HMO
Multi-Let

HMO Viability Calculator

Assess whether your HMO conversion or purchase stacks financially. Calculate room rents, yields, and cashflow per room.

AI-Powered
Free to use
Property details
Enter your HMO figures

Finance

HMO Operating Costs

HMO viability analysis
Based on your inputs
Gross Yield

13.66%

Before all costs

Net Yield

7.19%

After operating costs

Monthly Cashflow

£721

Good

Per Room Cashflow

£120

Per room per month

Monthly Gross Rent

£3,300

6 rooms × £550/room

Cash on Cash Return

13.8%

Annual return on £62,500 deposit

HMO vs BTL Comparison

Rent multiplier vs single-let

3.2x

vs BTL rent

DSCR

1.71

Excellent

ICR @ 5.5%

3.84

Passes stress

Annual Cost Breakdown

Management (12%)£4,467
Insurance£1,500
Maintenance (8%)£2,978
Utilities£4,800
Cleaning£2,400
HMO licence (amortized)£240
Total operating costs£16,385
Mortgage interest£12,188
Annual cashflow£8,652

Investment Summary

Total investment

£290,000

Cost per room

£48,333

Deposit required

£62,500

Mortgage amount

£187,500

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About the HMO Viability Calculator

What it does and how it helps you

The HMO Viability Calculator helps UK property investors assess whether an HMO conversion or purchase is financially viable. Calculate room-by-room rental income, factor in HMO-specific operating costs (management, utilities, licensing, insurance), and determine net yields, cashflow per room, and returns on investment for multi-let properties.

Calculate per-room cashflow and total property returns
Factor in HMO-specific costs (licensing, utilities, management)
Compare HMO vs BTL rental income multipliers
Stress test against lender ICR and DSCR requirements

How It Works

Understanding the calculation method

The HMO Viability Calculator provides comprehensive financial analysis: 1. Property Costs - Enter purchase price and refurbishment/conversion costs including fire safety, ensuite installations, and HMO-specific works 2. Room Configuration - Input number of lettable rooms and average rent per room to calculate total rental income 3. Finance Terms - Model deposit requirements (typically 25%+) and HMO mortgage rates (typically 6-7.5%) 4. HMO Operating Costs - Factor in management fees (12-15%), utilities (if included), cleaning, maintenance, HMO licensing, and specialist insurance 5. Voids & Losses - Account for expected vacancy rates and rental losses 6. Performance Metrics - Calculate gross and net yields, cashflow per room, cash-on-cash returns, DSCR, and ICR at stressed rates The calculator compares your HMO rental income to equivalent BTL rent, showing the rental multiplier advantage of multi-let properties. It also stress tests against lender requirements to ensure your HMO will secure finance.

When to use this calculator

Use this calculator when evaluating potential HMO investments, comparing room rent scenarios, or assessing whether an existing single-let property should be converted to HMO. Essential for understanding if room rents in your target area will generate sufficient income to justify the additional costs and complexity of HMO operation.

Frequently Asked Questions

Common questions about this calculator

A healthy HMO should generate £100-200+ cashflow per room per month after all costs including mortgage, management, utilities, maintenance, licensing, and voids. Below £50/room suggests the property is marginal or in a low-yield area. Above £150/room indicates strong HMO performance. Always factor in a buffer for unexpected costs and future rent controls.
Target gross yields of 8-12%+ for HMO properties, with net yields (after operating costs but before mortgage) of 6-9%. HMOs should deliver 2-3% higher yields than equivalent BTL properties to justify the additional management complexity and regulatory burden. In higher-value areas, yields may be lower but absolute cashflow per room remains strong.
HMOs typically generate 30-70% more rental income than letting the same property as a single let, with the multiplier varying by location. In student areas, multipliers can reach 1.7-2x BTL rent, while in professional areas 1.3-1.5x is more typical. The calculator shows your specific HMO vs BTL rent multiplier based on your inputs.
Expect higher operating costs than BTL: management (12-18% vs 8-10%), maintenance (8-12% vs 5-8%), HMO insurance (£1,200-2,500 vs £500-800), licensing (£200-350/year amortized), utilities if included (£200-500/month depending on rooms), and communal area cleaning (£150-300/month). Budget 35-45% of gross rent for total operating costs.
Research your target area thoroughly: check SpareRoom, Rightmove, and local Facebook groups for current room rents. Consider property quality (ensuite vs shared bathroom adds £50-100/month), location (near universities/hospitals/transport), and local competition. Factor in 5-10% void allowance. Professional room rents in cities range from £450-750/month, student rooms £350-550/month.

Related Property Terms

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