How Much Money Do You Need to Buy a HMO in 2026?

Photo by Colony Living

Are you looking to invest in your first or next HMO in 2026 but wondering how much it will cost you? Here we’ll break down how much money you need to buy a HMO, including what costs to factor in and my top advice for how new investors can fund their HMO properties and renovations!

Costs to Factor In When Buying a HMO

There are a number of costs you need to factor in before buying a HMO, especially as this type of property investment is typically more expensive than standard buy-to-lets. However, as one of the most profitable forms of residential property investment, investing in HMOs can be incredibly rewarding. 

In order to get this type of investment right, be aware of all the costs you should be factoring in at the outset. So, before purchasing a HMO, make sure you understand all of the initial and ongoing costs involved!

Property Price

The property price will naturally depend on a range of factors, including the location and condition and size of the property. How much you need to pay upon completion will also depend on how you’re planning to pay for the purchase. 

If you’ll be using a mortgage for the purchase, most lenders for HMO mortgages require 25% of the property value as a deposit. According to research by COHO in 2025, which analysed data from the Office for National Statistics, the average HMO in England and Wales is worth £293,197. This means the average deposit to purchase a HMO is just under £73,300.

If you’re planning to pay for the property with cash, you’ll need to have the money to cover the purchase price in full.

Stamp Duty

When purchasing residential property, you will owe stamp duty to HMRC within 14 days of completion. The amount you owe depends on how much you paid for the property and whether you’re eligible for an exemption or relief. 

Investors typically have to pay 5% on top of the standard rates for investment purchases, and stamp duty is paid on increasing portions of the property price. See the stamp duty rates for an investment purchase below.

  • Up to £250,000 – 5%
  • £250,001 to £925,000 – 10%
  • £925,001 to £1.5m – 15%
  • Above £1.5m – 17%

The government has a Stamp Duty Calculator you can use to help you understand how much you will likely owe. Or sign up for The HMO Roadmap to access our Deal Stacker, which takes in account your purchasing costs like stamp duty when appraising HMO deals.

Conveyancing Fees

You’ll need to work with a solicitor when buying any property. With a HMO purchase, it’s important to work with an experienced and knowledgeable professional or one who’s recommended by your trusted mortgage broker. If you have someone you can trust, it’ll help ensure smooth communication and collaboration with your wider power team.

Conveyancing fees can range, but it’s not just about the cost… A solicitor’s experience and ability to resolve issues quickly and efficiently is invaluable. Developing a strong relationship with your solicitor allows you to rely on their expertise, which can help you save money and time in the long run!

It’s important to keep in mind that lenders often have certain requirements for solicitors, or sometimes they offer a panel to choose from. So, don’t forget to check whether your solicitor is approved by your lender before instructing them.

Renovation Costs

When purchasing a HMO or a property you want to turn into a co-living rental, you might need to make certain upgrades in order to make it compliant with amenity standards or add value to be able to achieve certain rents – or both! But no matter how small or big the refurb is, it can be challenging to estimate the costs, especially if you’re a beginner HMO investor.

Additionally, unforeseen costs and issues will often crop up when refurbishing a house, so leave room for the unexpected! What you’ll end up spending on a renovation will depend on the current condition of the property and what spec you’re looking to create, but be sure you set a realistic budget.

I’ve seen some investors do creative renovations for a relatively small budget of £25k, but I’ve also seen the other end of the spectrum where investors spend more than £100k on a refurb to create a really high spec.

Think about whether you’ll need an architect for your HMO project. This will usually depend on your experience and project type. It’s recommended to work with one if you’ll be dealing with a change of use, doing any structural changes or want to change the floor plan. But if you’re doing very minor changes, you might not need one. 

Also, check whether you will require planning permission for the work you’re planning to do and if the property is in a location with an Article 4 direction in place. If you do, you’ll need to pay for a planning application fee, and it might also be beneficial to work with a planning consultant.

Compliance Costs

There are hundreds of different laws and legal obligations you must adhere to as a HMO investor. A big part of compliance is keeping a number of different certificates, which all cost money, and some of them you will have to renew regularly. Here are some of the basic certificates you’ll need when operating a HMO:

  • Electrical Installation and Condition Report
  • Gas Safety Certificate
  • Energy Performance Certificate
  • Fire Detection System Certificate
  • Emergency Lighting Certificate
  • Fire Risk Assessment
  • Legionella Risk Assessment

While costs for these certificates will vary depending on where you are in the country and size of the property, below we will share what you can typically expect to pay for some of these. But please keep in mind these are just guides.

