Gareth Broome • July 24, 2024

Understanding HMO valuations


For property investors, one of the attractions of an HMO is the potential to generate higher rental income than a conventional single-let property.



But that income doesn't automatically translate into a higher valuation.


A group of people are sitting at a table with a laptop and a model house.

A conventional residential valuation is primarily based on bricks-and-mortar value and comparable evidence. An established HMO can sometimes be assessed on an investment basis, taking into account the income it generates.


The property's configuration, number of bedrooms, facilities, planning use, licensing and the extent to which it has been adapted for HMO use can all matter.


Article 4 Directions can also be important because they can remove permitted development rights for certain HMO conversions in specified areas.


Not every lender approaches valuation in the same way. Some may only consider bricks-and-mortar value; others may consider investment value where the circumstances support it.


The question isn't simply 'What is my HMO worth?' It is 'Which lender is likely to value this property in the way that best reflects its actual investment characteristics?'



At Eastgate, we consider the valuation approach as part of the wider finance strategy.

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