Councils’ frosty reception for HMOs sees number decline in key regions

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England’s HMO market has shrunk by more than 21,000 properties in the last two years as local councils ramp up planning rules and licensing schemes.

Numbers were down by -2.4% to 489,701 last year, having already seen a -1.7% drop in 2021, according to figures from Octane Capital.

The East Midlands has seen the largest reduction, with HMO stock levels down -26.1% in 2022, while in the North East stock fell by -15.8%.

The South East (-6.7%), London (-5.2%), and North West (-1.6%) have also recorded drops. Despite this, the capital remains home to the greatest proportion of HMOs, accounting for 29% of England’s total stock.

Some regions have seen an increase, however, with levels climbing across the West Midlands (+16.9%), Yorkshire and the Humber (+11.2%), the South West (+0.6%) and East of England (+0.6%).

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Octane Capital CEO, Jonathan Samuels (pictured), says numbers have continued to slide since the introduction of tighter licensing rules at the end of 2018.

“While any attempts to raise living standards for the nation’s tenants should be welcomed, it’s imperative that we also incentivise investors to remain within the sector,” he says. 

“Failing to do so will only see the level of available rental properties continue to fall, driving the cost of renting ever higher in the process, at the expense of the nation’s renters.”

Along with more authorities introducing Article 4 conditions, the proliferation of landlord licensing schemes is also having an impact.

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A record 525 schemes are expected to be live in England and Wales by the summer, according to geospatial technology company Kamma which reports that councils launched 52 schemes and consultations last year. Councils have also stepped up their efforts to target the PRS by hitting errant landlords and agents with larger average fines.

Read more about HMOs.

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