How Article 4 really affects HMO values

The usual line, and the one you'll hear from lenders, is that a heavily adapted C4 HMO inside an Article 4 area can achieve a commercial investment valuation because the lawful use is scarce. So people assume an Article 4 direction automatically raises the value of every HMO inside the boundary.

What gets missed: the rush beforehand

In the two years or so before a direction takes effect, and especially once the 12-month notice is announced, there's often a development boom. Outside areas with very deep tenant demand, such as close to London, that oversupply can take two to four years to settle.

Picture an area where 100 new rooms usually come on each year, and then 2,000 brand new studio-style rooms arrive in the run-up. A five-year-old conversion that sat near the top of Tier 2 on the Tier Methodology can drop into Tier 3, with more voids and lower occupancy. In most places I've seen, values dipped for a while rather than rose.

Once things settle

The lack of new conversions does help. Casual developers move elsewhere, and new schemes tend to go through as sui generis applications with a good planning consultant behind them.

My view on Article 4

Long term, I think Article 4 is good for the sustainability of an area. My own view is that planning should be needed everywhere for C3 to C4, and separately for supported living, so it's clear what each property is for. Wales already takes a national approach and it has worked.

The real damage comes from immediate directions, where a developer can be halfway through a project and wake up to find they can no longer let to working professionals without going back through planning.

For where to buy in the first place, see non-Article 4 areas: where to invest, and why planning comes fifth.

Quick answers

Does Article 4 increase the value of HMOs?

Not straight away. The development rush before a direction takes effect often creates an oversupply of new rooms that can take two to four years to settle, during which existing HMOs can slip a tier and values dip. Once supply stops growing, scarcity of lawful use can support values.

What is an immediate Article 4 direction?

A direction that removes permitted development rights straight away rather than after 12 months' notice. It can leave a developer partway through a conversion needing planning permission to let it as intended.

From my answers on the HMO X Weekly Community Call, October 2026. Figures are illustrative and reflect my experience at the time; they're not financial, legal or tax advice, or a RICS valuation.