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Should You Sell or Rent out Your Property as an HMO?

Inheriting a property or being responsible for a second home can come with the question of whether it should be sold and the cash banked or whether to use it as an investment opportunity and let it out to students as a House in Multiple Occupation (HMO).

Whilst selling the property gives you a large lump sum, it can be a lengthy and costly process with tax implications. On the other hand, letting the property out as an HMO could mean the benefits of a monthly passive income but also comes with some potential risks if there are tenancy voids.

It’s a big financial decision and the answer will vary from person to person depending on their personal circumstances.

Below we have outlined some of the key pros and cons of both selling and letting to students to help you think through this important decision.

Pros and Cons of Selling the Property


  • You will receive a large lump sum of cash which can be used for other reasons or invested in other ways.
  • The UK market continues to be strong and house prices have been rising for many years.
  • You don’t have the worry of maintaining the property or keeping it secure if it is vacant.
  • There is no stress in covering any existing mortgage payments.
  • Some properties may not be suitable for renting out or their location may not appeal to renters and so they are best sold.


  • Selling the property means you won’t benefit from any future increases to the value of the property.
  • Selling is a lengthy process and can take months or over a year for chains to form and complete.
  • There are additional costs involved with selling such as conveyancing, removal vans or clearance costs.
  • There may be tax implications with capital gains or inheritance tax.
  • Whilst you get a lump sum from selling, once it’s spent it’s gone.
  • The buyers survey may bring up some issues you were not aware of and you may need to invest in renovations or upgrades to either complete a sale or get the best price.

Pros and Cons of Letting the Property as an HMO


  • You receive a predictable monthly income which is passive if subbed out to a property management company. This income could substitute a salary or pension. As there are several tenants residing within HMOs, the rental yield is generally higher than other rental properties.
  • You can rent out a property indefinitely and let your children inherit it.
  • Demand for HMO properties remains high as individuals find it difficult to either save enough deposit or afford a mortgage.
  • Over time, it is possible that the money collected through rent will exceed the value you would have got for selling the property.
  • If your property has a mortgage on it and you are struggling to sell it whilst living elsewhere, letting can take away the stress of covering the monthly payments.
  • You still own the property, and you can sell it at any point down the line if you wish whilst benefiting from any increase in the value of the property.
  • Good student/ young professional tenants will look after the property and provide security that the property is occupied and less open to break ins or squatters if the property would otherwise be left vacant for long periods.
  • Continuing to own the property may help reduce the tax implications rather than selling.
  • If the property is gained through inheritance and there was life insurance that paid off the mortgage, then the net rental income will increase.


  • If the property requires a mortgage it will need to become a buy to let one. There are different requirements for these compared to a standard homeowner’s mortgage and may have a higher rate of interest due to it being an HMO property.
  • You may need to invest in the property to ensure it meets all the HMO required standards.
  • Bad student tenants can severely impact your income if they damage furniture, flooring or the building structure.
  • Tenancy voids can also impact your income significantly. (periods between tenancies when nobody is living in the property.) Ensuring there is minimum time between student tenants can be tricky and marketing your property quickly and at the right rate becomes essential.
  • Properties may need to undergo alterations such as creating multiple individual bedrooms and fitting desks to ensure they are suitable for the student market.

The Importance of Researching Your Decision

In either event, whether a person sells or rents out their property as an HMO, there are significant financial implications, and any decision should be taken carefully and with advice from experts.

If you Choose to Rent out Your Property as an HMO

If renting out a property to students / young professionals and becoming a landlord of an HMO is the right way forward for you, your next decision is whether to enlist the help of a property management company or to go it alone. Using a management company, however, can greatly reduce the number of negatives associated with renting out the property that were listed above.

The Benefits of Using a Property Management Company

In fact, by using the services of a property management company, a student landlord gains many additional benefits including:

  • - Advice and valuation to ensure your property is listed at the correct rate.
  • - Help finding the right student /young professional tenants and ability to advertise to a wide and ready audience to avoid tenancy voids.
  • - Appropriate financial checks on students to ensure suitability and ability to pay.
  • - Guidance on how to protect your tenants’ deposits.
  • - Support understanding your legal obligations and ensuring that the property adheres to the ever-changing complex HMO laws and regulations for rental properties.
  • - Greater time to pursue your other interests or jobs whilst the management team organise checks and manage HMO tenancy agreements.

Some would say that given the legal complexity around letting a property, a landlord can no longer afford not to use a letting agency!

Bristol Digs a Full-Service Property Management Company

At Bristol Digs, our experienced team are here to support you through every step of the rental process. We offer a range of services from an initial rental valuation through to full management service so you can choose the management package that suits you.

We are also an ARLA approved agent which means that all client funds are protected under the Propertymark Client Money Protection Scheme.

To start your property letting journey and find out more about our property management services, call us on 0117 930 8750 or complete our online enquiry form.

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