How To Sell An HMO Property (2025 Update)

Max Royston

Selling an HMO is a far more complex process than a normal property sale. Everything from the initial valuation method to the paperwork required for a sale is exclusive and unique to HMO sales. It can easily get confusing, and you need your facts straight before you start.

Cash house buyers are the easiest way to sell an HMO property. At Gaffsy, our experts will talk you through every step of the process, but should you want to learn more about your options for selling an HMO first, this article will answer your questions.

What is an HMO property?

An HMO is a House in Multiple Occupation. According to the Government’s website, your home is a House in Multiple Occupation if three or more unrelated people live there forming more than one household PLUS you share a toilet, bathroom, or kitchen with other tenants.

There is also a separate classification for a large HMO. Your home will count as a large HMO if at least five tenants live there, forming more than one household.

An HMO might be a shared house, hostels, halls of residence or employee accommodation. Importantly, it’s different to a household where the residents are married or cohabiting or are related as family. HMOs are also distinct from multi-lets, despite these terms often being used interchangeably. A multi-let is a broader term referring to any property rented out to multiple tenants, like a scenario where a group of friends rent out a house on a single tenancy agreement.

The purpose of an HMO is to provide affordable housing options for individuals who might not be able to afford to rent an entire property on their own, such as a student or young professional. They’re also beneficial for landlords, as an HMO can often yield a higher total rent. However, they come with increased responsibilities, like the need to meet minimum room sizes and the correct fire safety regulations.

HMOs have different requirements for health & safety and maintenance than other types of rental properties which are occupied by one household. A large HMO, with more than five tenants, requires a license from the local council. Some local authorities also require a license for even small HMOs. We’ll cover further details on the documentation needed to sell an HMO later in this guide.

How is an HMO valued?

It can be tricky to value an HMO property for sale due to the subjective nature of valuations and scarcity of local comparable properties. Unlike traditional residential properties, HMOs, especially large ones, are often valued more as businesses rather than solely on their bricks-and-mortar value. This is primarily because they generate income. There can be some exceptions; for example, a small HMO for sale that could be used as a single household home may be valued as a traditional property instead.

When putting up your HMO for sale, it is important to value it accurately and aim to be realistic about your asking price, as incorrect valuations will cause problems with the sale later. 

Factors impacting HMO property valuations include:

• The current and potential rental income
• The occupancy rates
• Proximity to universities or city centres
• The condition of the property
• Number of lettable rooms
• Whether all necessary licenses are in place
• A history of reliable, long-term tenants

Differences between selling an HMO and a regular property

Documentation requirements

HMO sales require much more extensive documentation than a regular property sale. This includes but is not limited to:

• HMO floor plan
• Building regulation certificate
• HMO planning permission
• Fire alarm certificate
• Gas and electric safety certificates
• HMO license certificate (if a large HMO)
• EPC certificate
• Tenants’ details, along with tenancy agreements and records of rent paid
• Your HMO accounts

Aim to sell your home through an experienced HMO estate agent or cash house buyer. They will be able to advise on exactly what documents will be required in your area.

Target market

The pool of potential buyers for an HMO is generally smaller and more specialised than for regular properties. These buyers will typically be investors or professional landlords, rather than homeowners.

More challenging mortgages

Getting an HMO mortgage is usually more difficult and expensive than getting a standard residential mortgage. Buyers will need to work with specialist lenders, and the mortgage process can be more time-consuming and complex. 

A higher deposit requirement, of between 25-40% is typically required for an HMO, and they’ll be stricter lending criteria with a more detailed affordability assessment.

Difference insurance terms

As you would expect, the terms of your HMO insurance policy differ significantly from standard home insurance. Policies need to cover multiple unrelated tenants and a higher liability coverage is usually required. The premiums will also be more expensive due to the increased risks involved with an HMO.

It’s crucial to check your HMO is correctly registered with your insurer, as this will ensure you maintain valid coverage during the sale process.

