How the Renters’ Rights Act (May 2026) Changes HMO Investing, and Why Fully Managed Wins
June 22, 2026
The Renters’ Rights Act has changed the HMO investment landscape
The Renters’ Rights Act 2025, with major changes taking effect from 1 May 2026, has altered the private rented sector in a way that serious HMO investors cannot afford to ignore.
For responsible landlords, this is not something to fear. It is a long-overdue step towards a better, safer, more professional rental market. At Foot Forward Property Investments, we completely support the Renters’ Rights Act. In our view, it is about time the sector had a proper regulatory step up, especially in areas where some landlords have treated HMO properties like cash cows while caring far too little about the people living in them.
That approach has never aligned with how we operate. Tenants want homes that are safe, liveable, comfortable, and properly managed. Investors want assets that are compliant, durable, and capable of producing income without unnecessary operational stress. The best HMO investments now need to satisfy both sides of that equation.
That is why the barrier for HMO investment is higher than ever. The tolerance for mistakes is lower than ever. The fines, penalties, and reputational risks are higher than ever. A poorly planned HMO, a rushed refurbishment, a cramped floorplan, weak documentation, or careless management can now create serious financial and legal exposure for investors.
The answer is not to avoid HMO investing altogether. The answer is to invest properly, with the right team, the right specification, the right compliance approach, and the right management structure from day one.
That is where fully managed HMO investment wins.
What changed from May 2026?
The Renters’ Rights Act has introduced major reforms for private landlords in England. These reforms include the move away from fixed-term assured shorthold tenancies towards assured periodic tenancies, the abolition of Section 21 no-fault evictions, stricter processes around rent increases, greater rights for tenants to request pets, new restrictions around rental bidding, and stronger enforcement powers for local councils.
For ordinary single-let landlords, these changes matter.
For HMO landlords, they matter even more.
HMOs were already one of the most regulated parts of the private rented sector. A good HMO must account for licensing, fire safety, room sizes, amenity standards, planning considerations, tenancy documentation, utility usage, maintenance, tenant turnover, communal areas, inspections, deposits, referencing, management records, repair response times, and local authority expectations.
The Renters’ Rights Act does not remove those existing responsibilities. It sits on top of an already demanding regulatory environment. That means HMO investors are no longer operating in a market where “good enough” is a sensible strategy.
Good enough is risky.
Bare minimum is risky.
Cheap is risky.
A HMO investment now needs to be built and managed around evidence, compliance, tenant demand, and long-term durability. Anything less may look attractive on a spreadsheet at the start, but can become expensive once the property is live, tenanted, licensed, inspected, and exposed to the real demands of management.
Why the barrier for HMO investment is now higher than ever
The HMO market has always rewarded expertise. It has also punished guesswork.
What has changed is the speed and severity with which poor decisions can now become expensive. Investors need to think beyond the purchase price and headline yield. The more important question is whether the property has been designed, refurbished, licensed, furnished, tenanted, and managed in a way that can survive an increasingly regulated market.
A modern HMO investor should be asking:
Is the property genuinely suitable for HMO use?
Does the layout work for tenants, or has it simply been forced to make the numbers work?
Are rooms spacious, practical, and desirable?
Are all rooms en-suite?
Are the kitchen and living areas large enough for real daily use?
Is the garden usable and well maintained?
Is there off-street parking where possible?
Are the fire safety systems properly designed and maintained?
Is the refurbishment durable enough for shared living?
Is the management team HMO-specific?
Are records, inspections, tenant communication, rent collection, maintenance, and compliance handled professionally?
These questions matter because the regulatory environment has become less forgiving. Investors who once relied on informal management, patchy paperwork, or optimistic assumptions may now find that the margin for error has narrowed significantly.
That is why now is not the time to build a HMO property on the cheap. It is not the time to trust non-established companies, inexperienced operators, or deal packagers who disappear once the transaction has completed. It is time to work with a specialist team that understands the full journey from acquisition and refurbishment through to lettings, compliance, and ongoing management.
Why we support the Renters’ Rights Act
Some landlords view regulation as an obstacle. We do not.
A better-regulated rental sector protects tenants, improves standards, removes poor operators, and gives responsible investors a stronger long-term foundation. When the market becomes more professional, the landlords who were already doing things properly are not the ones who should be worried.
The landlords who should be worried are those relying on cramped rooms, weak specifications, poor maintenance, poor communication, low-quality management, and a business model built around extracting as much rent as possible while providing as little as possible.
That is not how a HMO should be run.
A HMO is not just an investment product. It is somebody’s home. Tenants should not have to compromise on safety, space, privacy, comfort, or basic dignity because an investor wants the highest possible headline yield.
