The UK’s House in Multiple Occupation (HMO) market has seen a surge in growth, with new data revealing a 40% increase in license applications since 2018. The research suggests that landlords are increasingly pivoting towards shared housing to meet the soaring demand for affordable, high-quality living spaces.
The study, from specialist landlord insurance provider Just Landlords, analyses data obtained via Freedom of Information (FOI) requests from local councils across the UK. It found that since 2018, the number of annual HMO applications has climbed from 41,162 to a record-breaking 57,725.
While growth has been steady throughout the UK, the situation varies from one city to the next. Edinburgh was named the UK’s HMO capital, with an average of 5,158 applications each year. This was followed by Oxford at 2,458 and Bristol at 1,491. Southwark and Tower Hamlets round out the top five with 1,412 and 1,394, respectively.
Sandwell, in the West Midlands, reported the highest rate of growth, seeing applications jump by 964%, from 28 in 2018 to 298 in 2024. West Lancashire saw applications grow by 886%, while applications increased by 750% in in Tower Hamlets, 742% in Guildford and 481% in Waltham Forest.
As the sector grows, the data also points to an increasing focus on quality and compliance. Across the UK, council inspections of HMOs have risen by 83% since 2018, while enforcement actions, including improvement notices and prosecutions, have jumped by 180%.
However, the data also identifies areas where the market is still adjusting to new regulations. Areas like Blackpool and Fenland saw over half of their annual applications refused, at 70% and 51% respectively, and Sandwell, despite seeing the highest growth rate, also reported the third-highest refusal rate at 48%.
Meanwhile, landlords in Lewisham, Wandsworth and Liverpool saw higher than average numbers of enforcement actions. Lewisham reported the highest number at 288, Wandsworth was second at 146, while Liverpool and Denbighshire both reported 141.
Nevertheless, the data suggests that the overall picture of the UK HMO market remains one of strong growth and professionalisation. As more landlords enter the sector and councils continue to improve oversight, standards across shared housing are expected to continue rising.
For professional landlords, the growing demand for shared accommodation presents a significant opportunity, particularly in high-demand university cities and growing regional investment hubs. With the right licensing, compliance, and insurance in place, HMOs remain one of the most resilient and high-yielding areas of the rental market.
"We’re witnessing a major evolution in the UK rental market," Clark Ross, managing director of Just Landlords, said. "An increasing number of landlords are moving away from traditional lets in favour of HMOs, to help meet the growing demand for flexible, affordable housing solutions.
"We’re also seeing an interesting geographical shift in investment. While London remains a cornerstone of the market, there has been huge growth in the Midlands and the North, with some areas seeing application numbers increase by nearly 1,000% since 2018."
He added: "While our findings reveal an environment of tightened regulation, this should be seen as a positive step for the market. Higher standards protect the reputation of the sector and ensure that dedicated, professional landlords aren’t being undercut by sub-standard operators. As the sector continues to grow, the most successful landlords will be those who treat their compliance and insurance as the bedrock of their business strategy."
