Houses of Multiple Occupation (HMOs), an important source of rental accommodation, are facing increasing restrictions across the UK. Councils are utilising planning powers, Article 4 Directions, and additional licensing schemes to manage their growth.
For example, Harrow Council introduced a borough-wide Article 4 Direction for smaller HMOs in June. Weeks later, the council refused an application to expand an existing five-bedroom HMO to six bedrooms, citing the new direction.
The rental market remains competitive, with Zoopla's Rental Market Report indicating that rental stock is 3% lower than a year ago, and the number of new homes entering the market has fallen by 6%. There are now over five enquiries for every available rental property, and Zoopla anticipates rents will rise by 4-5% by the end of 2026.
Landlords are also navigating a more complex environment, with significant mortgage and operating costs, alongside changes to the regulatory framework. The Renters' Rights Act, effective from May 2026, abolished Section 21 'no-fault' evictions and introduced assured periodic tenancies. A new Private Rented Sector Database will also require landlords to register each rental property at a cost of £65 per property per year.
Research from PlanningLens, covering 144 English councils, shows a tightening planning environment for HMOs. The number of HMO applications refused more than doubled from 590 in 2021 to 1,203 in 2025, while the approval rate decreased from 68.1% to 65.2%.