At Foot Forward Property Investments, our view is simple. Tenants want homes that are liveable and safe, and that is exactly what we deliver. When you develop a property properly, manage it properly, and keep tenant wellbeing at the centre of the model, you protect the tenant and the investor at the same time.
Why fully managed HMO investment is more important now
A fully managed HMO investment is not just convenient. In the post-Renters’ Rights Act market, it is a risk-management decision.
Many investors want the income potential of HMOs without becoming hands-on landlords. That is understandable. HMOs can be operationally demanding, and the workload is often underestimated by people looking only at projected returns.
A good HMO has multiple tenants, shared spaces, higher compliance obligations, more frequent maintenance requirements, more moving parts, and greater management sensitivity than a standard buy-to-let. Even when the property is built well, it still needs active professional oversight.
The reason investors can still enjoy a passive, hands-free HMO investment is because the right operator handles the details properly. At Foot Forward Property Investments, we do the right thing even when nobody is watching. That principle matters because compliance is not just about passing an inspection. It is about building habits, systems, records, and standards that hold up every day.
Fully managed should mean more than “we collect rent.”
It should mean the property has been developed with management in mind from the start. It should mean the refurbishment specification considers fire safety, durability, tenant comfort, maintenance access, communal use, furniture quality, and long-term wear. It should mean the people letting and managing the property understand HMOs specifically, not just property management in general.
The problem with build-and-disappear developers
One of the biggest risks in the HMO market is the separation between the company that develops the property and the company that later manages it.
A lot of developers will build a property for an investor, hand it over, and then farm out the management to a third-party letting agent. That agent may manage every type of property under the sun, from flats and single lets to commercial units and family homes. They may not specialise in HMOs. They may not understand the refurbishment choices made during development. They may not have a direct accountability loop back to the people who created the asset.
That creates a problem.
If the developer is not responsible for the long-term management outcome, their incentives can become short term. They can focus on making the sale, making the floorplan work, and making the numbers look appealing. The long-term reality of tenant satisfaction, maintenance, compliance, voids, and management may become someone else’s problem.
We do things differently.
With our properties, once a property is developed, we hand it over to our in-house lettings team. They are 100% owned by us, and we like it this way because it keeps us completely accountable. They only manage the HMO properties that we develop, which ensures they are never swamped by unrelated property types and that they are solely focused on managing investor HMO properties.
That structure matters.
It means the development team cannot ignore management realities. It means the management team understands the product. It means feedback from tenants and day-to-day operations informs how we continue to develop future HMOs. It also means investors are not left trying to coordinate separate suppliers, agents, contractors, compliance advisers, and managers after completion.
For the right investor, that end-to-end structure can be one of the smartest decisions they make.
Tenant expectations have increased massively
The HMO market has matured. Tenants now expect more, and rightly so.
The days of offering small, non-en-suite rooms with tired furniture and a cramped shared kitchen should be over. In competitive rental markets, tenants compare quality. They look at the room, the bathroom provision, the kitchen, the living space, the garden, the parking, the furnishings, the cleanliness, the safety, and the professionalism of the management.
Any landlord building non-en-suite, cramped rooms simply to save money and make the floorplan work for them is likely to lose massively in the long run. A layout that squeezes in one more room may look good on a spreadsheet, but tenants do not live in spreadsheets. They live in the property.
If the rooms feel cramped, the kitchen is too small, the living area is uncomfortable, the property lacks storage, the garden is poor, parking is difficult, or maintenance is slow, tenants will notice. Over time, that can affect voids, reviews, rent resilience, management workload, and asset reputation.
That is why our properties are designed around tenant demand as well as investor performance.
We focus on en-suites in every room. We provide spacious rooms that massively exceed the minimum standard. We ensure that kitchens and living rooms are spacious and liveable, because shared spaces have to work in real life, not just in a floorplan. We ensure rooms are properly furnished, because tenants need practical, comfortable spaces that feel like homes. We also look for properties with a great-sized garden and off-street parking wherever possible, because these are amenities tenants increasingly value when choosing a room.
This is not just about doing the right thing for tenants, although that matters deeply. It is also about protecting the investor. Better properties tend to attract better tenant demand, support stronger retention, reduce avoidable complaints, and create a more resilient long-term investment.
Build quality and safety are now central to investment performance
Build quality is not cosmetic. In HMO investing, build quality is a form of risk control.
A low-quality refurbishment may reduce upfront costs, but those savings can disappear quickly through maintenance issues, tenant dissatisfaction, compliance concerns, and avoidable disruption. Shared living creates more wear than a standard single let, so finishes, fixtures, fittings, flooring, doors, kitchens, bathrooms, heating systems, ventilation, and fire safety systems need to be specified properly.
We take build quality and safety very seriously because it protects both tenants and investors.