  • Prices for Electrical Installation and Condition Reports typically cost from £100 to £250
  • A Gas Safety Certificate usually costs are £50 but some charge closer to £80
  • An Energy Performance Certificate on average costs between £60 and £120

Licence Fees

Licencing requirements are different across the country, so make sure you understand this in detail. It also depends on whether you’re investing in a small or big HMO. There are national minimum standards set centrally by the government, but local authorities can insist on their own standards. So, find out if any properties you’re interested in buying will need a licence.

If your HMO has three or four tenants, your property will be considered a small HMO, and you may not be required to get a licence. All large HMOs, which have more than four tenants, will require a HMO licence from the local council. There are also additional and selective licencing schemes in place that would mean even some small HMOs require a license.

Licencing fees typically range from £500 to more than £1,500 depending on the local council. More and more councils are adopting additional or selective licensing schemes, so this is another cost investors must factor in even if they are not currently required to have a licence!

Management & Operational Costs

You’ll also need to decide whether you will self-manage or use a managing agent. There’s so much to think about when it comes to running and managing a HMO, and this will get even more challenging and time consuming with the Renters Rights Act. Whether you’re managing your own HMOs or using an agent, it must be done in the right way.

If you end up using a local managing agent, it’s important to understand what this’ll cost. They typically separate their fees into tenant find fees, ongoing monthly management fees and then extras for maintenance.

A tenant find fee can often be anywhere from 50% to 100% (plus VAT) of the first month’s rent. Ongoing monthly management rates can be anywhere between 8% and 10% (plus VAT) with student HMOs on the cheaper end and professional HMOs on the more expensive end.

Additionally, maintenance will usually be charged at 15% on any item. In recent years, the cost of maintenance and repairs have also increased along with many other expenses. This is a lot of cash, so if you’re looking to scale up a HMO portfolio, take the time to effectively weigh up the pros and cons!

5 Tips for Funding Your HMO Projects

You may be wondering what your options are if you don’t have the amount of money you need on hand to buy a HMO, so here’s some of my top advice on how to fund your portfolio as a beginner investor and be ready to purchase your first or next HMO in 2026!

  • Understand all of your funding options.

As investing in HMOs is more capital intensive, it might be beneficial to utilise a mix of funding options to pay for your properties and refurbishments. So, be aware of the different ways you can finance and fund your deals, including through HMO mortgages, joint ventures, fixed rate lending from private investors and by recycling capital.

If you can tap into the varying ways to fund your HMOs, financing your deals will no longer be an issue! This will then give you the ability to be in a position to act on the right opportunities whenever they crop up.

  • Utilise HMO mortgages.

Utilising HMO mortgages will allow you to buy HMOs worth more than the cash you put in up front. This means you can make your money work much harder, so don’t underestimate the value of mortgages when buying HMOs.

Choose the right product and lender, and often this doesn’t necessarily mean the deal with the lowest rate! To help you secure the best product, find ways to get yourself in a super lendable position and work with a specialist mortgage broker who knows the ins and outs of HMO mortgages.

  • Create a private finance raising strategy.

There are different ways to take advantage of private finance, including joint ventures and fixed rate lending, so make sure you understand how you could use these structures to buy your HMOs.

A joint venture is an arrangement where two or more parties pool their resources together to invest. Each party will be responsible for a certain amount of costs, liabilities, risks, profits and losses. Fixed rate lending is then when an investor agrees to loan you a set amount of money over an agreed period and interest level.

  • Learn how to recycle capital.

If you want to start and really build your HMO business, recycling capital can help you regenerate cash. It can support private finance deal structures too, so you can then pay investors back. Start looking into how you could recycle capital from your properties.

  • Consider rent-to-rent.

If you have little to no capital, rent to rent can be an effective strategy as it requires substantially less capital than buying your own assets. You can generate some substantial amounts of cashflow through this powerful model, which can then help you build your own asset-owning business! So, look into this strategy and find out if it’s right for you.

Be Ready to Buy Your Next HMO

While there are often additional costs that come with investing in HMOs, there are so many benefits as well. When done right, it can be an extremely successful form of property investment.

If you’re considering buying a HMO in 2026, ensure you’re ready for the costs and any funding you’ll need to acquire for your projects. And keep assessing your costs as these often change over time.

To effectively start, scale and systemise your HMO portfolio, sign up for The HMO Roadmap for access to more than 400 interactive training videos, useful templates for your business and tools to help you find, fund, fix and fill your properties!

If you’d like to join a supportive community where you can ask any questions you have about HMO investment and gain advice from fellow investors, join us over in our free Facebook Group The HMO Community.

About the Author:

Andy Graham is the founder and the lead trainer at The HMO Roadmap! He is also the co-founder of The HMO Mastermind, writes as a regular columnist in different magazines about a variety of HMO topics and is the host of The HMO Podcast! Follow Andy on Instagram!