You don’t have to look far to find gloomy headlines about landlords leaving, rising costs and the Renters’ Rights Bill changing the rules of the game.
But as I recently argued, “more difficult” is not the same as “terminal.” Buy-to-let is still alive and well, and so is investing in multi-occupancy homes (HMOs).
Healthcare organizations – where to invest and what is the return?
In Credit Lord’According to HMO data for the fourth quarter of 2025, the average annual rent in the UK sample increased by 18.9% year-on-year to £33,591 and the average property value by 15.8% to £330,362, while average yields fell from 10.4% to 9.6%. That’s yield compression, not collapse. It says that rents are rising, but the value of assets is also rising.
Where the opportunities lie geographically is just as important. Lendlord’s figures show the North West now has the largest share of the healthcare sector, at 17.9%, up from 15.1% a year earlier, while Greater London’s share fell from 20.6% to 16.5%.
The North East remains the leader in returns with 15.1%. London is almost a mirror image: average HMO values rose from £660,227 to £684,724, it yields the highest annual rent of £55,017, but yields are the lowest at 8.0%.
In other words, if you want returns, the Northeast stands out; if you want capital growth, London still looks like a strong long-term market.
Landlord profile: who invests in healthcare organizations?
Hamptons says investors bought 10.8% of homes in Britain in 2025, up from 11.9% the year before, but there were still 66,587 new buy-to-let businesses set up in 2025, an increase of 8% on 2024, with a further 5,922 set up in January 2026 alone.
Around three-quarters of new buy-to-let purchases are now made through limited companies. Hamptons also estimates that by 2025, Millennials will have set up a record 33,395 new buy-to-let companies and will now make up half of the shareholders in newly created BTL companies.
However, it is important to note that healthcare organizations are in a specialist corner of the credit and investment market. Not every buy-to-let lender will consider them. Starting landlords usually have fewer options.
Underwriters look at experience, licensing, fire safety, lease sustainability and, for larger borrowers, portfolio strength.
Additionally, some lenders assess total room rent differently than others, and appraisals may be based on physical value or investment value, which can significantly change loan-to-value and refinancing options.
A few practical things HMO landlords should consider
Healthcare organizations can often look great when it comes to gross revenue, and regional return data explains why they continue to attract investors. But higher settlement costs, licensing fees, compliance expenses, utilities, insurance, furnishing, management and invalid assumptions can quickly erode margins. A higher gross return is only useful if the cash flow is still working, after you have properly stress-tested the deal.
Larger healthcare organizations often also require a mandatory permit from the local government, and some municipalities also have additional or selective licensing schemes.
If you are converting a single rental property into an HMO, lenders will also want to know what work is involved and whether any consents are required. In other words, the HMO investment business lives or dies at the local level. National averages are useful, but do not replace local due diligence.
What impact will the Tenants’ Rights Act have on HMO?
Then there’s the Renters’ Rights Act 2025. Phase one starts on May 1, 2026. From that date, new and existing private rental agreements in England will move to the new system – section 21 states: most fixed terms will disappear, rent increases will be limited to once a year through the statutory process, restrictions on advance rents will apply, rental bids will be prohibited, and discrimination against applicants with children or on benefits is prohibited.
Phase two, expected from the end of 2026, will bring the new Landlord Ombudsman and Private Rental Sector Database, with Awaab Law and the Decent Homes Standard to follow later.
The industry commentary is remarkably consistent. The National Association of Residential Landlords (NRLA) says the May 1, 2026 effective date means ‘the clock is ticking’ and warns the rollout risks failing without the vital documentation landlords still need.
Others say the legislation appears to be dampening future investor interest, meaning rental stock is unlikely to grow and the growing layers of regulation make professional, regulated management more important than ever.
The greatest impact specifically for healthcare organizations is operational. The law does not eliminate licensing or management rules for HMOs, but it does reduce the margin for error.
Landlords who have relied on fixed terms to control turnover, or on significant upfront rent to offset risk in more complex leases, will need to reconsider how they structure agreements, model cash flow and plan their holdings.
The decision per room versus joint rental becomes more strategic. Documentation becomes more important.
And because local governments have stronger enforcement tools and meaningful financial sanctions, compliance shifts from a background task to a core part of investment performance.
In short: Should you invest in an HMO?
The conclusion is the same as I made about the broader buy-to-let market: harder doesn’t mean terminal. Healthcare organizations are still alive and kicking. But the industry that will exist in 2026 will not be the casual, spreadsheet-like model of the past.
It is regional, selective, compliance-oriented and financially driven. Landlords who understand that will still find strong income markets, especially in the Northeast and Northwest, and those who treat HMOs as a standard single-family home with a few extra bedrooms will find the new regime much less forgiving.
Hiten Ganatra is director of Visionary finance