HMO Properties Need to Be Ran Like a Business to Remain Profitable

August 25, 2026

We have developed and managed HMO properties across the North of England for over 34 years. During that time we have seen just about every version of the HMO market imaginable, from periods when regulation was relatively light, through licensing changes, tighter fire standards, increased planning scrutiny and now the Renters’ Rights Act.

So when we say that HMO properties need to be ran like a business, it comes from more than three decades of actually developing them, filling them, managing them and dealing with everything that happens after an investor collects the keys.

From 2026 onwards, the HMO market is going to become far less forgiving for amateur landlords and those who decide they quite fancy “giving it a go themselves”. The compliance burden is increasing, tenants quite rightly expect better standards, councils are paying more attention to HMOs and landlords have more responsibilities to keep on top of. None of this makes HMO investment a bad sector. Quite the opposite. It simply favours experienced operators and investors who understand that buying the property is only the beginning.

For investors who want the income without taking on another full-time job, partnering with a company that develops and manages HMOs properly makes considerably more sense.

The Social Media HMO Dream Has Caught Quite a Few People Out

A few years ago, social media became flooded with property gurus promoting HMOs as the quickest possible route to building a huge portfolio. Buy something cheap, refinance it aggressively, pull all your money back out and repeat.

The infamous “all money out HMO”.

It sounded fantastic in a seminar room or underneath a photograph of somebody standing next to a rented Lamborghini. In practice, quite a few inexperienced landlords bought into it, often using significant amounts of borrowing while relying on extremely optimistic rental figures and equally optimistic end valuations.

They were sold HMOs as completely passive investments.

Oh, how wrong they were.

A lot of fresh landlords lapped up the marketing, bought heavily leveraged properties and then discovered that an HMO is not simply a normal rental property with a few extra bedroom doors fitted. There are tenants to manage, licences to maintain, inspections to complete, bills to pay, cleaners to organise, repairs to deal with and a constant stream of compliance work sitting behind the property.

Add expensive finance onto that equation and things can become uncomfortable very quickly.

HMO investment should never have become an exercise in borrowing as much money as possible so somebody can boast about owning ten properties instead of two. We have always preferred profitable properties over impressive portfolio numbers.

An HMO Is an Operating Business

When we develop an HMO for an investor, we look at the property as an operating business from day one.

What will it cost to run? What will the bills look like? How durable are the materials? Can we maintain it easily? Is there parking? Does it have usable outside space? Are the bedrooms large enough? Does every room have an ensuite? What type of tenant is likely to live there and, just as importantly, how do we encourage that tenant to remain there?

Those questions matter far more over ten or twenty years than whether the kitchen photographs particularly well on Instagram.

Our business has been shaped around something fairly simple. Landlords want profitable HMO properties, but most do not want to spend their evenings chasing a plumber, answering tenant messages or wondering whether a fire inspection has been booked.

We develop the property into the HMO for the investor, dealing with the work required from a building and compliance perspective. Once it is complete, our management team takes over.

That includes tenant management, rent collection, inspections, licensing, compliance, cleaning, maintenance coordination, tenant queries and the everyday administration involved in running the property. We also pay the utility bills from the gross rental income before reporting the NET position back to the investor.

The investor owns the property. We run it.

Stop Building Boutique HMOs

One of the stranger trends created by social media was the idea that every HMO needed to look like a boutique hotel.

Expensive kitchens. Designer chairs. Unusual wall finishes. Feature lighting that costs a fortune to replace. Furniture selected because it photographs well rather than because it can survive years of tenant use.

We like our HMOs to look good. Of course we do. Tenants want a clean, modern, comfortable place to live and good presentation helps attract the right people.

There is a point where sensible expenditure turns into vanity.

Imagine fitting a very expensive kitchen range that gets discontinued two years later. Two doors become damaged and suddenly matching replacements are unavailable. Instead of replacing two inexpensive cupboard doors, the landlord starts looking at changing half the kitchen simply to make everything match.

The same problem happens with unusual furniture, specialist tiles, bespoke lighting and overly complicated interior schemes.

