HMO planning refusals have more than doubled since 2021, new research shows.
Housing experts warn tighter rules could be quietly driving up illegal and unregulated occupancy across England, saying renters are being asked to choose between housing that is affordable and housing that is safe as legal shared housing options shrink.
HMOs have long been a lifeline for students, young professionals and low-income workers priced out of living alone. But a growing squeeze on this type of shared housing could leave renters with fewer safe, legal options, according to property expert Paul Endacott of 1st Avenue.
He said: “What we're seeing here isn't really a story about landlords versus councils, it's a story about where people are actually going to live when the legal, regulated options start disappearing. Every time a licensable HMO gets refused planning permission or a licence application gets turned down, that demand for a cheap room in a shared house doesn't vanish, it just goes somewhere else.”
His warning is borne out by analysis of 144 English councils, which shows HMO planning refusals rising sharply. Decided applications climbed 87% between 2021 and 2025, from 1,848 to 3,454, while refusals more than doubled, from 590 to 1,203. Approval rates held at around 68% between 2021 and 2023, before slipping across 2024 and 2025, with early 2026 figures lower still at 63%.
That tightening is happening alongside the spread of Article 4 directions, which remove automatic permission to convert family homes into small HMOs. There is no central register, but the National Residential Landlords Association estimates that 75 to 80 English local authorities have adopted them, with Harrow and Warrington among the latest councils to announce plans. Where no Article 4 direction exists, some small HMO conversions may be permitted development, meaning some may not appear in planning application figures at all.
Paul continued: “The uncomfortable truth is that somewhere else is often less visible and less safe. We know from enforcement patterns over the years that when regulation tightens around larger, more visible HMOs, some operators simply shift into smaller properties or informal arrangements that fall outside a council's usual inspection regime.”
Planning controls are being layered on top of a stricter licensing system designed to improve safety and standards. Under the Housing Act 2004, landlords letting to five or more people from two or more households who share facilities must hold a valid HMO licence, and letting without one is a criminal offence. Penalties can include civil fines of up to £30,000 per offence, rent repayment orders worth up to 12 months' rent, prosecution and entry on the database of rogue landlords and property agents. Some councils are also extending licensing to smaller HMOs, bringing more shared homes into inspection and management regimes.
“That matters because licensing exists for good reasons, covering fire safety, room sizes, and basic living standards,” Paul added. “When people end up in accommodation that was never inspected or licensed, they lose access to all of those protections, often without even realising it.”
Meanwhile, demand for shared housing shows little sign of easing. The Renters' Rights Act is expected to abolish fixed-term tenancies and Section 21 'no-fault' evictions once the relevant provisions come into force. Industry figures have warned this could make HMOs more attractive to some landlords than traditional single lets, while students, a major HMO tenant group, face projections of a student-bed shortfall of around 190,000 by the end of the decade.
Housing bodies warn that reducing legitimate HMO supply does not remove demand for affordable shared accommodation, but may push it elsewhere. The National Residential Landlords Association has previously argued that Article 4 restrictions can disproportionately affect students and young people who choose to live in small groups, while campaigners have pointed to past cases where rogue operators shifted towards smaller, unlicensed HMOs to avoid scrutiny.
Paul concludes: “Councils are absolutely right to clamp down on poor-quality, overcrowded HMOs run by genuinely rogue landlords. But there's a risk that blanket restrictions, particularly Article 4 directions covering entire towns or boroughs, end up filtering out well-managed shared housing alongside the bad, leaving tenants with fewer safe, legal choices rather than better ones.”
“Until local and national policy properly reconciles the demand for affordable shared housing with the drive to raise standards, we're likely to keep seeing this tension play out,” said Paul. “Renters deserve housing that is both affordable and safe, and right now, an awful lot of them are being asked to choose between the two.”
