The Cost of Converting a Property to an HMO

Converting a property into a House in Multiple Occupation (HMO) can be a lucrative strategy, but it’s also one of the most capital-intensive and complex processes an investor will face. From initial strip-out to final handover, a refurbishment project demands detailed budgeting, careful scheduling, and close oversight of trades and compliance.

Setting a Realistic Budget

Many HMO investors underestimate the true cost of converting a single let into an HMO. It’s not just the building work to consider, there are professional fees, compliance costs, and ongoing operational requirements to account for. A typical budget should cover:

• Acquisition costs such as stamp duty, legal fees, surveys, broker charges and valuations.
• Professional services, including architects, HMO designers, planning consultants and building regulations.
• Compliance upgrades like fire doors, alarms, emergency lighting and licensing fees.
• Furniture and fit-out to attract tenants and maximise rental yield.
• A contingency fund of at least 10–15% of the build cost to absorb unexpected expenses.

Cost to Convert a Residential Property to an HMO 

For a small 4–6 bedroom HMO conversion, investors should expect:

• £7,000–£15,000 for stamp duty, legal fees and surveys.
• £5,000–£10,000 for architects, HMO designers and planning submissions.
• £1,000–£3,000 for HMO licensing and compliance applications.
• £40,000–£80,000 for construction, including kitchens, bathrooms and compliance installations.
• £10,000–£20,000 for fire safety systems and upgrades.
• £8,000–£15,000 for furnishing and decoration.

With contingency added, many projects land in the £70,000–£140,000 range. Having this level of breakdown allows you to track progress against budget and calculate your expected ROI more accurately.

Detailed breakdown of HMO conversion costs

1. Acquisition & Professional Fees (£7,000–£15,000)

The first import costs to consider are the acquisition and professional fees involved in an HMO conversion. The cost of these can vary greatly and can be influenced by a number of factors, including where the property is located, the size of the property and the condition that it’s in. Here is a bit more detail on what those costs are:

• Stamp Duty Land Tax (SDLT): Depends on property value and investor status (e.g., second home surcharge).
• Legal Fees: Solicitor conveyancing, property searches, and contract reviews.
• Building Survey: Full structural or homebuyer’s report to assess renovation scope.
• Valuation Fees: Often required by lenders or investors before purchase.
• Broker Fees: For sourcing and arranging suitable mortgage or development finance.

Tip: A thorough survey and legal due diligence can help identify potential HMO compliance issues early, saving thousands in future remedial work.

2. Design, Planning & Professional Services (£5,000–£10,000)

Another key part of your HMO conversion costs is the professionals you may need to hire as part of your conversion process. Getting your conversion right is a key part of making your HMO marketable and sustainable, so working with professionals like architects, structural engineers and HMO design consultants can be an inevitable part of the process. This includes:

• Architectural Drawings: Layout redesigns for additional bathrooms, bedrooms, or communal spaces that are compliant with HMO national room sizes and local council requirements.
• HMO Design Consultancy: Guidance on local authority standards (room sizes, fire safety, amenity requirements).
• Planning Submissions: Fees for C3 to C4 or Sui Generis planning permission or lawful development certificates (if required).
• Structural Engineer Reports: If major walls or extensions are planned.
• Building Regulation Approval: Ensures compliance with Part B (fire safety), Part G (sanitation), and other building regs.

Tip: Engaging professionals familiar with HMO regulations can prevent costly rework or compliance failures.

3. Licensing & Compliance Applications (£1,000–£3,000)

Compliance is one of the key parts to consider when it comes to an HMO conversion. There are various fees associated with obtaining things like licenses, fire risk assessments and other compliance certificates. This includes:

• HMO Licence Application Fee: Varies by council (£500–£1,500 typically). Explore our full guide on HMO licensing for more details.
• Electrical Installation Condition Report (EICR) and Gas Safety Certificates.
• Fire Risk Assessment: Mandatory under the Regulatory Reform (Fire Safety) Order 2005. We have more detail on fire safety in our fire regulations guide.
• PAT Testing for all electrical appliances.
• HMO Inspections: May require follow-up works before licensing is granted.

