How Much Do You Need to Start Your First HMO in the UK?

Let’s be honest - most people don’t invest in property because they’re scared they can’t afford to.

If you’ve ever thought “I’d love to do this but I don’t have the money”, you’re not alone. And you're not wrong to ask. It’s a smart question - because too many people dive in without running the numbers first.

So let’s break down exactly what it costs to get started with an HMO - with real figures, not fantasy.

Spoiler alert: You don’t need to be a millionaire. But you do need a plan.

Initial Costs to Expect When Starting an HMO

1. Deposit

Most lenders require 25% of the property value as a deposit for an HMO mortgage.

• Example: For a £250,000 property, that’s £62,500.
  
  

💡 Want to reduce this? Consider joint ventures or investor finance - covered in our free training.

2. Stamp Duty & Legal Fees

Stamp duty varies depending on your situation, but as a second property, expect:

• Stamp duty: ~£10,000 (on a £250k property)
  
  
• Legal & conveyancing fees: £1,000–£2,000
  
  

3. HMO Conversion & Setup Costs

This is where most people under-budget. Here’s what you’ll need to include:

💡 Steve’s Tip: Use Ottoman beds for extra storage - tenants love it, and it saves space.

4. Licensing Fees

These vary by council, but expect:

• HMO licence: £500–£1,000
  
  
• Possibly planning fees (if in Article 4 areas)
  
  

Always check with your local council before buying.

5. Mortgage Broker, Survey, and Insurance

• Broker fee: £500–£1,000
  
  
• Survey: £400–£800
  
  
• Specialist HMO landlord insurance: £300–£800 per year
  
  

So what's the total?

Here’s a ballpark estimate for a standard 5-bed HMO:

🔹 Total Investment: ~£84,000 – £102,500

It’s a business - and like any business, it takes capital to set up. But remember this: done right, a single HMO can generate £20k–£30k+ profit per year.

That’s a full-time income from one property.

What if you don’t have that much money?

You’ve got options:

• Joint Ventures – team up with someone who has funds
  
  
• Investor Finance – raise private finance with a strong deal
  
  
• Rent-to-Rent – control property without buying it
  
  

We cover these in detail inside our free Masterclass - no upsell, just the real strategy.

Want to learn how to start with the budget you’ve got?

Join the Free HMO Masterclass with Steve Doran

• Discover 3 ways to start with less capital
• See live deal breakdowns
• Learn how to avoid beginner money traps

👉 Claim your free spot now

Final thought:

The truth is, investing in HMOs takes capital - but it also creates cashflow faster than almost anything else in property.

Most people overestimate what they need, and underestimate what’s possible.

If you’re willing to learn the ropes, plan smart, and take action - you can do this.