Non-Article 4 areas: where to invest in HMOs, and why planning comes fifth

The best non-Article 4 areas for HMO investment are rarely the ones investors are hunting for. If you pick a town because it hasn't gone Article 4 yet, you are choosing on ease of conversion rather than tenant demand, and only one of those still matters to you in year five.

This guide is for investors and developers deciding where to buy or build an HMO. It covers what an Article 4 direction changes, why the open postcode is often the crowded one, and the questions to answer first. It's the question I'm asked more than any other, answered on the HMO X Weekly Community Call in August 2026.

Key takeaways

• Choose the location on tenant demand, tenant profile, your team and how sustainable the income is. Check Article 4 status after that.
• Permitted development only takes a house from C3 to C4 for up to six people. Seven or more needs a planning application wherever you are.
• Areas without Article 4 are no hidden gem. Most developers know where they are, and their new stock is your competition.
• Article 4 areas are harder, not closed, and coverage is often patchwork, ward by ward.

What is an Article 4 direction?

An Article 4 direction is made under article 4 of the General Permitted Development Order. As GOV.UK's planning guidance explains, it allows the Secretary of State or a local planning authority to withdraw specified permitted development rights, including rights to change the use of a building.

For HMOs, the right that matters is Class L of the General Permitted Development Order, which lets a house move between C3 (a dwellinghouse) and C4 (a small HMO) without a planning application. Where Article 4 removes that right, the change needs planning permission.

What permitted development does and doesn't cover

This right gets stretched in conversation. Under the Use Classes Order, C4 means a house occupied by not more than six residents. Six is the ceiling.

A scheme for seven or more people falls outside C4 altogether. It becomes sui generis (a use "of its own kind", outside the standard classes) and needs a planning application, Article 4 area or not. Loft conversions and extensions sit under separate permitted development rights, with their own limits.

So the easy build people picture is a six-person HMO and nothing larger. If your numbers only work at seven or eight, the non-Article 4 postcode has bought you far less than you thought. Take advice from a qualified planning consultant on any specific scheme.

Why do investors look for non-Article 4 areas?

When someone leads with Article 4, what they want is almost always the same: a cheap terraced house taken from C3 to C4 without a planning application, fitted out all en-suite, let quickly and refinanced. The question usually tells me someone is chasing a refinance rather than choosing an investment area.

That isn't unreasonable. The concern is what it leaves out: where the demand is, whether it will last, which areas to avoid, and how exposed you'd be if borrowing rests on rents the town can't sustain.

HMOs are there to solve a local housing need, not to provide a strategy to investors.

An HMO is a home for people who need somewhere to live in that town, near that work. When that need lines up with your plan, you have a good investment. When you start from the plan and hunt for a postcode to fit it, you've got it upside down.

Are non-Article 4 areas the best areas for HMOs?

Not automatically, and often the opposite. There are pockets of the country not yet under Article 4, but most developers already know where they are. That is the problem with the question.

The pattern repeats. An authority closes an area with a new direction, attention moves to the nearest open location, and within a year it has plenty of developers and new stock arriving at once. Everything off that conveyor belt is your competition.

The launch-rent trap

A wave of newly converted, fully en-suite six-person HMOs sets a new top of market for local room rates, and those rents look good while the wave is cresting. Take them if you have them. But be careful what you borrow against them: the level new supply supports on the way in is not always the level it supports on the way out. Speak to a specialist broker before setting finance against launch rents.

Is Article 4 a closed door?

No. Article 4 areas are harder, which is a different thing, and harder is often where the better assets sit. Fair-weather developers go where planning is easy, which is frequently where demand is thinnest.

You can still develop inside an Article 4 area with a capable planning consultant and real knowledge of the local authority. Or you can focus on buying an established HMO in a key location, check it is lawful and compliant, and hold it in a catchment new supply can't easily enter. Some of the best HMOs I see are developed inside Article 4 areas.

Where to invest in HMOs: six questions to answer first

When someone asks me the Article 4 question, I ask these back. They decide whether you end up with a successful build and a successful HMO.

1. What do you know? Which parts of the country are close to you, and which do you know best?
2. Who will you work with? Where would you be comfortable with a particular build team or managing agent?
3. How will you run it? Will you invest locally and perhaps self-manage, or buy at a distance?
4. Will the demand last? Are you choosing on longevity of tenant demand and income, and a tenant profile you understand?
5. Is your team in place? Do you have a power team somewhere: people you trust, who answer the phone?
6. Now, what does planning allow? Is the area under an Article 4 direction, is coverage complete or patchwork, and which wards are in or out?

Who looks after the asset once it's trading matters more than the postcode's planning status. A well-run property in a deep lettings market lets more reliably than an easy conversion in a thin one.

A region is not one market

Article 4 is rarely a clean line around a whole town. In some cities certain wards are in and others are out, and directions are introduced, extended and occasionally lifted. Once you've chosen a location for the right reasons, work those margins ward by ward rather than letting the designation choose the town for you.

Room rates vary just as much: a principal town with deep demand can sit fifteen miles from smaller towns with a far lower rate ceiling. A county-level view will mislead you. A street-level view will not.

How I approach this

Planning status matters a great deal to what you can build and how long it takes. It's just the fifth question, not the first. My starting point is the developer lens of the Tier Methodology: design for the tier the asset will hold long-term, not the opening rent.

Every HMO has a home tier: the tier its market, asset and operation should support. A new six-person, all en-suite conversion will usually launch looking like Tier 2 (New Quality). The question is whether the local market holds it there once the next wave of identical stock arrives, or whether room rates drift it towards Tier 3 (Standard). That gap is where optimistic plans come unstuck.

So look at the data first: how many HMOs are being created, where rents are moving, how much new stock is coming, and how sustainable demand looks against it.

Understand the local market and the needs of the tenants in it, and your HMO will succeed on execution and quality ongoing management.

Frequently asked questions

What is the best non-Article 4 area in England?

There isn't a single answer, and chasing one is usually the mistake. Areas without Article 4 are well known to developers, so they tend to attract waves of new HMO stock competing for the same tenants. The best area for you has deep, durable tenant demand that you understand and can manage well. Check planning status after that.

Can I convert a house to an HMO without planning permission?

In general, permitted development allows a change of use from C3 to a C4 small HMO for up to six residents, unless an Article 4 direction has removed that right locally. An HMO for seven or more people is sui generis and needs planning permission wherever it is. Take advice from a qualified planning consultant before you buy.

Is it worth investing in an Article 4 area?

It can be. Article 4 makes new HMO supply harder to create, which can protect established, lawful HMOs from a flood of competing stock. You can still develop there with a capable planning consultant, or buy an established HMO after checking lawful use and compliance carefully.

How do I find out if an area has an Article 4 direction?

Check the local planning authority's website, which should list any Article 4 directions in force and the areas they cover. Coverage can apply to specific wards rather than a whole town, and directions are introduced, varied and occasionally withdrawn. Always confirm the current status with the council before committing to a purchase or a scheme.

Choose the area, then check the map

Don't follow the crowd to the next open postcode. By the time you've heard about it, so has everyone else. Decide on the investment first: test a specific HMO against real local market data with my free HMO Analyser, or email me about a location you're weighing up.

*Article 4 directions are introduced, varied and withdrawn by individual local authorities. Always confirm current status with the relevant authority before committing to a purchase.*

Written by Richard Nicholls, Lead Valuer and Business Development Manager at HMO X and creator of the Tier Methodology. First written for HMO X.