This is according to new data from Just Landlords which discovered there had been a 40% jump in HMO licence applications since 2018, with over 57,000 applications received in the last year alone.
Edinburgh, Oxford and Bristol were named UK’s HMO hotspots, possessing the highest annual application rates
But the analysis also threw the spotlight on areas such as Sandwell in the West Midlands and West Lancashire as rising investment regions. In these places application growth of nearly 1,000% was reported.
The specialist landlord insurance provider, Just Landlords, used data obtained from Freedom of Information (FOI) requests from local councils across the UK to investigate the take up of HMO.
It found, since 2018, the number of annual HMO applications had climbed from 41,162 to a record-breaking 57,725.
Edinburgh had the highest annual application rates of 5,158 per year. Oxford came second with 2,458 and Bristol third with 1,491. Meanwhile, Southwark and Tower Hamlets in London came fourth and fifth with 1,412 and 1,394 respectively.
Sandwell, in the West Midlands, reported the highest rate of growth, seeing applications jump by 964%, from 28 in 2018 to 298 in 2024. This was followed closely by West Lancashire with 886%, then Tower Hamlets with 750%, Guildford with 742% and Waltham Forest with 481%.
Clark Ross, managing director of Just Landlords, said: “We’re witnessing a major evolution in the UK rental market. An increasing number of landlords are moving away from traditional lets in favour of HMOs, to help meet the growing demand for flexible, affordable housing solutions.”
“We’re also seeing an interesting geographical shift in investment. While London remains a cornerstone of the market, there has been huge growth in the Midlands and the North, with some areas seeing application numbers increase by nearly 1,000% since 2018.”
Just Landlords noticed as increasing focus on quality and compliance, with council inspections of HMOs rising by 83% since 2018 and enforcement actions, including improvement notices and prosecutions, jumping by 180%.
Areas like Blackpool and Fenland saw over half of their annual applications refused, while landlords in Lewisham, Wandsworth and Liverpool saw higher than average numbers of enforcement actions.
Ross added: “While our findings reveal an environment of tightened regulation, this should be seen as a positive step for the market. Higher standards protect the reputation of the sector and ensure that dedicated, professional landlords aren’t being undercut by sub-standard operators.
“As the sector continues to grow, the most successful landlords will be those who treat their compliance and insurance as the bedrock of their business strategy.”