HMO licence applications have risen 40 percent since 2018, according to new research from specialist insurer Just Landlords, with councils now receiving more than 57,000 applications a year as landlords shift towards shared housing.
HMO demand shifts towards regional growth areas
The research, based on Freedom of Information responses from 302 local authorities, found annual HMO applications climbed from 41,162 in 2018 to 57,725 in the latest year covered. Edinburgh recorded the highest average number of applications at 5,158 a year, followed by Oxford on 2,458 and Bristol on 1,491.
Outside the traditional university city hotspots, some regional markets showed much faster growth. Sandwell reported a 964 percent increase in applications between 2018 and 2024, while West Lancashire was up 886 percent. That points to landlords looking beyond established city centres as pressure on affordability keeps demand for shared accommodation high.
The regional split matters because it suggests the HMO story is no longer confined to a handful of student-heavy locations. Investors appear to be responding to a wider affordability problem in the rental market, where room-by-room letting can make monthly costs more manageable for tenants while preserving income for landlords.
For landlords, the attraction is clear. HMOs can offer stronger yields than single-let property, especially where tenants are willing to trade private space for lower monthly housing costs. But the figures also suggest competition is rising in the very areas where more investors now see opportunity.
Compliance pressure rises with the market
The same dataset found HMO inspections were up 83 percent since 2018, while enforcement action, including improvement notices and prosecutions, rose 180 percent. Areas including Lewisham, Wandsworth and Liverpool recorded some of the highest annual enforcement totals, showing councils are paying closer attention as the sector expands.
Clark Ross, managing director of Just Landlords, said higher standards should be seen as positive for professional operators because tighter oversight helps stop compliant landlords being undercut by poorer-quality competitors.
That matters because application quality appears uneven in some locations. Blackpool saw 70 percent of annual HMO applications refused in the data analysed, while Fenland recorded a 51 percent refusal rate. For investors moving into shared housing for the first time, that is a warning that licensing rules, management standards and local conditions can quickly affect viability.
In practice, that means landlords cannot rely on national averages alone. A council with high demand can still be a difficult market if planning controls, amenity standards, room-size rules or enforcement priorities make licensing harder to secure. The strongest opportunities are likely to be in areas where tenant demand is rising but local compliance hurdles remain predictable and well understood.
This follows Landlord Knowledge’s report on Croydon’s dual licensing rollout, which showed how quickly compliance requirements can widen once councils decide larger parts of the private rented sector need closer oversight. Combined with recent enforcement action in Greenwich, the latest figures suggest HMO growth and tougher regulation are now moving in parallel.
Just Landlords said the study was based on FOI requests covering application volumes, refusals, complaints, inspections, enforcement activity and unlicensed HMOs. The company says its research into the HMO market shows landlords are increasingly treating shared housing as a long-term strategy rather than a niche sideline.
What this means for landlords
- If you’re considering HMOs: rising application numbers suggest there is still demand, but crowded local markets may be harder to enter profitably than headline growth figures imply.
- Watch for: licensing refusal rates, inspection trends and enforcement levels in your target council area before buying or converting a property.
- Bottom line: HMOs can still offer attractive returns, but the margin for error is shrinking as councils tighten standards and more landlords compete for the same tenants.
Editor’s view
Landlords are not moving into HMOs by accident. They are doing it because shared housing still offers one of the clearest ways to protect yield when costs, tax and regulation are squeezing single-let returns. But this report also shows the easy wins are disappearing, and compliance is becoming just as important as demand.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 9 April 2026
Sources: Just Landlords research, FOI data from UK local authorities
Related reading: Croydon launches dual licensing schemes covering 73% of rental stock