Tip: Budget both the licence fee and the cost of bringing the property up to the council’s required standard.

4. Construction & Refurbishment (£40,000–£80,000)

The largest part of any HMO conversion project is going to be the actual construction and refurbishment work itself. We’ve estimated this can be between £40,000 – £80,000, but realistically the cost here can be as low or as high as is necessary for your build. Of course, a few small modifications to an existing HMO vs converting a large property into a large HMO can be completely different prices. Working with professionals early on can help you get a better grip on what the realistic construction costs might be for your specific project.

• General Building Works: Reconfiguration of internal layout, creation of en-suite bathrooms, or extensions.
• Plumbing & Heating: Installation or upgrade of central heating systems, additional bathrooms, and hot water capacity.
• Electrical Works: Rewiring, additional sockets, and emergency lighting systems.
• Kitchens: Commercial-grade appliances, extractor systems, and durable finishes.
• Bathrooms: Multiple HMO shower rooms or en-suites with waterproofing and ventilation systems.
• Insulation & Soundproofing: Compliance with HMO amenity and comfort standards.

Tip: Get multiple contractor quotes and include a clear scope of works to avoid price creep during the build phase.

5. Fire Safety & Compliance Systems (£10,000–£20,000)

Fire safety systems are an important part of any HMO, and should be considered in your budget. The fire safety requirement for HMOs are far more stringent compared to general buy to let properties, and requirements like fire alarm systems, fire doors, lighting systems and more are common.

• Fire Alarm System: Grade A or D systems, depending on HMO size and layout.
• Fire Doors: FD30-rated doors with self-closers and intumescent strips.
• Emergency Lighting & Signage: To meet HMO fire safety regulations.
• Fire Extinguishers & Blankets: Strategically placed in communal areas.
• Smoke & Heat Detectors: Interlinked alarms throughout all rooms.

Tip: Always have a qualified fire safety consultant design and sign off on your fire safety system.

6. Furnishing, Decoration & Fit-Out (£8,000–£15,000)

• Furniture Packs: Beds, wardrobes, desks, and communal area furniture.
• White Goods: Fridges, washing machines, tumble dryers, ovens, and microwaves.
• Decorating: Painting, flooring, curtains/blinds, and lighting fixtures.
• Soft Furnishings & Accessories: To create a professional and appealing finish that attracts quality tenants.

Tip: High-quality HMO interior design and durable furniture pays off through reduced replacement costs and better tenant retention.

7. Contingency & Miscellaneous (10–15% of total)

It’s always worth have a contingency budget in case of issues or delays. We recommend having at least 10-15% of the total for contingency in case of the following:

• Unexpected Works: Damp proofing, roof repairs, or structural fixes.
• Inflation Allowance: Material and labour costs can rise quickly.
• Delays or Redesigns: Especially common with planning or licensing issues.

Large Sui Generis HMO Conversion Costs

For larger HMOs (7+ bedrooms), development costs increase significantly due to extensions, additional bathrooms, fire and acoustic requirements, and more extensive internal and external works.

• Typical total cost: £150,000–£250,000 depending on property size and location.
• Cost per bedroom: A useful rule of thumb is around £30,000 per bedroom, including all internal and external work. For example, a 7-bedroom HMO would cost approximately £210,000.
• Location impact: Costs vary geographically. In the North of England and Scotland, build costs can be 10–15% lower, while in London they may increase by 15% or more. It’s important to consider the best HMO investment areas in the UK and how this might impact your costs and budget.

This cost framework helps investors plan large-scale Sui Generis projects, estimate potential ROI, and ensure financing aligns with expected development expenditure.

Managing the HMO Conversion Process

Project management is about turning that budget into a functioning, compliant HMO within the agreed timeline. Success starts with defining the scope clearly: how many rooms will the property have, will en-suites be added, are extensions or loft conversions planned? This scope guides both your planning application and your tender process with contractors.

