HMO valuation calculator.
The same method a surveyor uses: room schedule → gross rent → Adjusted Gross Rent → gross yield and YP in perpetuity — with the vacant-possession and restricted-marketing values lenders actually instruct on, and whether the investment or bricks-and-mortar basis applies.
Valuers deduct 20–30% for management, voids, utilities, council tax and repairs (both of our reference reports used 25%). If let to a social housing provider, the deduction is materially lower — around 15%.
Applied to the gross rent. Roughly 11.5–13% for good-quality licensed stock — higher for bigger lot sizes or where work is needed.
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Bricks & mortar likely
A valuer is likely to value this as a house (bricks & mortar) — the rent won't drive the figure. Answer the fine-tune questions below for a better steer.
The valuer’s calculation
HMO valuation questions, answered
What is Adjusted Gross Rent (AGR)?
The gross room rents less a deduction — typically 20–30% — covering management, voids, utilities, council tax, repairs and renewals, letting costs and licensing. HMOs trade on a multiple of this net figure; valuers quote both the gross yield on gross rent and the net yield on AGR (usually around 8–9.5%).
When is an HMO valued on the investment basis rather than as a house?
When it reads as a true commercial HMO: a large or sui generis property, fully licensed, in an Article 4 area, and heavily adapted so that returning it to a single dwelling would be uneconomic. Smaller, lightly converted HMOs are usually valued bricks-and-mortar, from comparable house sales.
What yield do valuers apply to an HMO?
A gross initial yield applied to the gross rent — recent reports show roughly 11.5–13% for good-quality licensed stock, with higher yields for larger lot sizes or properties needing investment. The value is gross rent × YP in perpetuity (1 ÷ yield).
Why is the vacant possession value lower?
Valuers deduct a letting-up allowance — commonly around 3 months' rent, up to 6 — for the time it takes to fill the rooms. Restricted-marketing values go further: typically −10% for a 180-day sale and −20% for a 90-day or auction sale.
The valuation is one step. Model the whole HMO deal — buy, convert, refinance, cash out.
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