Better than buy-to-let in 2023? Why HMOs are the future

For years, buy-to-let proved the simplest, safest option for investment income – yet weak supply and a hostile tax environment for landlords have made returns harder to come by. Now, in 2023, HMOs regularly prove more profitable than buy-to-let offering higher yields and ROI. 

Houses in Multiple Occupation (HMOs) are properties shared by at least three people, not from the same household. HMOs have suffered a poor reputation among renters, thanks to a handful of unscrupulous landlords.

Fortunately, a new wave of ethical landlords and investors see the social and financial benefits of offering high-quality, high-spec coliving spaces to a more affluent and profitable market of young professionals.

Leading the movement is The HMO Platform, a property training platform giving landlords and investors the tools and support to develop Next Level HMOs – key to unlocking higher rents and returns. In this best-selling book, Next Level Landlord, The HMO Platform founder, investor and award-winning developer, Matt Baker outlines the company's Tenant F.I.R.S.T. methodology that advocates delivering great experiences for tenants and higher returns for landlords.

One example is Reena, a former accountant from Brighton, and a recent success story of The HMO Platform. With zero property experience, she rejected buy-to-let due to its low returns in favour of developing a nine-bed, fully-ensuite coliving space in Bury. It boasts a large kitchen-diner, cinema snug and co-working breakout spaces. Her property now delivers a £2,050/month profit, and she's providing quality, affordable coliving space to those who need it.

Strict regulation means support is essential when navigating the territory. This higher level of care puts off landlords attracted by the ease of buy-to-let. But it also presents an opportunity.

As Reena’s story shows, now is the perfect time to explore HMOs as an option.