In a nutshell, yes. The better question is ‘why? And compared to what?’
Because even with rising rates, tighter regulation, and build cost inflation, done right, HMOs still outperform almost everything else in property investing today.
I’ve been thinking a lot lately about where property investing is heading, particularly for those of us who either already own portfolios or are trying to build one in today’s market.
If you’ve been around property for a while, you’ve probably felt the shift too. And if you’re just getting started, you’ve probably already noticed that Buy-to-Let (BTL), once the standard route for building property wealth, doesn’t quite work the way it used to.
There’s no single reason for that. It’s been a slow, steady tightening over the last few years, rising interest rates, shrinking tax relief, increasing compliance requirements, and more changes due in 2025. On their own, none of these would kill a strategy. But together, they’ve turned BTL into something that’s capital intensive, heavily taxed, and, most importantly, slow.
And for me, that’s been the key realisation with BTL: Low profit, and a great way to tie up your capital.
With the way financing works now, it’s incredibly difficult to keep your capital moving without sacrificing almost all your profit just to extract your funds for the next BTL deal. That’s the bit that’s had the biggest impact on how I think about strategy.
That doesn’t mean property itself doesn’t work. It still does, but not in the way many of us were taught when we started.
If anything, it’s made me step back and ask a far more useful question:
What’s the smarter alternative?
If the goal is to build a meaningful income, to create a portfolio that doesn’t just exist on paper but actually pays you enough to change your life, and to pass something down to your kids that’s fully formed, not just bricks and an IHT bill, then for me, single-lets don’t get me there anymore.
What I’ve seen, both in my own experience and through working with other investors across Kent, is that HMOs, particularly larger HMOs, done right, are delivering that kind of income in a fraction of the time.
And they’re doing it without the need to send 1000 letters a week or take ‘distressed property owners’ for coffee once a month.
Why BTL No Longer Works Like It Used To
There’s nothing wrong with single-lets as an asset class. They still have their place.
But if your goal is financial independence within a decade, rather than just creating a slow-burn pension pot, I just don’t think the maths works anymore.
I’ve seen it over and over — those famous Domesday Book graphs showing property prices climbing steadily from the bottom left to the top right, tracing over a thousand years of data, all the way back to William the Conqueror valuing Birmingham as four taxable landholdings after 1066.
10.2% a year on average.
It’s the reassurance we all look for — proof that owning property is a smart, rational move.
And it is.
But what happened over the last 1000 years doesn’t matter if your goal is income and wealth preservation in the next 5 to 10.
What’s happening now on the other hand, does.
The Maths in Kent Right Now
Take a standard 3-bed house in Kent. It rents for around £1,400 per month.
Once you’ve paid the mortgage, insurance, management, maintenance, and tax, there’s barely anything left. It certainly doesn’t build the kind of income that lets you take your foot off the gas, cut back on work, or live the way you probably hoped property would allow you to live.
And that’s assuming the tenant stays. The minute they leave, your income stops.
Then there’s refinancing itself. In the past, refinancing was how you kept growing, pulling equity to fund the next deal. Now, it just seems to wipe out almost all the profit with a Single-Let, often locking you into 5-year fixes at rates that barely leave anything on the table.
The proverbial ‘robbing Peter to pay Paul’ portfolio growth strategy.
We all remember 2-3%. Those days feel a long way off.
And even if you do have equity in your properties because you bought them 15 years ago, it’s likely you own them in your own name, so while you could borrow more…Section 24 is going to make things harder.
And for what? A few hundred a month and the rest going to NatWest and HMRC?
That’s why so many landlords feel stuck — asset rich, cash poor.
You may need 10 or more properties to generate any kind of serious income, and even then, one legislative tweak, or one interest rate rise, can strip away most of your profit overnight.
It’s not that BTL doesn’t work, it’s that it’s too slow and too fragile for what I’m trying to build.
Why HMOs (Done Right) Still Work — Even Now
The first time I really paid attention to HMOs, it wasn’t just the headline rents that caught my eye, it was the combination of high income and the ability to recycle capital quickly by adding massive value that made me look closer.
That same 3-bed house, converted into a 9-bedroom HMO, could generate around £7,000 per month.
