Definition

What is a House in Multiple Occupation?

For housing purposes, a property will generally be an HMO where it is occupied by at least three people forming two or more households who share facilities such as a kitchen, bathroom or toilet. Students living together will usually be treated as separate households. The legislation is concerned more with how the property is occupied and used than with how any contracts are structured.

Planning

Loughborough’s Article 4 Direction

Loughborough has been covered by an Article 4 Direction since 2012. The Direction removed permitted development rights that would otherwise allow a property to change from use class C3, as a dwellinghouse, to use class C4, as a small HMO, without a planning application. Many established HMOs therefore pre-date the Direction. New HMOs can still be created, although full planning permission is required. The most common planning issues are the concentration of HMOs in the surrounding area and the effect on parking.

Restrictions on the creation of new HMOs can constrain supply, which may support higher rental values for established HMO properties. However, rental performance will still depend on the property, location, condition and level of demand.

If you are considering buying an existing HMO, ensure that the property either has express planning permission as a C4 small HMO or can demonstrate lawful HMO use dating from before the Article 4 Direction took effect. This may be evidenced by a Certificate of Lawfulness of Existing Use or Development, commonly abbreviated to CLEUD. HMOs occupied by more than six people are generally classed as sui generis and require specific planning permission.

Licensing

HMO licensing in Loughborough

It is essential to understand that planning permission and HMO licensing are separate requirements. In Loughborough, a property must have the appropriate planning permission or be able to demonstrate established lawful HMO use, as well as holding any required HMO licence. Licences are non-transferable, so a new owner must make their own application.

Charnwood’s borough-wide Additional HMO Licensing Scheme began on 1 April 2023 and is scheduled to run until 31 March 2028. It requires smaller HMOs occupied by three or four people from two or more households to be licensed. HMOs occupied by five or more people are generally subject to mandatory HMO licensing. Operating a licensable HMO without a licence is an offence. For offences committed on or after 1 May 2026, the council may impose a civil penalty of up to £40,000 as an alternative to prosecution; conviction may result in an unlimited fine.

You can read more about this and apply here.

Occupancy

Student and professional HMOs

Student HMOs typically operate on an annual cycle, with tenancies often starting on 1 July or 1 September. Advertising may begin in the autumn to secure tenants for the following academic year. Most are let on a single agreement to a group of students. Student HMOs can sometimes present a lower referencing risk because each occupant will often have a guarantor.

Professional HMOs are usually let by the room as vacancies arise, so occupants may not know one another before moving in. Applicants are often employed, although affordability and referencing should still be assessed individually. Professional tenants often remain for longer and may cause less seasonal wear and tear than student groups. This model can also spread occupancy risk. Failing to let a student property before the academic year begins can have a significant financial effect. In a professional HMO, one or two vacant rooms will usually have a less severe impact because the remaining rooms continue to produce income.

Investment

Should you buy an HMO?

HMOs offered for sale are often valued partly by reference to their income potential as well as more conventional valuation factors. Where planning permission can be obtained, converting a suitable C3 dwelling into a C4 HMO may create value. However, permission should never be assumed, particularly within an Article 4 area.

HMOs are also significantly more management-intensive. Wear and tear can be greater because more people use the property and its shared facilities. Tenancies may be shorter and tenant turnover can be higher. Management also involves communicating with several occupants and, in some cases, their guarantors. HMOs are generally better suited to landlords with suitable experience or access to specialist professional management. Successful operation requires a sound understanding of the regulations, efficient maintenance practices and effective communication with tenants.

Returns

Do all HMOs produce strong returns?

Larger HMOs can often produce stronger gross yields because their income is multiplied across more rooms. However, they may also involve higher purchase, finance, utility, licensing, maintenance and management costs. Smaller two and three-bedroom HMOs are not usually financially viable and, in some cases, may perform better as conventional single-household rentals. Returns should therefore be assessed using the property’s full operating costs rather than headline rent alone.

Huntleys

Why choose Huntleys?

Huntleys provides specialist student and professional HMO letting and management services throughout Loughborough. Our marketing includes professional photography, video tours and floorplans as standard, helping each property present its individual strengths clearly. Huntleys is a Loughborough-based letting agent with extensive experience in student and professional HMOs.

We help landlords understand planning, licensing, tenancy management and ongoing compliance requirements, while offering comprehensive services to find tenants and manage tenancies. We take pride in keeping landlords well-informed about relevant market and regulatory developments. Visit our Loughborough town centre office to meet the team and discuss how we can help with your HMO.