Tenant considerations 

Unlike most regular property sales, HMOs are often sold with sitting tenants and you’ll need to carefully manage tenant communications throughout the sale process. This can be attractive to investors looking for immediate rental income, but bear in mind that buyers will want to review existing tenancy agreements and tenant histories. Be prepared for a more lengthy and detailed process compared to a standard property sale.

How long does it take to sell an HMO?

HMO property sale transaction times really can vary depending on the size and complexity of the property. However, it goes without saying that, the larger & more complex the property, the longer the transaction time.

How long the process takes will also come down to the method you have chosen to sell your house. For instance, if you have chosen to sell your house of multiple occupancy at auction, it will take at least twenty-eight days for the sale to complete. Selling your HMO on the open market will take much longer, often reaching many months due to the time taken for conveyancing and the small pool of buyers.

Alternatively, you could sell your HMO directly to a cash buyer, which is a quick and guaranteed way of cementing a sale. In the following section, we explain the different HMO-selling methods available to you in more detail.

Ways to sell an HMO

When it comes to selling your House in Multiple Occupation (HMO), there are several routes you can take, each with its own advantages and disadvantages. Have a read of our summary to understand your options and make the most informed decision.

Estate agents

Selling through a traditional estate agent is a common approach for HMO owners as they have experience in marketing properties and can access a wide network of potential buyers. They’ll handle the viewings, negotiations, and can guide you through the sales process. However, not all estate agents are well-versed in the intricacies of HMO sales so it’s important to choose an agent with specific experience in this niche market. While they can potentially achieve a good sale price, the process can be lengthy, often taking several months. Additionally, consider that commission fees will be taken from the sale price, and they can be substantial.

Auction houses

Selling an HMO at auction can be a quick way to dispose of the property, often completing within a month of the auction date. Another plus is that this method can create competition among buyers, potentially driving up the price. Auctions are particularly useful for HMOs that may be difficult to sell through traditional means, perhaps due to their condition or location. However, there’s a risk of the property selling for less than you hoped, and you’ll need to set a reserve price carefully. 

Private sale

Some HMO owners opt to sell their property privately, without using an agent; this approach saves on agent fees and gives you complete control over the sale process. It works particularly well if you already have interested buyers, such as other local landlords or investors. However, selling privately requires significant time and effort. You’ll need to handle all aspects of the sale, from marketing to negotiations, which can be challenging, especially if you’re not experienced in property sales.

Cash house buyer

Selling to a cash house buyer is often the most efficient and straightforward option for HMO owners. These companies specialise in quick purchases and often have experience with HMOs – they’re usually investors themselves so have a good understanding of the HMO market. The process will also be much faster than other methods, completing in as little as one week. 

Another advantage of using a cash house buyer is that, whilst the offer may be slightly below market value, there will be no agent fees to pay. You’ll also save yourself the stress and uncertainty of chains or buyers pulling out at the last minute. A cash buyer will take on HMOs in any condition and are often willing to purchase with sitting tenants, making the whole process easier for you.

Sell your HMO quickly with Gaffsy

If selling to a cash house buyer stands out as the best option for you, why not get in touch with Gaffsy? We’re experienced and trustworthy buyers, with the sole aim to provide a simple and fast solution for your house sale.

We specialise in purchasing properties in all conditions – including fully operational HMOs, those needing renovations, and even properties facing licensing issues. 

Here’s how we can help you sell your HMO quickly and efficiently:

• Fast process: We can make a cash offer on your HMO within 24 hours, regardless of its current occupancy status or condition. This rapid response can be particularly valuable if you’re facing time-sensitive issues such as expiring licenses or necessary costly renovations.

• Tenant management: Unlike traditional buyers who might be deterred by existing tenancies, we’re comfortable purchasing HMOs with sitting tenants. We’ll handle all aspects of tenant management post-sale, including communication and potential relocations if necessary.

• No fees: Our offer is what you get – no hidden costs, no estate agent fees, and no need to pay for additional HMO-specific marketing. This can result in significant savings for you, especially considering the higher fees often associated with selling specialist properties like HMOs.

Useful Links:

https://www.gov.uk/private-renting/houses-in-multiple-occupation

https://www.londonpropertylicensing.co.uk/mandatory-hmo-licensing