The Future of HMOs in 2025: A Detailed Look at Emerging Trends
The housing market is undergoing a significant transformation, and at the heart of it, HMOs are playing a crucial role in shaping the future of shared living. With rising demand for affordable housing, evolving tenant expectations, and increasing regulatory pressures, landlords and property investors must adapt to stay competitive.
This article explores the key trends, challenges, and opportunities shaping the future of HMOs in 2025, based on a recent report from COHO.
Legislative Changes and Their Impact on HMOs
The Renters’ Rights Bill is set to introduce major reforms, impacting HMO landlords in several ways:
Abolition of Section 21 Evictions
The removal of ‘no-fault’ evictions will make it harder for landlords to remove problematic tenants.
HMO landlords, who often rely on Section 21 to address disruptive tenant behaviour, may face longer and more complex legal processes under Section 8.
New Fixed-Term Tenancy Rules
Fixed-term tenancies will be replaced with periodic tenancies, allowing tenants to leave with just two months’ notice.
Student landlords will need to provide clear tenancy terms at the start of the lease, ensuring that properties can be reclaimed at the end of the academic year.
Stricter Licensing and Safety Standards:
Landlords will need to comply with increased safety regulations, including higher energy efficiency standards.
The expansion of the Decent Homes Standard to private rentals will impose further requirements.
These legislative changes will demand better tenant screening, improved property management practices, and greater financial planning from landlords.
Shifting Tenant Preferences: Community and Quality Matter More Than Ever
Modern tenants are looking for more than just a place to stay; they want a community-driven experience. The Shared Living Survey 2025 revealed that:
59.5% of tenants would pay up to 10% more to live with housemates who share their values and lifestyles.
80% of respondents said that a bad housemate would make them leave earlier than planned.
76.8% stated that having good housemates would make them more eager to move in.
Key Amenities That Matter Most to Tenants include:
High-speed internet (67.62% rated it as “extremely important”)
En-suite bathrooms (48.9%)
A washing machine (83.85%)
Landlords who focus on matching housemates effectively and providing high-quality amenities will attract and retain tenants more successfully.
The Rise of Professionalism in HMO Management
The shift towards greater professionalism in the HMO sector is becoming evident. More landlords are treating their properties as structured businesses, adopting:
Property management technology to streamline operations.
Automated rent collection and deposit protection services.
Professional maintenance teams to ensure high living standards.
HMO landlords who treat their investments as businesses—monitoring expenses, planning finances carefully, and maintaining high standards - will be better positioned for success in 2025.
Sustainability and Smart Home Technology: The Future of Shared Living
Environmental sustainability is a key concern in the modern housing market. HMOs are embracing green initiatives such as:
Energy-efficient appliances and insulation to reduce costs.
Solar panels and smart heating systems to improve efficiency.
Waste reduction strategies and recycling programs.
At the same time, smart home technology is revolutionising property management. Features like keyless entry, digital monitoring, and AI-powered rent collection are making operations smoother and more efficient.
The Investment Landscape: Where Are HMOs Headed?
Despite challenges, HMOs remain an attractive investment option. Key factors influencing investment decisions in 2025 include:
Higher rental yields: HMOs can generate up to 9% returns, compared to lower yields from single-lets.
Increased demand: A growing number of young professionals, students, and older adults are turning to shared living due to high property costs.
Diversified tenant base: Investors who cater to both Gen Z renters and older professionals can maximize occupancy rates.
However, investors must balance rising regulatory costs and operational expenses to maintain profitability.
Navigating Dispute Resolution and Compliance
With stricter regulations, dispute resolution is becoming a more complex process.
The Renters’ Rights Bill includes the establishment of a Private Renters’ Ombudsman, which all landlords must join.
To avoid costly legal disputes, landlords should:
Maintain clear tenancy agreements.
Provide transparent communication and quick maintenance responses.
Use Alternative Dispute Resolution (ADR) services to handle tenant conflicts before they escalate.
Final Thoughts: The Future of HMOs is Bright—For Those Who Adapt
The HMO sector is evolving at a rapid pace, shaped by new regulations, changing tenant demands, and advancements in technology. While the upcoming legal reforms will present challenges, they also provide an opportunity for landlords who embrace innovation, focus on quality, and invest in sustainable practices.
For those willing to adapt, improve their management practices, and create tenant-friendly environments, the future of HMOs in 2025 looks promising.
More information
The article from COHO titled “The Future of HMOs 2025” can be found in full here.
