Recent research indicates that planning refusals for houses in multiple occupation (HMOs) have more than doubled since 2021, a trend that could significantly impact the mortgage market. As councils tighten regulations, landlords may face increased challenges in securing planning permissions, which could affect the availability of rental properties and ultimately influence the mortgage market.
Why Are HMO Planning Refusals Increasing?
According to property firm 1st Avenue, the number of HMO applications rejected has surged, with refusals climbing from 590 in 2021 to 1,203 in 2025 across 144 English councils. This increase coincides with a broader rise in the total number of HMO applications decided, which grew by 87% during the same period, from 1,848 to 3,454. Despite this growth, approval rates have declined from approximately 68% to 63% between 2024 and early 2026.
What Are Article 4 Directions?
Many councils are implementing Article 4 directions, which remove permitted development rights for converting family homes into small HMOs. This means landlords must now seek planning permission for such conversions, creating additional hurdles. Although there is no central register of these directions, estimates suggest that between 75 and 80 local authorities in England have adopted them.
What This Means for the Mortgage Market
The tightening of regulations could lead to a decrease in the availability of affordable shared housing. Paul Endacott, a property expert at 1st Avenue, warns that as legitimate HMO options diminish, some tenants may be pushed towards unregulated or informal accommodation. This shift could have significant implications for landlords and investors, as the demand for well-managed shared housing remains high. Investors may need to reassess their strategies in light of these changes, focusing on compliance and navigating the evolving planning market.
Frequently Asked Questions
How do planning refusals impact the mortgage market?
Increased planning refusals for HMOs can limit the supply of rental properties, potentially driving up demand and prices, which may affect mortgage rates and availability for landlords.
What should landlords do in response to these changes?
Landlords may need to stay informed about local planning regulations, consider alternative investment strategies, and ensure compliance with new requirements to secure their rental properties.