There are an estimated 182,554 HMO properties in England & Wales. 74% of these are ‘small; HMOs, shared by three or four tenants, while 26% are ‘large’ with five tenants or more, according to the research carried out by COHO, the HMO management platform.
London is home to the largest proportion of HMOs, accounting as it does for a third – 33.9% – of the national total, followed by the South East (13.6%), South West (10.7%), North West (8.4%), and Yorkshire & Humber (7.4%).
The average value of an HMO in England & Wales sits at £293,197 which means the nation’s entire HMO stock has an estimated market value of just over £78bn, the study found.
In London, where the average value of an HMO property sits at £660,227, the total stock has a combined value of almost £40.9bn.
The South East is home to an average HMOs price of £436,146, creating a total regional value of £10.8bn.
Meanwhile, HMO stock in the South West has an estimated combined value of £7.9bn, followed by the North West at £4bn.
The average annual rental income for an HMO in England & Wales sits at £29,715. Across the nation’s 182,554, the entire HMO sector is generating an estimated total rental income of over £6.3bn a year.
In London, HMOs generate an average annual rental income of £40,169, which means the capital’s entire stock creates an annual rental income of around £2.5bn.
While London has the largest combined HMO rental income, individual properties actually generate the most rental income in the South East, where each HMO averages £46,042. This gives the region a combined rental income of more than £1.1bn.
In the South West, the HMO market generates rental income of £747.3m, and in the North West it’s £419.2m.
While the Yorkshire & Humber region is home to the lowest average HMO value (£196,014) and second-lowest average rental income (£21,208), its large market means that it outperforms Wales and the North East for both combined stock value and combined rental income due to the latter two regions having HMO markets less than half the size of Yorkshire’s.
Meanwhile, the East Midlands commands the lowest average annual rental income per property (£20,223) but due to a healthy average HMO value of £236,779, its total stock value of £2.9bn is higher than Yorkshire & Humber, Wales, and the North East.
COHO founder and CEO, Vann Vogstad, commented: “HMO market’s value is going to keep increasing not only because of the constant and growing demand from a variety of tenant demographics, but also because rising tenant expectations means landlords are going to improve the standard of living and thus benefit from stronger rental income.”
