How do you work out HMO yield?

Add up the rent from every room to get the total monthly income, multiply by 12 for the annual rent, then divide by the purchase price for the gross yield. Net yield and ROI also subtract bills, voids, management and mortgage interest, which the calculator above does for you.

Why is HMO cashflow higher than a standard BTL?

Letting by the room usually produces more total rent than a single household tenancy, so a well-run HMO can cashflow far better. It also costs more to run (bills are typically included, management is heavier, and licensing, fire safety and Article 4 planning can apply) so model the real costs, not just the headline rent.

Do I need an HMO licence?

Most HMOs of five or more people forming two or more households need a mandatory licence, and many councils run additional or selective licensing on smaller HMOs. Always check the specific council before you buy. It affects both cost and whether the strategy is viable.

How do you work out HMO yield?

Add up the rent from every room to get the total monthly income, multiply by 12 for the annual rent, then divide by the purchase price for the gross yield. Net yield and ROI also subtract bills, voids, management and mortgage interest, which the calculator above does for you.

Why is HMO cashflow higher than a standard BTL?

Letting by the room usually produces more total rent than a single household tenancy, so a well-run HMO can cashflow far better. It also costs more to run (bills are typically included, management is heavier, and licensing, fire safety and Article 4 planning can apply) so model the real costs, not just the headline rent.

Do I need an HMO licence?

Most HMOs of five or more people forming two or more households need a mandatory licence, and many councils run additional or selective licensing on smaller HMOs. Always check the specific council before you buy. It affects both cost and whether the strategy is viable.

All tools

HMO Calculator

Work out the real return on a house in multiple occupation: room income against bills, voids, management and finance, with cashflow, ROI and yield.

Room income
Cashflow + ROI
Gross yield

Indicative only. Built from published rules and the figures you enter; we do not guarantee accuracy or completeness, and this is not tax, legal or financial advice. Check with a qualified professional before relying on it. How accurate is this?

Our take

HMO income looks big because the costs hide in the detail

Letting by the room usually brings in more rent than one household tenancy would, which is why HMO figures look strong on paper, and the calculator sets bills, voids, management and finance against that income.

The costs that surprise first-time investors are the compliance ones: a mandatory licence for most HMOs with five or more people from two or more households, fire safety work, and in some areas an Article 4 direction that turns the change of use into a planning application.

Check the council’s licensing and planning position before you offer, because it decides whether the strategy is open to you at all, then model a few empty rooms, since a deal that only works at full occupancy is thinner than it looks.

If the numbers survive that test, a deal pack lays the room-by-room income and costs out in a form a lender or business partner can read.

Our opinion, based on the official sources named above: general guidance, not regulated advice and not a forecast. We earn from OfferCheck reports and from introducing sellers to cash buyers, so weigh it with that in mind (see our disclosure). We are not authorised or regulated by the FCA.

Strategy

Market value

£0£1,000,000

Purchase price

£0£1,000,000

Monthly rent (total)

£0£5,000

Sourcing fee

£0£20,000

Refurb / furniture

£0£200,000

Bills (pcm)

£0£1,500

Legal fees

£0£10,000

Deposit

0%100%

LTV

0%100%

Mortgage rate

0%15%

Management

0%30%

Voids / maintenance

0%30%

Additional property (5% SDLT surcharge)Tax region

Stress test

If things move against you

The same cashflow maths, re-run at a higher rate, lower rent and a void month: pure arithmetic, no forecast.

Scenario	Cashflow / mo	ROI
Today	£996	31.0%
Rate +1%	£933	29.1%
Rent −5%	£908	28.3%
1-month void	£850	26.5%

Self-managed cashflow on the figures you entered. Other running costs are held fixed in each scenario, so these are conservative. A guide, not a forecast.

Full breakdown

BMV

20.0%

Gross yield

21.1%

ROI (self)

31.0%

ROI (managed)

24.5%

Cashflow (self, pcm)

£996

All-in capital

£38,500

SDLT

£5,000

Reverse calc: target ROI

5%40%

Max offer for 20% ROI: £141,000

SDLT includes the 5% additional-property surcharge. Individual BTL landlords: mortgage interest relief is restricted (Section 24). Check your own tax position. Informational only: not financial advice.

Turn this into a branded, shareable Pack

The Property Pack Maker builds an investor-ready PDF from these numbers: comparables, map, charts and your branding.

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This calculator is for guidance only and does not constitute financial, tax, mortgage or investment advice. Figures are estimates, always seek professional advice and verify costs before committing to a purchase.

HMO investing: common questions

How do you work out HMO yield?: Add up the rent from every room to get the total monthly income, multiply by 12 for the annual rent, then divide by the purchase price for the gross yield. Net yield and ROI also subtract bills, voids, management and mortgage interest, which the calculator above does for you.
Why is HMO cashflow higher than a standard BTL?: Letting by the room usually produces more total rent than a single household tenancy, so a well-run HMO can cashflow far better. It also costs more to run (bills are typically included, management is heavier, and licensing, fire safety and Article 4 planning can apply) so model the real costs, not just the headline rent.
Do I need an HMO licence?: Most HMOs of five or more people forming two or more households need a mandatory licence, and many councils run additional or selective licensing on smaller HMOs. Always check the specific council before you buy. It affects both cost and whether the strategy is viable.

HMO Calculator

HMO income looks big because the costs hide in the detail

If things move against you

HMO investing: common questions

Turn these numbers into an investor-ready pack