years ahead.