What's the HMO market like right now, and where is it heading in 2027?

What's the market like right now?

It depends where you are in the country and what type of HMO you have. Interest rates have crept up and HMOs cost more to run, but focusing only on that misses the point. Knowing your local area matters far more than the national picture.

In some areas it can take three or four weeks to fill a room with a good tenant at £650 to £750 a month, and that's fine. You can afford to hold a room a little longer while you check references properly rather than rush the wrong person in. In other areas, one tenant moves out in the evening and the next moves in the following morning. Where rents are stagnating, it's rarely down to a lack of tenants. It's usually an oversupply of rooms, occasionally made worse by a local shock such as a large employer closing.

On sales, we've agreed a steady number all year with committed sellers and committed buyers. Buyer enquiries aren't slowing down. Prices are being agreed a little below asking, typically 3% to 4%, which can mean £10,000 to £25,000 on a deal, because running costs have gone up. Sellers with a clear reason to exit, whether that's refinancing, retirement or simply being tired of the management, are finding buyers.

Don't test the market

With a family home you can list at an ambitious price and see what happens. With an HMO, a public listing can unsettle tenants and the balance of the house, and a failed sale can affect your chances of refinancing or selling later.

This is a market for data, compliance and preparation, not aspirational pricing.

Where are HMOs heading in 2027?

HMOs exist to meet local housing need, for everyone from people on benefits to young professionals on six-figure contracts. That's why they will stay relevant and stay part of the housing mix in every town.

I've said on several talks this year that 2025 felt like the last year HMOs were sold as a get-rich-quick strategy. The courses have moved on to other things. In my view the industry will be better for it, with more careful investors coming in who see HMOs as people's homes rather than a shortcut.

More landlords leaving than joining

For 2027 I expect more landlords to leave the market than join it. Many who took five-year fixes in 2022 with high borrowing will struggle to refinance, and some keys will be handed back. In weaker areas where demand has dropped, that will mean more stock for sale. If you're buying there, make sure the price already reflects any fall in rent, with some room for growth after it.

Good value for patient buyers

There will also be people building portfolios and buying established HMOs, as there's good value around at the moment. The ones who do well will treat it as a ten-year plan across four, five or six properties rather than a quick win.

Keep an eye on Article 4, changes to the HHSRS and the Renters' Rights Act through the year. My overall message for next year: raise your due diligence, and learn from people who aren't trying to sell you something.

Quick answers

Are HMO prices falling in 2026?

Prices are being agreed a little below asking, typically 3% to 4%, because running costs have risen. Buyer enquiries remain steady, and sellers with a clear reason to sell are still finding committed buyers.

Should I list my HMO to test the market?

No. A public listing can unsettle tenants, and a failed sale can affect your chances of refinancing or selling later. Price on data and prepare the compliance first.

What will happen to the HMO market in 2027?

Expect more landlords to leave than join, as some who fixed high borrowing in 2022 struggle to refinance. That should mean more stock for sale in weaker areas, and good value for buyers who plan long term.

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.