Fire safety is especially important in HMOs. A shared house with multiple unrelated occupants needs careful thought around detection, alarms, escape routes, fire doors, emergency lighting where required, kitchen safety, electrical standards, and ongoing management checks. These systems cannot be treated as a tick-box exercise. They need to be designed, installed, maintained, and recorded properly.
The same principle applies to general liveability. Good ventilation, sensible layouts, proper heating, robust furnishings, practical kitchens, and manageable communal areas all contribute to a safer and more sustainable property.
A HMO that is safe, liveable, and well managed is not just a better home. It is a better investment asset.
Why cheap HMOs can become expensive
There is a particular type of HMO investment that looks attractive at first glance. It usually has a low entry price, a high headline yield, minimal refurbishment detail, and very little discussion about management quality.
Investors should be careful.
A cheap HMO can become expensive if the refurbishment specification is weak, if the layout does not meet tenant expectations, if compliance has been treated casually, if the local authority position has not been properly checked, or if the management is handed to a general letting agent with limited HMO experience.
The risks can include higher maintenance costs, longer void periods, tenant complaints, lower retention, licensing problems, remedial works, enforcement action, reputational damage, and weaker resale appeal.
In an ever-tightening regulatory environment, cutting corners is not a strategy. It is a liability waiting to surface.
That does not mean every HMO must be overbuilt or unnecessarily expensive. It means every decision should be made properly. The room sizes, en-suite provision, fire safety systems, communal spaces, kitchen specification, furniture, garden, parking, compliance documentation, and management process should all be considered before the investor commits.
Why Foot Forward Property Investments is built for this market
Foot Forward Property Investments has over 34 years of experience in developing and managing HMO properties, with over 450 projects completed to date.
That experience matters because HMO investing is not theory for us. We see what works in real properties with real tenants, real refurbishments, real compliance requirements, real maintenance demands, and real investor expectations.
Our model is built around end-to-end accountability. We do not simply introduce an investor to a property and walk away. We help handle the investment journey from refurbishment through to tenanting and management, using a joined-up structure that keeps development and operations aligned.
That matters more than ever.
Investors entering the HMO market today need more than a deal. They need a property that has been assessed properly, refurbished properly, documented properly, tenanted properly, and managed properly. They need a team that understands HMO rules, tenant expectations, local rental demand, refurbishment costs, management systems, and long-term asset protection.
The smartest move you might ever make as a HMO investor is not chasing the cheapest deal or the biggest headline yield. It is choosing the structure that gives the property the best chance of performing safely, compliantly, and sustainably over time.
For many investors, that means working with a firm such as Foot Forward Property Investments to handle the entire investment end to end, from refurb to management.
What a modern HMO investor should prioritise
A responsible HMO investment decision should include more than projected income.
Before buying, investors should understand the full picture. That includes the location, tenant demand, local licensing position, planning status, refurbishment specification, room sizes, en-suite provision, communal space, fire safety systems, furniture quality, management structure, net yield assumptions, maintenance allowances, utility assumptions, void assumptions, and exit considerations.
At a minimum, investors should be looking for:
- A specialist HMO developer with direct experience
- A clear refurbishment scope
- A property designed around tenant demand
- En-suite rooms wherever possible
- Spacious bedrooms that exceed minimum standards
- Practical kitchens and living rooms
- Strong fire safety design
- Proper furniture and durable finishes
- Garden space and off-street parking where possible
- Clear compliance support
- Transparent net yield calculations
- HMO-specific management
- Ongoing accountability after completion
The market has moved. Investors should move with it.
Fully managed does not mean passive because nothing happens
A common misunderstanding is that passive HMO investing means nothing needs to be done.
That is not how property works.
Passive investing works when the right people are doing the work on your behalf. Rent still needs to be collected. Tenants still need to be referenced. Rooms still need to be let. Maintenance still needs to be managed. Compliance still needs to be monitored. Safety systems still need attention. Communication still needs to happen. Records still need to be kept.
The investor can be hands-free because the management is hands-on.
That distinction is critical.
A genuinely passive HMO investment requires active professional management behind the scenes. It requires a team that notices issues early, responds quickly, understands shared living, and maintains standards over time. It also requires a property that has been built properly in the first place, because even the best management team will struggle with a poor layout, weak refurbishment, or under-specified asset.
This is why our end-to-end model matters. We develop HMOs with long-term management in mind, then our in-house lettings team manages the properties we create. That gives investors a more joined-up experience and gives tenants a better-managed home.
Why tenant-first HMO investing is also investor-first
Some people wrongly assume that improving tenant standards reduces investor outcomes. In our experience, that is a false way to look at the market.
Tenant-first HMO investing is not charity. It is a smarter, more sustainable investment approach.
