HMO Yield Calculator
Turn room rates into deal numbers: gross yield, total monthly cashflow and cashflow per room, with the HMO licence, realistic management costs and jurisdiction-aware stamp duty all counted.
Your numbers
Average across rooms.
Purchase & running costs
HMO management is floored at 15%.
Your results
- Monthly cashflow
- £1,125
- Gross yield
- 15.0%
- Total monthly rent
- £2,750
- Cash-on-cash ROI
- 13.4%
- Cash needed
- £101,150
£225 per room after all costs
5 rooms
annual cashflow ÷ cash invested
deposit + refurb + tax + costs
- SDLT (England & N. Ireland)additional-property rates
- £12,900
- Monthly mortgage paymentinterest-only
- £756
- Total investmentincl. refurb and licence
- £266,150
Free to use, no sign-up needed. Figures are estimates for guidance, not financial or tax advice.
How the HMO calculator works
An HMO (house in multiple occupation) is let by the room rather than as one household, which multiplies the rent and the workload at the same time. This calculator uses the same room-by-room engine as Dealist's deal analyser: it builds a rent schedule from your room count and average room rate, then runs the deal like any other rental with HMO-specific costs layered in.
Total monthly rent and gross yield
Total monthly rent = rooms × average rent per room. Five rooms at £550 is £2,750 a month. Gross yield = annual rent ÷ purchase price × 100. Room-by-room income is what pushes HMO gross yields into double figures where a single let on the same street might return 6% to 7%.
Total investment
Total investment = purchase price + refurbishment or conversion + stamp duty + licence + legal and other costs. Stamp duty uses the real 2026 additional-property tables for whichever nation you pick: SDLT with the 5% surcharge, LBTT with the 8% ADS, or LTT higher rates. The licence fee is a real cost most quick calculators ignore.
Monthly cashflow, total and per room
Cashflow = total rent − (mortgage interest + management + maintenance + voids + insurance). Management is floored at 15% of rent, reflecting what HMO management genuinely costs. Voids matter more in HMOs because rooms turn over more often than family lets; the void allowance spreads your assumed empty weeks across the year. Dividing by the number of rooms gives cashflow per room, the figure seasoned HMO investors use to compare deals of different sizes: £150 to £250 per room per month is a common target.
Cash-on-cash ROI
Cash-on-cash ROI = annual cashflow ÷ cash invested × 100, where cash invested is your deposit plus refurbishment, stamp duty, licence and fees. It answers whether the extra work of an HMO actually beats simpler strategies on the money you put in.
Worked example
You buy a large terrace for £220,000 and spend £30,000 converting it to a five-bed HMO letting at £550 a room, financed at 75% LTV and 5.5% interest-only.
| Total monthly rent (5 × £550) | £2,750 |
| SDLT (additional-property rates) | £12,900 |
| Licence and legal costs | £3,250 |
| Total investment | £266,150 |
| Cash invested (after £165,000 mortgage) | £101,150 |
| Mortgage interest per month | £756 |
| Management (15%), maintenance, voids, insurance | £868 |
| Monthly cashflow | £1,125 |
The gross yield is 15% and the cashflow works out at about £225 per room per month, a 13.4% cash-on-cash return on the £101,150 invested. Run the same house as a single let at £1,100 a month and the yield drops to 6%: the HMO premium is real, but so are the licence, the management floor and the conversion cost that this calculator makes you count.
Frequently asked questions
What counts as an HMO?
A house in multiple occupation is a property let to three or more tenants from more than one household who share facilities such as a kitchen or bathroom. At five or more occupiers from two or more households it becomes a large HMO, which requires a mandatory licence in England and Wales. Scotland licenses HMOs from three unrelated occupiers.
Do I need an HMO licence?
Mandatory licensing applies to large HMOs (five or more occupiers) across England and Wales, but many councils also run additional or selective licensing schemes that catch smaller HMOs, so always check the specific council before buying. Licence fees vary roughly from £500 to £1,500 for a five-year licence, which is why this calculator includes it as a line item.
What is a good gross yield for an HMO?
HMOs are bought for income, and gross yields of 10% to 15% are the usual target range, roughly double a standard buy-to-let in the same area. If a proposed HMO shows a single-let-level yield of 6% to 7%, the extra management, licensing and refurbishment burden is rarely worth it.
Why is management set at a minimum of 15%?
Room-by-room lettings mean more tenancies, more turnover, more inspections and bills administration than a single let. Specialist HMO managing agents typically charge 12% to 18% of collected rent, and self-managing still consumes real hours. The calculator floors management at 15% so the cashflow reflects reality rather than single-let assumptions.
Are bills included in the calculation?
HMO rooms are usually let with bills included, and utilities, broadband, council tax and communal cleaning can easily run to £60 to £120 per room per month. This calculator does not have a separate bills field, so either enter room rents net of bills or increase the management and maintenance percentages to cover them. Whichever you choose, be consistent.
What is Article 4 and why does it matter for HMOs?
In England, converting a family home to a small HMO (three to six occupiers) is normally permitted development, but many councils have Article 4 directions removing that right in specific areas, meaning you need full planning permission. Buying in an Article 4 area without checking is one of the most expensive HMO mistakes; existing certified HMOs there often trade at a premium.
Do HMOs need a special mortgage?
Yes. Mainstream buy-to-let products usually exclude HMOs, so you will need an HMO-specific mortgage from a specialist lender. Expect rates slightly above standard buy-to-let, a 25% deposit as the norm, and many lenders requiring landlord experience. Valuations may be on a bricks-and-mortar basis for smaller HMOs, or a commercial income basis for larger ones.
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