Student HMOs: Why the Next Two Years Present a Prime Opportunity for Landlords

The UK student housing market is shifting fast, and Houses in Multiple Occupation (HMOs) are firmly in the spotlight. With over 77% of domestic students choosing HMOs over purpose-built student accommodation (PBSA), the humble shared student house remains the go-to option for affordability and flexibility. If you're a landlord—or thinking of becoming one—now is the time to pay attention. Here's what national trends are telling us about where the market is heading over the next two years.

1. Demand is Booming—and Will Keep Rising

Student numbers are surging. UCAS data showed record numbers of UK 18-year-olds securing university places in 2024, and projections suggest this trend will continue into the next decade. By 2030, domestic demand for higher education is expected to grow by 30%.

What does this mean for landlords? In simple terms: more students equals more demand for housing, particularly for affordable options like HMOs. Already, the 2024–25 letting cycle started earlier than ever, with students snapping up quality housing months in advance.

2. Supply is Shrinking—Especially in the HMO Sector

Despite growing demand, the supply of HMOs is not keeping up. Planning restrictions (like Article 4 Directions) have made it harder to convert family homes into student lets. Meanwhile, many small landlords have exited the market due to tax changes, rising mortgage rates, and increasing regulation. As a result, thousands of HMO properties have disappeared from the student housing pool.

This leaves fewer beds available for more students—and that imbalance is pushing rents higher.

3. Rents Are Rising and Occupancy Is Near Full

Average HMO rents rose by around 5.3% in 2024, and some cities—like Glasgow—saw jumps of over 10%. Meanwhile, maintenance loans have not kept pace, putting pressure on students’ budgets and making affordable HMOs even more attractive.

Occupancy rates are also sky-high. In most university cities, nearly every well-located HMO is filled. Even where high-end PBSA has seen some slowdown, the demand for budget-friendly shared housing remains strong.

4. Affordability Will Keep Driving Student Choices

Students—both domestic and international—are becoming more price-sensitive. With PBSA rents often exceeding £200/week, many are opting for shared houses, commuting from home, or even choosing universities in cheaper cities. The average student budget for rent is around £152/week outside London, meaning HMOs are likely to remain the preferred choice.

For landlords, this means demand will remain especially strong for well-maintained, competitively priced shared housing.

5. The Outlook: Strong Yields and Strategic Growth

With demand outstripping supply and rents continuing to rise, landlords can expect strong returns—especially those who own or invest in HMOs near high-growth universities. The window to benefit is open now, but it won't last forever. Regional oversupply in some PBSA-heavy cities (e.g. Coventry, Sheffield) may temporarily soften rents at the high end, but the affordable HMO segment remains under pressure and under-stocked.

6. Key Risks and What to Watch

While the outlook is strong, landlords should stay alert to regulatory changes. The Renters' Reform Bill may alter fixed-term tenancies and affect the traditional lettings calendar. Planning rules in more cities may also tighten, limiting future conversion opportunities. Staying agile, well-informed, and compliant will be key.

Conclusion: A Market Built for the Proactive Landlord

If you're already a landlord in the student HMO sector, you're in a strong position. If you're thinking of entering the market, the next two years offer a unique opportunity. With national student numbers on the rise, limited new supply, and affordability pressures steering students toward HMOs, now is the time to invest, upgrade, or expand your portfolio.

As always, the winners in this market will be the landlords who understand the trends, offer value, and respond to what students actually need. And right now, what they need most is affordable, quality shared housing.

Need help letting or managing your student property? Get in touch with our team at Student Housing—we’re former students who know the market inside out, and we’re here to help you succeed.