Planning refusals for houses in multiple occupation (HMOs) have significantly increased, more than doubling since 2021. This trend, highlighted by research from property firm 1st Avenue, raises concerns for landlords and investors in the UK mortgage market, particularly as demand for affordable shared housing continues to rise.
Why Are HMO Planning Refusals Increasing?
Research indicates that the number of HMO applications denied has escalated alongside a broader increase in the total number of applications. From 2021 to 2025, the number of decided applications rose by 87%, from 1,848 to 3,454. Despite this surge, approval rates remained stable at around 68% until 2024, when they fell to 63% in early 2026. This decline coincides with the growing use of Article 4 directions by councils, which limit permitted development rights for converting family homes into small HMOs.
What Does This Mean for the Mortgage Market?
The tightening of HMO regulations may lead to fewer legitimate rental options, which could push tenants toward unsafe or unregulated housing. Landlords need to be aware of the changing mortgage market and consider the implications for their investments. As councils increasingly impose restrictions, it may become more challenging to secure planning permissions, impacting the overall profitability of HMO investments. For those looking to navigate these changes, staying updated on current mortgage rates is essential.
Who Is Affected by These Changes?
Landlords and property investors are directly impacted by the increasing refusal rates, as the restrictions on HMO applications could limit their ability to expand their portfolios. Additionally, tenants seeking affordable shared housing may find their options diminishing, potentially leading them to seek informal or unregulated accommodation. The National Residential Landlords Association estimates that between 75 and 80 local authorities in England have implemented Article 4 directions, amplifying these challenges.
Frequently Asked Questions
What are Article 4 directions?
Article 4 directions are planning regulations that allow local councils to remove permitted development rights, requiring landlords to seek planning permission for converting family homes into HMOs.
How can landlords adapt to the changing HMO market?
Landlords should stay informed about local planning regulations, consider diversifying their property portfolios, and explore alternative rental strategies to mitigate the impact of HMO restrictions.