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Single Lets VS HMO's

Updated: Nov 26, 2020

Many of us 'property people' choose to strategically invest in both Single-Lets and HMO's to diversify their property portfolios.

So what are Single-Lets and HMO's?

A Single-Let is a property that is let out for a single fixed price. This could be to an individual, a couple, or a family, but the rental sum is through a single AST contract.

HMO stands for 'House of Multiple Occupancy'. If you read our last blog post you'll know all about these. This is usually a house of students, or working professionals who each pay rent individually by room.


Single-Lets are popular among families and couples. They can require a specialist Buy to Let insurance in place that covers both contents. They may also require public liability insurance – this will come in handy if an accident were to occur within the property.

What are the Pro's of a Single Let?

1. There is less management work as there is normally a smaller amount of tenants.

2. The property still benefits from capital appreciation- usually around 5-7% which is still much better than what it would be doing in the bank.

3. The tenants are more likely to be long term, which means less voids.

4. The house is more likely to suffer less from wear and tear meaning you won't need to replace things as often as you might in a HMO.

What are the Con's of a Single Let?

1. They often generate a lower cash-flow than a HMO due to there only being one stream of rent per calendar month. A lower cash-flow means a lower NET profit, meaning a lower ROI.



A HMO is a property which is let out to individuals on a multi-let basis. For example, a five bedroom HMO will bring in five streams of income from the tenants, rather than one stream like a Single Let.

Primarily, HMO's are let out to students and working professionals. They often find that it is cheaper to rent out a room in a HMO than a flat or house to themselves. HMO's are often situated in urban locations to meet the demands of students and working professionals.

Similarly to Single-Let's, HMO's will also require a specialised Buy to Let insurance that covers the contents, as well as public liability insurance if someone were to accidentally injure themselves due to a fault of the property.

What are the Pros of a HMO?

1. A HMO is a multi-stream asset, which means a higher cash-flow than a Single-Let. A higher cash-flow means a higher NET profit and a higher ROI.

2. HMO's can be considered more valuable than Single-Let's of a similar size and calibre, due to higher cash-flow generated, investors will pay more for a HMO on the market.

What are the Cons of a HMO?

1. An increased number of tenants tends to lead to more wear and tear on the property which will result in money being spent on replacing things.

2. More management is required.

3. Additional call outs may be required if one of your tenants loses their keys.

4. Voids. Many HMO's that are let to students are vacant for up to three months of the year due to their term ending in May and commencing in September. This means you will have potential void periods over the summer months. You will also most likely have to find new tenants each year as many students find new houses per year.

Single-Let's or HMO's?

Overall, both assets have their pros and cons. However, generally speaking HMO's generate a much higher cash-flow than Single-Let's, but more work and management in required. Having a mixture of both Single-Lets and HMO's help diversify risk within your portfolio as more and more councils are heading towards the article 4 direction.

Thanks for reading!


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