England’s HMO market is shrinking despite a widespread need for more affordable rental accommodation.

In 2019/20, there were an estimated 510,776 HMOs across the rental market.

By 2020/21, this number had fallen by 1.7 per cent to a total of 501,993, and it has continued to fall over the last year. 

The latest figures show that with a further 2.4 per cent annual decline, there are now some 489,701 HMOs across England

This means that, in the space of two years, England’s HMO market has shrunk by over 21,000 properties. 

The East Midlands has seen the largest reduction, with HMO stock levels down 26.1 per cent in a single year. 

In the North East, HMO stock has declined by 15.8 per cent while the South East, London and North West have also recorded drops.

However some regions have seen an increase, with HMO stock levels climbing over the last year across the West Midlands (up 16.9 per cent), Yorkshire and the Humber (up 11.2%), and the South West and East of England (both up 0.6 per cent).

Despite a decline in overall stock levels, London remains home to the greatest proportion of HMO rental homes, accounting for 29.7 per cent of England’s total stock. 

This equates to an estimated 145,615 properties. 

Jonathan Samuels of Octane Capital – which conducted the study – says: “HMO stock levels have continued to slide since the introduction of tighter licensing rules by the government at the back end of 2018 and there are now some 21,000 less HMOs available across England than there were just two years ago.

“While any attempts to raise living standards for the nation’s tenants should be welcomed, it’s imperative that we also incentivise investors to remain within the sector. 

“Failing to do so will only see the level of available rental properties continue to fall, driving the cost of renting ever higher in the process, at the expense of the nation’s renters.”