What’s the Difference Between HMO & Standard Rentals in London? | Keating Estates

What’s the Difference Between HMO & Standard Rentals in London?

If you’re considering letting property in London, one of the first decisions you’ll need to make is whether to let your property as a standard rental or as a House in Multiple Occupation (HMO). While both options have their benefits, they come with very different legal responsibilities, tenant dynamics, and income potential.

At Keating Estates, we help London landlords navigate these choices every day. This guide outlines what defines each type of tenancy, how they differ, and what you should consider in 2025.

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What Is a Standard Rental?

A standard rental property is typically let to:

  • A single person
  • A couple
  • A family unit

These tenancies are governed by a single Assured Shorthold Tenancy (AST) agreement with joint or sole responsibility for the property.

Key Features:

  • One tenancy agreement
  • One household
  • Shared responsibility for bills and maintenance
  • No special licensing required (in most cases)

Standard rentals are ideal for:

  • One-bed or two-bed flats
  • Family homes
  • Professional couples or young families

What Is an HMO?

An HMO (House in Multiple Occupation) is defined as a property rented by three or more people who are not from one household and share facilities (e.g. kitchen or bathroom).

Examples:

  • Three or more unrelated individuals sharing a house
  • A flat shared by multiple tenants with individual rooms

HMO Rules in London:

  • Mandatory licensing for large HMOs (5+ tenants from more than one household)
  • Selective licensing in many boroughs (even for 3+ tenants)
  • Additional safety measures (fire doors, smoke alarms, etc.)
  • Annual inspections and stricter compliance

Letting an HMO without the required license can lead to significant fines and legal action.

Pros and Cons for Landlords

Income Potential

  • HMOs typically generate higher rental yields because rent is charged per room
  • Standard rentals may offer lower yield but less management complexity

Management

  • HMOs require more frequent maintenance, tenant communication, and higher compliance effort
  • Standard rentals are easier to manage, with fewer voids and longer tenancies

Tenancy Duration

  • HMOs often attract shorter-term lets (6–12 months)
  • Standard rentals often involve families or couples who stay longer

Costs

  • HMOs incur higher upfront setup costs (licensing, fire doors, layout changes)
  • Standard rentals have lower startup requirements

Where Do HMOs Work Best in London?

  • Student-heavy areas (e.g., Camden, Stratford, Southwark)
  • Professional sharer hubs (e.g., Clapham, Brixton, Tooting)
  • Properties close to major transport links

We regularly help landlords convert properties into compliant HMOs — or advise when a standard rental is the better option.

Legal & Safety Requirements (2025 Update)

All rental properties must meet minimum standards, but HMOs require:

  • Valid HMO licence (per borough rules)
  • Fire risk assessments and smoke detection systems
  • Annual Gas Safety Certificates
  • Electrical checks (EICR) every 5 years
  • Minimum room sizes and amenity requirements

Letting a property as an HMO without the correct structure or paperwork can void insurance and risk serious penalties.

Which Type of Rental Is Right for You?

Choose an HMO if:

  • You want to maximise rental yield
  • You have time or support to manage multiple tenants
  • Your property layout supports room-by-room letting

Choose a Standard Rental if:

  • You want less admin and compliance
  • You’re targeting couples or families
  • You prefer longer-term, stable tenancies

Q&A: HMO vs Standard Rental

FAQs – HMOs and Rentals

Yes — but you must check local council requirements and apply for the correct licence first.

Not all — but most do in London. Many councils require licences for 3+ sharers.

Usually, yes — but the increased income must be weighed against higher costs and complexity.

Yes. Keating Estates can advise on layout, licensing, compliance, and tenant sourcing.

Need Help Choosing the Right Letting Model?

Keating Estates offers expert lettings and management advice across London. Whether you’re considering HMO conversion or want a reliable, hands-off standard rental, we’ll guide you every step of the way.

Visit: www.keatingestates.com
Call: 020 7274 3111
Email: info@keatingestates.com