The UK rental market is a dynamic space, particularly for landlords and accommodation hunters seeking the right type of housing arrangement. For those evaluating between a House in Multiple Occupation (HMO) and traditional student accommodation, understanding the pros and cons of each can be crucial. Whether you’re a landlord aiming for a high return on investment or a tenant looking for affordable and convenient living options, this guide will help you weigh your options.

What is an HMO?

An HMO, or House in Multiple Occupation, is a property rented out by at least three unrelated people who share facilities like bathrooms or kitchens. This setup is popular in the UK, particularly in university towns and cities, as it allows landlords to maximise income by renting out rooms individually. In most cases, HMO landlords must follow certain regulations to ensure safety and quality for tenants.

What is Student Accommodation?

Student accommodation typically refers to purpose-built properties managed by universities or private companies specifically for students. These buildings often come fully furnished and include shared common areas, like study rooms, gyms, and social spaces. Managed and serviced for convenience, this type of accommodation offers a ready-made community for students, allowing them to live near peers and access student-centric amenities.

HMO vs. Student Accommodation: What’s the Difference?

For landlords and tenants alike, it’s essential to understand how these types of properties differ. Here’s a breakdown to guide your decision-making.

1. Rent and Affordability

Landlord Perspective:

HMO: Renting each room individually can often yield higher returns than traditional rentals. This can be especially profitable in cities where rental demand is high, like London, Manchester, and Birmingham.

Student Accommodation: Student rents are generally predetermined and can sometimes be lower than individual room rentals in HMOs. Additionally, student accommodation is often fully furnished and equipped, which can make it a more hassle-free option for landlords, albeit with potentially lower returns.

Tenant Perspective:

HMO: Many students and young professionals choose HMOs as they tend to offer competitive pricing. By sharing a property, tenants can access affordable rents, often cheaper than dedicated student accommodation.

Student Accommodation: Though sometimes pricier, student accommodation offers convenience, as bills are often included in the rent, and facilities are designed for students’ needs.

2. Location and Accessibility

Landlord Perspective:

HMO: HMOs can be located throughout a city, offering more flexibility in location choice, especially in popular residential areas.

Student Accommodation: Proximity to university campuses is a major selling point. Purpose-built student accommodations are generally near universities, which can attract students looking for convenience.

Tenant Perspective:

HMO: Tenants have more options in terms of location, often allowing them to find affordable housing in various neighbourhoods.

Student Accommodation: Students benefit from living close to campus, reducing commute times and expenses. However, this can limit the variety of available neighbourhoods.

3. Regulations and Licensing

Landlord Perspective:

HMO: Landlords of HMOs in the UK must follow stringent regulations, which may include licensing. Local councils often have specific HMO requirements, such as fire safety measures, adequate bathroom facilities, and space requirements. While adhering to these can be costly, well-maintained HMOs can attract long-term tenants.

Student Accommodation: Purpose-built student accommodations are regulated by different standards, and in many cases, landlords are not directly responsible for their management. This can mean fewer regulatory burdens for landlords, particularly if they invest through a property management company.

Tenant Perspective:

HMO: Tenants should ensure that the HMO they’re interested in meets all safety standards. HMOs are regulated to offer safety and comfort, but it’s essential for tenants to check that the landlord holds the necessary licenses.

Student Accommodation: This accommodation type often benefits from being managed by professional companies that meet standardised regulations, giving students peace of mind regarding safety and comfort.

4. Social Environment and Community

Landlord Perspective:

HMO: HMOs attract diverse tenants, from students to young professionals. This variety can result in less predictability in terms of turnover, but it can also mean a broader tenant pool.

Student Accommodation: These properties are designed to build community among students, with amenities that encourage social interaction and networking.

Tenant Perspective:

HMO: HMOs can offer a quieter environment, which some students may prefer if they’re focused on studying or want more independence.

Student Accommodation: Many students prefer student accommodation for its vibrant social scene. Common areas and planned events make it easier to make friends and engage in student life.

HMO vs. Student Accommodation: Which is Better?

For Landlords: If you’re looking for high returns and flexibility, an HMO can be more profitable, especially in high-demand areas. However, bear in mind the responsibilities tied to HMO management and licensing. If convenience is a priority, purpose-built student accommodation is generally less demanding to manage and can offer consistent returns, though potentially at a lower yield.

For Tenants: Students looking for affordability and flexibility may prefer HMOs, especially when living with friends. However, if you value proximity to campus, included bills, and access to social amenities, student accommodation may be a better choice.

Key Considerations Before Making Your Choice

Budget and Financial Goals: Landlords should consider their financial targets and willingness to manage a property actively.

Tenant Lifestyle: Those who enjoy the social aspects of student life may find student accommodation ideal, while independent students or professionals may prefer the quieter environment of an HMO.

Location: For students, proximity to campus may be a deciding factor. Landlords should consider areas with high rental demand, as HMOs further from campus may still appeal to young professionals.

HMO Landlord Safety Certificates

In Closing

For UK landlords, HMOs can be a lucrative investment, especially in high-demand areas with proper licensing. For tenants, both HMOs and student accommodation have advantages, from affordability to convenience. Evaluating your lifestyle preferences, budget, and proximity to campus or work can help you make the right choice.

Ultimately, the decision between an HMO and student accommodation depends on individual priorities, whether as a landlord looking to maximise returns or a tenant seeking comfortable, affordable housing.

Further Reading