We have managed HMOs for long enough to know that things get damaged. Furniture wears out. Appliances fail. Tenants move in and out. A good HMO interior should therefore be attractive, durable and easy to maintain.

That is how a business owner thinks.

Spend the Money Where Tenants Actually Care

If somebody gave us a choice between spending thousands more on designer furniture or putting that money into providing proper ensuites, parking and outside space, we know where the money would go.

Ensuite bedrooms are now extremely important for professional HMO tenants. People paying good money for a room generally do not want to walk down the landing in a towel every morning and queue for a shared bathroom.

We have found that good-sized ensuite rooms help tenants remain in the property longer. Lower tenant turnover means fewer empty periods, fewer inventories, less redecorating and fewer costs associated with finding replacement tenants.

Gardens matter too. So does off-street parking.

These are ordinary things, but they make an enormous difference to somebody who is actually living in the property for twelve months, two years or longer.

Investors sometimes become distracted by trying to push the rent another £25 or £50 a month through expensive interiors because they have been told that higher rent will produce an artificially high commercial valuation when they refinance.

We would rather build an HMO around stable occupancy and dependable NET income.

A valuation is a snapshot. The bills and maintenance arrive every month.

Management Is Where HMO Profitability Is Won or Lost

Consider what happens once the refurbishment is finished.

A tenant reports a leaking shower. Somebody else has lost their key. The cleaner has noticed a damaged fire door. The energy supplier needs a meter reading. A bedroom becomes vacant and needs remarketing. Rent has not arrived from another tenant. An inspection is due. The garden needs attention. A compliance certificate is coming up for renewal.

Meanwhile you have your own job, business or family to deal with.

One problem is manageable. Ten are irritating. Once you own several HMOs, the management requirement starts to stack up considerably.

Maintenance needs responding to quickly because small problems have an amusing habit of turning into expensive ones when ignored. Tenant queries need answering. Rent needs monitoring. Utility accounts need checking. Statements need producing. Cleaners need organising. Licences need renewing. Safety records need maintaining. Inspections need completing properly and documenting.

Ignore enough of those jobs and the property begins to deteriorate.

Tenants leave faster. Voids increase. Repair bills rise. Standards fall. Eventually the HMO that looked fantastic on the original investment spreadsheet is producing considerably less money than expected.

That is usually when somebody discovers that their “passive property investment” is consuming most of their spare time.

Regulation Has Raised the Bar

We do not think higher standards in the HMO sector are a bad thing.

For years there have been landlords operating poor properties, completing the bare minimum and giving the wider HMO market a bad reputation. Raising the standard makes life harder for those operators.

Experienced professional landlords should be able to deal with it.

The Renters’ Rights changes, tighter local authority scrutiny and the wider direction of housing regulation mean running an HMO casually is becoming increasingly difficult. The person with a spreadsheet, a few YouTube videos and no management infrastructure is going to find the market considerably tougher than somebody operating with established systems, property managers, maintenance contacts and years of HMO experience behind them.

HMO investment is still capable of producing excellent NET returns. It just needs to be treated properly.

Why Our Fully Managed HMO Service Exists

Our service has developed over 34 years around the problems we know HMO investors actually face.

We source and develop the property. We complete the work required to turn it into a proper professional HMO. We consider licensing and compliance from the beginning rather than trying to fix problems after the refurbishment has finished. Then our management operation takes over and deals with the tenants and running of the building.

The objective is not to create the most expensive HMO on the street.

It is to create a property that professional tenants genuinely want to live in, keep operating costs sensible and protect the investor’s NET income over the long term.

For somebody with a demanding career, a business to run or an existing property portfolio, there is little attraction in spending Thursday evening discussing a broken washing machine with five tenants. Nor should there be.

That is why our fully managed HMO investment service has become so valuable to the investors we work with. They receive the benefit of owning an HMO property without having to build an HMO management company around themselves.

HMO properties can still be extremely profitable.

They simply need to be ran like a business.

You can view our current fully managed HMO properties for sale at www.footforwardproperties.co.uk/hmo-for-sale.