This is evident from new data from Just Landlords, which revealed that the number of HMO licensing applications has increased by 40% since 2018, with more than 57,000 applications received last year alone.
Edinburgh, Oxford and Bristol were named the UK’s HMO hotspots, with the highest annual application rates
But the analysis also highlighted areas such as Sandwell in the West Midlands and West Lancashire as emerging investment regions. Application growth of almost 1,000% was reported in these places.
Specialist landlord insurance company Just Landlords used data obtained from Freedom of Information (FOI) requests from local councils in the UK to investigate HMO uptake.
It found that the number of annual HMO applications had risen from 41,162 to a record 57,725 since 2018.
Edinburgh had the highest annual application rates at 5,158 per year. Oxford came second with 2,458 and Bristol third with 1,491. Meanwhile, Southwark and Tower Hamlets in London came fourth and fifth with 1,412 and 1,394 respectively.
Sandwell, in the West Midlands, reported the highest growth rate, with applications increasing by 964%, from 28 in 2018 to 298 in 2024. This was closely followed by West Lancashire with 886%, then Tower Hamlets with 750%, Guildford with 742% and Waltham Forest with 481%.
Clark Ross, managing director of Just Landlords, said: “We are witnessing a major evolution in the UK rental market, with an increasing number of landlords moving away from traditional lettings in favor of healthcare organisations, to help meet the growing demand for flexible, affordable housing solutions.”
“We are also seeing an interesting geographic shift in investment. While London remains a cornerstone of the market, there has been huge growth in the Midlands and the North, with some areas seeing an increase in applications of almost 1,000% since 2018.”
Just Landlords noticed an increasing focus on quality and compliance, with council inspections of healthcare organizations increasing by 83% since 2018 and enforcement actions, including improvement notices and prosecutions, increasing by 180%.
Areas such as Blackpool and Fenland had more than half of their annual applications rejected, while landlords in Lewisham, Wandsworth and Liverpool saw higher than average enforcement actions.
Ross added: “While our findings reveal an environment of stricter regulation, this should be seen as a positive step for the market. Higher standards protect the reputation of the sector and ensure that dedicated, professional landlords are not undermined by substandard operators.
“As the industry continues to grow, the most successful landlords will be those who view their compliance and insurance as the foundation of their business strategy.”