Converting a property into a house in multiple occupation costs an average of £82,084 across England, new research from Rushbrook has found, before landlords factor in the purchase price.
The property management firm put the typical cost at £15,275 per bedroom, based on an average HMO size of 5.37 bedrooms. Once an eligible three or four-bedroom purchase is included, the average total outlay reaches £531,882.
Regional splits redraw the maths for investors. London carries the highest conversion bill at £92,796, while the North East sits lowest at £70,955, a gap of more than £20,000 for the same type of project.
London conversion bills top £92,000 as regions split
The South East follows London at £90,552 with the South West at £89,737. At the cheaper end, the North West averages £73,076 and the East Midlands £74,485.
Total investment including purchase peaks in London at £957,105, then the South East at £630,333 and the East of England at £557,416. The figures underline why HMO investors keep drifting north in search of yields that justify the upfront spend.
Roma Sharma, managing director of Rushbrook, said: “Converting a property into an HMO is a substantial financial undertaking, and the conversion costs alone can represent a significant investment before landlords have even factored in the cost of purchasing the property.”
Sharma added that landlords who buy an existing licensed HMO to dodge conversion work still need full due diligence, since older stock can hide further repair bills.
This follows Residential Landlord’s coverage of Stoke-on-Trent’s city-wide Article 4 Direction for small HMOs, which shows planning risk rising just as conversion costs bite. Councils are tightening control at the same time as the price of entry climbs.
Planning curbs add risk to high-cost conversions
An £82,000 conversion that then hits an Article 4 refusal is a fast route to a loss, so landlords should confirm planning position before spending a penny on works. HMO planning refusals have already doubled as Article 4 curbs spread, which makes early checks on local policy essential.
Licensing adds a second layer of cost and delay. Landlords new to shared housing should read the government’s HMO licensing guidance alongside local council requirements before committing funds.
Opinion
HMO yields still tempt, but the entry ticket keeps getting dearer and councils keep moving the goalposts. Landlords who run the full numbers, planning risk included, will be fine. Those who price the works and skip the policy check are asking for trouble.
