Research by residential property management specialist Rushbrook indicates a significant cost difference for landlords considering HMO investments. The average asking price for an existing licensed HMO in England stands at £340,264. This compares to an estimated £531,882 for the route of purchasing and then converting a property.
The £191,618 gap highlights that buying an already licensed HMO is, on average, less expensive than undertaking a conversion. Rushbrook's figures are based on 2,507 licensed HMOs advertised for sale and estimated conversion costs.
The estimated conversion bill averages £82,084 across England, added to an average purchase price of £449,798 for an eligible three or four-bedroom property. London has the highest estimated conversion cost at £92,796, while the North East has the lowest at £70,955. For existing licensed HMOs, London is the most expensive market with an average asking price of £763,981, and Yorkshire and the Humber has the lowest at £203,146.
Roma Sharma, Rushbrook's managing director, noted that while an established market of licensed HMOs exists, buying an existing property does not guarantee it will require no further work or investment. She emphasised the need for appropriate due diligence and professional handling of ongoing management responsibilities, including maintenance, tenant relationships, and compliance, to protect the investment long-term.