Are HMOs dead? Not quite but they must evolve
By Natasha McCracken, Co-Founder, Goldfinch Property Investments
I’m often asked whether HMOs (Houses in Multiple Occupation) are “dead”. The truth is more nuanced: the commercial market is saturated, and a combination of regulation that favour the tenant and increase risk for the landlord such as abolishing section 21, enhanced costly licensing requirements, changing social expectations of what a quality HMO is in an extremely competitive market, councils building ever more studios aimed at students, and of course the ever-broadening geography of Article 4 regulation around city areas, means the traditional high-yield HMO playbook no longer works the way it used to. Many investors are finding their numbers no longer stack up.
When Supported Housing Is Treated Like a Shortcut
In response, a wave of investors has flocked to the supported-accommodation HMO model, seeing it as a quick fix to preserve yields and lower risk. But without genuine intent, this strategy doesn’t hold up in the longer term.
Why? Because supported housing isn’t just a property play — it’s a people-centred ecosystem. When homes are poorly configured, partnerships are thin, or the focus is purely commercial, the quality of care and the longer term stability of income both suffer.
We’re are seeing regulatory gaps creating confusion, loopholes, and the potential for commercial gain over quality. There’s still a lack of clarity around planning requirements regarding minimum studio sizes in HMO-style conversions. This means that, in too many cases, commercial decisions trump ethical ones — properties get pushed to the edge of compliance rather than designed for dignity.
Developers create high-yielding properties because they hold ‘studios’ not rooms, are able to flip much more profitably - and do so, to a whole new marketplace of investors in supported accommodation; some who are coming from an ethical place but wanting the best financial returns.
In the long term, that’s not sustainable. It’s not sustainable for residents, who deserve safe and appropriate homes. It’s not sustainable for care providers, who carry reputational and operational risk. And it’s not sustainable for investors, because fragile schemes eventually unravel.
Doing the Right Thing Is the Sustainable Strategy
At Goldfinch Property Investments, we believe in taking the time to do this properly. We create asset-based opportunities by partnering with charities, the housing associations displaying the highest standards, and care providers who deliver genuine, measurable outcomes.
Each home is thoughtfully designed, fully compliant and placed on long-term leases that provide stable, predictable income — underpinned by purpose and integrity. It’s a model that balances commercial rigour with human responsibility.
Doing the right thing isn’t a moral luxury; it’s the most resilient form of investing there is. Regulation will continue to tighten, expectations will continue to rise, and those who build on ethical, transparent foundations will be the ones left standing.
Because in housing — as in investing — better values lead to better value.
Better investments, for better results, for everyone.
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