In the past, valuing a small HMO meant choosing a side. You either went bricks and mortar, valuing the property based on comparable sales in the area, or you went investment, looking at rental income and yield. One or the other. Clean lines. Simple maths.
In 2025, that split-second decision making process is starting to look dated. And for valuers still picking just one route, there’s a growing risk that they’re not landing on market value at all.
Not a niche anymore
Let’s start with the basics. Small HMOs, that’s up to six unrelated occupants, are everywhere. The latest National HMO Market Report for England & Wales 2025, published by HMOSales.com in May 2025, puts the number of HMOs in England and Wales at around 362,000, more than double the previous Census estimate. They pull in more than £6.3bn in annual rent and sit on a combined asset value of £78bn. This is not a fringe strategy for amateur landlords. This is the thick of the market.
Which makes the stakes higher. Get the valuation wrong and it’s not just a line on a form that’s off, it’s lending decisions, loan-to-value (LTV) calculations, investor appetite and broker confidence. It’s the whole picture.
Yield is too loud to ignore
Here’s the bit that matters. Average HMO yields are 10.4%. Most single-lets are at 4 to 6%. In Q1 this year, HMO yields were around 7.5%, more than double the average return on single-let properties, which came in at just 3.6%.
Zoom in on the regions and it gets sharper. The North East is pushing 12.5%. Manchester, Liverpool and bits of the North West are up there too. Even London, not exactly a yield hunter’s paradise, is managing 6.6%, with the South East at 8.1%.
This is not background noise, it’s an investment case. Ignoring it just because the instruction says “bricks and mortar” misses the point and possibly the right valuation.
The bit brokers should know
Valuers have a job to do. But brokers need to understand how that job works, especially when expectations don’t line up with the final report.
A bricks and mortar valuation that doesn’t nod to yield? Risky. An investment valuation that skips local sale values? Same again. These things aren’t optional extras. They are part of the market value picture. If you’re advising landlord clients in 2025, this stuff matters.
Good valuers should always blend both methods. They should weigh up investor appetite, check the tone of vacant possession, and balance the two based on what the property is, where it is, and how it’s used.
What we’re saying is…
Valuations work best when they’re balanced, evidence-based, and grounded in reality.
We’ve seen enough one-sided reports to know where the risks are. We’ve worked with enough brokers to know the frustrations when a strong HMO doesn’t land the value it deserves.
If that sounds familiar, maybe it’s time to have a different kind of conversation around method, market value and what a good HMO valuation really looks like.
That’s exactly the approach Pure Panel Management supports. We don’t just place valuation instructions, we work with valuers who understand that market value means looking at both sides of the equation. Comparable sales and yield both matter. And the best reports don’t choose between them, they balance them. It’s the standard we expect, and the service we back brokers to deliver.
James Gillam is managing director at Pure Panel Management