After all the costs, utilities, management, maintenance, licensing, you could be left with £2,000 per month net. Even with 7% interest rates.
The big weakness of a BTL portfolio, interest rates, is just not there with HMO. And if rates drop to 4%, you’re looking at a middle manager’s salary from 1 property.
The bigger win comes when you refurb and reconfigure the house properly, adding rooms, communal space… and commercial value. That allows you to refinance at a much higher valuation, pulling a big chunk of your initial investment back out, ready for the next project.
That’s the cycle that keeps the momentum going.
- You’re not stuck waiting years for capital growth.
- You’re building real income from the first deal.
- You’re creating an actual business asset, not just a rental house.
And with 20-30%+ return on capital being the target, even in today’s market, it’s clear why this model has survived rising rates far better than single-lets.
Not All HMOs Are Created Equal
I’m not pretending every HMO works.
It’s a graveyard out there frankly.
The cheap, tired HMOs from 2015, the ones with mismatched furniture, tired and sad decor, and a layout that no one thought through, those are the properties being sold off right now en-masse.
(You know the ones I mean)
And, they’re being sold at high prices, based on the income they generate, which is why it’s £100k+ more expensive than the house down the street. “It’s already a HMO”…just a bad one.
You’re buying cashflow…but from a dying asset.
And there’s a reason for that. No one wants to live there unless they absolutely have to.
The problem the market needs solving, and where you can provide real value to the market and be paid a lot for it, is through intense focus on the tenant…specifically the young professional tenant, just out of uni, or left home, in their first or second well paid job, that wants someplace nice to live, but doesnt want to make the jump to a 1 bed flat and all of the bills, headache and cost just yet.
They want something that looks, sounds and feels like home, and is fit for 2025.
So rental demand in Kent today is for well-designed, well appointed, professionally managed HMOs. For house-proud tenants that want a comfortable, semi-social place to live while on the first few rungs of the career ladder.
That’s where the demand is, and where the opportunity lies.
Why Kent is Perfect for This Strategy
If you’re investing locally, Kent offers an almost perfect balance of demand, property type, and affordability — if you know what to look for.
1. Strong Tenant Demand
- Commuter-friendly locations with fast links to London.
- Local employers providing steady professional demand.
- A growing population of early-career professionals looking for flexible, affordable housing.
2. The Right Stock at the Right Price
The best HMO opportunities in Kent all tend to have three things:
- Adequate Frontage (or side access) for bikes and bins — essential to appeal to town planners and to have the right amenity space
- Walking distance to a town centre, major employer, or transport hub — location is everything with HMOs, outside of town just wont work, regardless of price.
- Enough garden and/or internal space to extend — because adding square footage is where much of the value uplift with more bedrooms comes from.
All of this is available at prices that are around 25% or less of what you’d pay in London.
3. Room Rates That Stack Up
Right now, professional HMOs in Maidstone & Medway, routinely achieve £700-£850 per room when first let, and when refinancing, lenders look at the income, not just comparable sales. This matters.
What HMO Model Fits You?
One thing I’ve learned is that there’s no one-size-fits-all approach to HMOs.
Some investors prefer smaller 4-5 bed setups, some love the 6 Bed HMO, seeing it as a kind of sweet spot, whilst others thrive with 9+ bed schemes.
You choose your poison. There is no right or wrong answer, only preference.
What feels like stress to one investor is exactly what excites someone else.
Find Out Which HMO Model Suits You
Knowing your own investment style, and the kinds of projects that actually suit you, can save you years of frustration and wrong turns. That’s exactly why I put together the Property Investor Profile Scorecard.
It’s designed to help you uncover the HMO strategy that fits your personality, goals, and appetite for risk, so you can focus on building a portfolio that actually works for you, not just one that looks good on paper.
It’s quick, it’s free, and once you’ve completed it, you’ll also get an invite to join the Kent HMO Alliance, a private community for hands-on investors actively building and managing HMOs across Kent.
The Alliance is where we share ideas, answer questions, solve real problems, and bring in guest speakers to help us all stay ahead of the curve, whether that’s with planning, licensing, finance, floor plan layout or anything else that comes up along the way.
To join, just take the Scorecard at the bottom of the page.
If you’re serious about building real income through property, and doing it in years, not decades, this is where you want to be.
