HMO Calculator
Room-by-room HMO returns including bills, voids and management.
Computed on our server. The method is set out in full below.
An HMO is not a buy-to-let with more bedrooms. It carries its own cost base — bills the landlord pays, higher management, licensing, more wear — and modelling it like a single let overstates the return every time. This works it out room by room, so the rent roll and the running costs are counted on the same basis.
What this calculator works out
- Rent roll built room by room, so an ensuite at a premium and a small single at a discount are priced separately.
- The bills a landlord carries in a shared house: gas, electricity, water, broadband, TV licence and communal cleaning.
- Void allowance per room rather than per property — an HMO rarely empties all at once, and modelling it as if it does understates the return.
- Management and maintenance at HMO rates, which are higher than a single let for good reason.
- Net monthly cashflow, net yield, and return on the cash actually invested after the conversion.
How the result is worked out
Annual rent is the number of rooms multiplied by the rent per room, over twelve months. Operating costs are the management, maintenance and void percentages applied to that annual rent, plus the landlord-paid bills. Net operating income is the annual rent less those operating costs, and annual cashflow takes the mortgage interest off that. Gross yield is annual rent divided by the purchase price; net yield is net operating income divided by the purchase price. Cash invested is the deposit plus the refurbishment plus the buying costs, and the cash-on-cash return is annual cashflow divided by that figure.
A worked example
A five-bed HMO at £550 a room grosses £2,750 a month. Bills at £400, management at 12%, an 8% maintenance allowance and a per-room void allowance take roughly £1,100 of that before the mortgage. Whether the deal works comes down to what the conversion cost to create those five rooms — which is the number most listings do not tell you.
Common questions
What yield should an HMO give?
Gross yields of 8-12% are common on HMOs against 5-6% for a single let in the same area, but gross is the wrong number to judge on. An HMO carries bills, higher management, licensing and faster wear, so the gap between gross and net is much wider. Compare net yield and monthly cashflow, and compare them against the extra work the property will actually cost you.
When does a property need an HMO licence?
Mandatory licensing applies across England to any HMO occupied by five or more people forming two or more households. Below that it depends on the council — many, including areas of Liverpool and the Wirral, have operated additional or selective licensing schemes covering smaller HMOs, and the designated areas change. Check the specific address with the local authority before you buy, because the answer changes the numbers.
What bills does an HMO landlord usually pay?
In a shared house the landlord normally carries gas, electricity, water, broadband, the TV licence and communal cleaning, because tenants on separate agreements cannot practically split them. That is typically £350-£500 a month on a five-bed and it is the single largest difference between HMO and single-let modelling. It is a field in this calculator rather than an assumption for exactly that reason.
Is an HMO worth it compared with a single let?
On the numbers, usually yes — the same building producing several rents almost always beats one. On effort, it is a different business: several tenancies, a licence, a fire risk assessment, annual PAT testing, more turnover and more maintenance. If you are not going to manage it yourself, put the management fee in honestly at the start. Ours is 12% for an HMO against 9% for a single let.
Does this include the conversion cost?
Only if you enter it. The refurbishment field is where the cost of creating the rooms goes, and leaving it at zero is the most common way to make a conversion look better than it is. A room does not appear for nothing: budget the fire doors, the alarm system, the extra bathroom and the contingency before you judge the return.
Related tools and services
Worth running the same deal through the Buy-to-Let Calculator and the Flip & BRRR Calculator before you commit to a strategy — the same building can look very different under each, and the gap between them is usually the real decision. The rest are in the calculator library.
If the numbers work and the property is in Liverpool or the Wirral, we run it for a living: see HMO and BTL management for a property you already own, or investment sourcing if you are still looking for the right one.
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