How Much Does HMO Management Cost in the UK?

A common question that we hear from landlords is whether it’s worth paying an agent to manage their property, and more importantly how much does it cost.

The answer depends on many factors, such as where the property is located, size, and exactly what level of service is being offered. Management fees are usually between 8% and 15% of the gross monthly rent for HMO management.

Many landlords focus purely on the cost. For example a 6-bed HMO which generates £4,000pcm, a 10% fee is £400. This equates to £4,800 a year so it’s a fair question that the landlord asks.

However, the more important thing to consider is what you are actually getting for that and the competency of the agent when it comes to HMOs.

As standard, a HMO management service should cover tenant sourcing, full referencing, rent collection, handling maintenance issues, compliances with all the HMO laws, regular inspections, and responded to the day-to-day queries from tenants.

Often landlords will take the cheapest management fee and feel like they are getting a good deal. There are many agencies where they offer very low and attractive fees, but service level is poor. This results in tenants that are not vetted properly, inventories not being done, poor communication which results in a much higher tenant turnover and ultimately larger void periods. Therefore, it looks like a saving on paper but it ends up costing far more in voids, arrears, and property damage.

With the ongoing changes in the rental sector, including the increased regulation and impact of the Renters Rights Bill, it is vital that your agent understands all the compliance requirements and is experienced with managing HMOs.

At the end of the day, HMO management isn’t just a cost but it’s a decision on how you run your investment. Some landlords will prioritise control and cost saving while others will prioritise time and stability. The key is to understand what balance works best and what makes good management.