Selecting the right team is equally critical. At a minimum, you will be working with a main contractor and various trades, but many investors choose to appoint specialist HMO designers who can produce drawings, manage planning submissions and oversee compliance. For more complex projects, a dedicated project manager may be worth the investment, taking day-to-day oversight off your shoulders.

Once the team is in place, a detailed schedule of works is essential. Breaking the project into phases, demolition, structural work, first fix, second fix, compliance installs, decoration and furnishing, provides accountability and helps prevent delays. Regular site visits, weekly cost reviews and close attention to compliance at each stage reduce the risk of expensive remedial works later.

To summarise:

1. Define the scope: deciding on the number of rooms, whether en-suites will be added, and any extensions.
2. Assemble the team: usually including a main contractor, specialist trades and, where possible, an HMO designer or project manager.
3. Create a schedule of works: mapping phases such as demolition, structural changes, first and second fix, compliance installs, and final decoration.
4. Monitor progress: through site visits, cost reviews and compliance checks at each stage.

Avoiding Common HMO Conversion Pitfalls

Even well-prepared investors can fall into traps during an HMO refurbishment, and these mistakes often cost both time and money. One of the biggest pitfalls is underestimating HMO conversion costs. It’s easy to focus on the building works and forget about professional fees, licensing charges or the expense of fire safety systems, which can quickly add tens of thousands to the budget. A lack of contingency is another common issue. Unexpected structural problems or planning conditions can derail even the most carefully considered plan if you haven’t set aside extra funds.

Another frequent mistake is choosing contractors based on the cheapest quote rather than experience. HMOs have very specific compliance requirements, and tradespeople unfamiliar with fire doors, alarm systems or amenity standards may complete work that later has to be redone. This often results in greater expense than hiring the right people from the start.

Design changes mid-project also pose a risk. Investors sometimes decide to add an extra en-suite or reconfigure a layout halfway through the build. While this might increase rental potential, it almost always leads to delays and cost overruns unless the changes are carefully managed and budgeted for.

Finally, many landlords assume contractors will manage compliance for them. While good trades will often highlight regulatory issues, the responsibility for meeting HMO standards lies with the landlord. Failing to double-check compliance can result in failed inspections or licensing delays.

To summarise, the most common pitfalls include:

• Underestimating total costs and neglecting contingency funds.
• Hiring trades without HMO-specific experience.
• Making unplanned design changes during the build.
• Assuming compliance will be handled by contractors rather than taking responsibility as landlord.

Avoiding these issues requires discipline and foresight. By budgeting realistically, vetting contractors carefully, sticking to the agreed design, and staying actively involved in compliance, landlords can save themselves from costly mistakes and keep their HMO project firmly on track.

The Role of HMO Designers

Specialist HMO designers are increasingly popular because they simplify the process from start to finish. Their services often include:

• Property surveys and compliance research, ensuring the project aligns with local design guidance.
• Optimised layouts, designed to maximise rental yield while staying within regulations.
• Planning submissions, with high approval rates thanks to specialist expertise.
• Building regulation drawings, managed through to approval.
• Support during the build, working alongside your contractor to keep the project on track.
• Handover and refinance support, helping investors pull out their capital once the project is complete.

By taking on these responsibilities, HMO designers reduce risk and stress, while increasing the chances of a profitable, compliant conversion.

Key Takeaways

Budgeting and project management are the backbone of any successful HMO conversion. A realistic budget that includes acquisition costs, professional services, compliance, construction, fit-out and contingency will prevent unpleasant surprises. Strong project management ensures the refurb stays on schedule and within budget.

HMO Checker can be also be used at the earliest stages to confirm a property’s viability, while specialist HMO designers can guide you through design, planning, build and refinance. Together, these resources give landlords the best chance of delivering a compliant, profitable HMO that stands the test of time.