HMO conversions costing £82,000 on average

HMO conversions are costing landlords over £82,000 on average, according to new research from Rushbrook.

This is based on analysis of English landlords with an average HMO size of 5.37 bedrooms, with £15,275 of investment required per bedroom.

Rushbrook analysed HMO property listings across England using PropertyData, alongside estimated conversion costs based on regional construction costs and the average number of bedrooms within existing HMO properties.

London is the most expensive region to convert an HMO, with an estimated conversion cost of £92,796, based on £18,007 per bedroom and an average of 5.15 bedrooms.

The South East follows at £90,552, while the South West ranks third at £89,737.

At the other end of the market, the North East offers the lowest estimated conversion cost at £70,955, followed by the North West (£73,076) and East Midlands (£74,485).

The cost of getting an HMO up and running could be more for landlords buying a property to convert it though.

When factoring in the estimated purchase price of an eligible three- or four-bedroom property, Rushbrook's analysis puts the average total cost of purchasing and converting a property into an HMO at £531,882 across England.

This comprises an estimated property purchase price of £449,798 and an additional £82,084 in conversion costs.

London has the highest estimated total investment requirement at £957,105, followed by the South East at £630,333 and the East of England at £557,416.

Rushbrook found landlords are having to spend more on HMO conversion given the apparent lack of pre-existing HMOs in the market.

The firm’s analysis identified 2,507 licensed HMO property listings across England, with an estimated average asking price of £340,264.

The South East accounts for the largest proportion of available listings, with 478 properties representing 19.1% of the national total.

“Converting a property into an HMO is a substantial financial undertaking, and the conversion costs alone can represent a significant investment before landlords have even factored in the cost of purchasing the property,” said Roma Sharma, managing director at Rushbrook.

“However, buying an existing property doesn't necessarily mean it will require no further work or investment, and landlords still need to carry out the appropriate due diligence.

“Whichever route investors choose, the initial purchase or conversion is only the beginning.

“HMOs bring additional management responsibilities, particularly around maintenance, tenant relationships and compliance, and ensuring these are handled professionally is essential to protecting the investment over the longer term.”