When tenants have spacious rooms, en-suites, good furnishings, practical kitchens, comfortable living spaces, proper safety systems, usable outdoor space, and responsive management, the property is more likely to remain attractive. That can support retention, reduce avoidable disputes, improve reputation, and make the asset easier to manage.
Investors benefit when tenants want to stay.
Investors benefit when properties are safe.
Investors benefit when compliance is taken seriously.
Investors benefit when management is accountable.
Investors benefit when the property is not built around short-term corner-cutting.
That is why the Renters’ Rights Act should be seen as a signal. The future of HMO investing belongs to professional, tenant-focused, compliance-led operators.
Why now is not the time for deal packagers or unproven operators
In a looser market, investors sometimes got away with weak due diligence. In today’s market, that is much more dangerous.
A deal packager may be able to source a property. That does not mean they can develop it properly, manage the refurbishment, understand HMO compliance, tenant it successfully, manage it long term, or stand behind the investor after completion.
An unproven developer may promise strong returns. That does not mean the property has been designed for real tenant demand or long-term regulatory resilience.
A general letting agent may be capable of managing standard rentals. That does not mean they are the right fit for a specialist HMO investment.
With an ever-tightening set of regulations, investors should be cautious about anyone offering a cheap, simple, or overly optimistic route into HMOs. HMO investing can still be an excellent strategy, but only when approached properly.
Now is the time to work with Foot Forward Property Investments if you want a secure, professionally structured HMO investment property with an experienced team handling the process from refurbishment through to ongoing management.
The future of HMO investing is professional
The Renters’ Rights Act has raised expectations across the private rented sector. For HMO investors, this should be seen as a turning point.
The old model of squeezing in as many rooms as possible, keeping costs low, farming out management, and hoping tenants accept whatever is available is becoming weaker every year. Tenants are more informed. Councils have stronger powers. Regulation is tightening. Mistakes are more expensive. Investors are becoming more cautious.
That is a good thing.
It means the market is moving towards better homes, better management, and better operators. It also means investors need to choose partners carefully.
At Foot Forward Property Investments, we believe the strongest HMO investments are built on the same principles that protect tenants: safety, space, quality, compliance, transparency, and proper management. We support the Renters’ Rights Act because the sector should work better for the people living in rented homes, not only for the people investing in them.
For investors who still want the income potential of HMOs without the operational burden, fully managed is no longer just a convenience. It is the model that best fits the direction of the market.
If you want to explore professionally developed, fully managed HMO investment opportunities, view our current HMO properties for sale here:
https://www.footforwardproperties.co.uk/hmo-for-sale/
FAQs
How has the Renters’ Rights Act changed HMO investing?
The Renters’ Rights Act has increased the importance of compliance, professional management, clear documentation, tenant standards, and long-term asset quality. HMOs were already highly regulated, and the new reforms make it even more important for investors to work with experienced operators who understand both development and management.
Is HMO investing still worth it after the Renters’ Rights Act?
HMO investing can still be worthwhile for the right investor, but the strategy needs to be approached properly. The strongest opportunities are likely to be well-located, well-refurbished, compliant, tenant-focused, and professionally managed. Investors should not rely on headline yield alone.
Why does fully managed HMO investment matter more now?
Fully managed HMO investment matters because the operational and compliance burden has increased. Investors can still remain hands-free, but only when a capable team is actively handling tenanting, management, repairs, compliance, records, inspections, and communication behind the scenes.
Why are en-suite rooms important in modern HMOs?
En-suite rooms offer privacy, convenience, and a better tenant experience. Tenant expectations have increased significantly, and non-en-suite, cramped layouts designed only to maximise room count may struggle over the long term. Spacious en-suite rooms can help improve tenant appeal and long-term rental resilience.
Why should investors avoid cheap HMO conversions?
Cheap HMO conversions can create hidden risks. Poor layouts, weak refurbishment, limited communal space, inadequate safety planning, cheap furnishings, and poor management can lead to higher maintenance costs, compliance issues, tenant dissatisfaction, and weaker long-term performance.
What makes Foot Forward Property Investments different?
Foot Forward Property Investments has over 34 years of experience in developing and managing HMO properties, with over 450 projects completed to date. Our model is end to end, from refurbishment through to in-house lettings and management. Our lettings team is 100% owned by us and only manages the HMO properties we develop, which keeps our team focused, accountable, and specialist.
Are HMO investment returns guaranteed?
No. HMO investment returns are not guaranteed. Rental demand, occupancy, legislation, finance costs, maintenance, property values, tax treatment, and local market conditions can all affect performance. Investors should review each opportunity carefully and take independent legal, tax, mortgage, and financial advice where appropriate.
Written by Thomas Abram – Group Marketing Executive