Real HMO Operating Costs in the UK: What Landlords Need to Know

If you're modelling your HMO at 20–25% running costs, you're probably underestimating.

I know because that’s exactly what I used to assume when I started investing in HMOs in the UK 5 years ago.

I’m Benjamin Fountain, an HMO landlord and co-founder of Netmo. After years of managing properties, paying management agents, approving inflated contractor quotes, and dealing with endless minor tenant issues, I realised something important: most landlords don’t truly know their real HMO operating costs.

And that affects every investment decision.

What Are the Real Operating Costs of an HMO in the UK?

When landlords search for “HMO operating costs UK” or “HMO running costs breakdown”, they usually want a simple percentage. The reality is more detailed.

Typical HMO running costs include:

• Utilities (gas, electric, water, broadband)
• Maintenance and repairs
• Compliance and certification
• Letting or management fees
• Cleaning and communal upkeep
• Void periods
• Insurance
• HMO licensing fees

Listing them is a start. Tracking them properly (per property) is time consuming.

Across my portfolio, operating costs sit in the high 30s as a percentage of gross rent.

5 years ago when I started I would have panicked. Now I don't worry, because when you measure accurately, you can make good decisions.

HMO Running Costs Breakdown (UK Reality)

Utilities in bills-included HMOs

Energy costs alone can distort margins quickly.

In bills-included HMOs, usage often increases when tenants don’t directly feel the cost.

Without active tracking, margins quietly erode. When gas cost more than gold (what felt like it anyway at the start of the Russian invasion of Ukraine), I replaced all gas cookers with induction ones.

Maintenance and Contractor Costs

This is where I used to lose money unnecessarily, but at the start I thought this was the only way juggling my day job, family commitments, and starting my HMO journey.

When I worked with management agents, the process often looked like this:

Tenant reports issue →Agent forwards issue to me →Contractor arranged →Inflated quote →Approval →Problem turns out to be minor →I’ve paid three-figure call-outs for simple breaker resets.

Multiply that over a year and your HMO cost percentage climbs fast.

That frustration is what led me to build Netmo. Now tenant issues are triaged automatically using AI diagnostics, appliance manuals, and room-level context. Most minor issues are resolved before a contractor is ever needed.

Compliance and Certification Costs

HMO compliance requirements in the UK include:

• Gas Safety Certificate
• Electrical Installation Condition Report (EICR)
• Fire Risk Assessment
• Emergency lighting checks
• HMO licence renewal

Every property has its own timeline and poor tracking leads to reactive spending and rushed compliance work. Add to this the difficulty of receiving a comprehensive multi-property quote from the service providers and this results in many hours spent trying to pull this all together.

Operational visibility reduces last-minute costs.

Letting and HMO Management Fees

Average HMO management fees in the UK range from 8–15% or more.

When I reviewed my own numbers, I realised I was paying for coordination rather than expertise. Seriously, more often than not my managing agents were just forwarding me the email from tenant and back with the answer. Or suggesting a really expensive fix to a trivial issue.

With Netmo in place, I significantly reduced agent reliance and saved hundreds of pounds per property.

Void Periods

Voids are often underestimated in cost calculations.

A property that looks profitable annually can underperform once voids are factored properly into monthly cost percentage.

This is why I track performance per HMO, monthly.

What Is a Realistic HMO Cost Percentage?

Many landlords assume 20–25%.

In reality, based on my 5 year experience tracking costs property by property, room by room:

• 30–40% is common once all costs are included.
• Above 40% usually signals inefficiencies.

The real issue is variance.

One HMO may operate at 35%.
Another at 44%.

Portfolio averages hide problems.

Every HMO has its own cost ceiling.

Why Per-Property Tracking Matters

Saying “the portfolio is doing fine” can mask underperformance.

As an investor, what matters is:

• This property
• These costs
• This margin

If one HMO drifts, I want to know why.

Is it energy consumption? Maintenance patterns? Room pricing? Void length?

And I want to know this instantly, not having to pull all the data into an ad hoc spreadsheet.

How Netmo Helps Reduce HMO Operating Costs

Netmo allows landlords to:

• Automate tenant issue diagnostics via AI, offering an effective automatic triage of the reported issues. 95% of issues are trivial and are resolved via AI-chat which has access to all appliance manuals and house set up information.
• Resolve common room-level issues without contractor call-outs.
• Create house-level chat spaces (no WhatsApp / phone number sharing required). Some of my tenants take proactive steps to build a community in the property, some don't want anything to do with the other tenants, but still need a way to receive information and update messages relating to daily running of the house.
• Automate tenant onboarding.
• Track cost visibility per property.
• View the entire portfolio in one dashboard.

The result:

• Fewer unnecessary contractor visits
• Reduced management friction
• Lower operational costs
• Clearer cost percentage tracking

If you want to see how I think about HMO cost ceilings and per-property tracking, I share operational insights regularly on LinkedIn:

👉 https://www.linkedin.com/feed/update/urn:li:activity:7424050696137932800/
👉 https://www.linkedin.com/feed/update/urn:li:activity:7422232246738395136/

You can also follow my profile here:
👉 https://www.linkedin.com/in/benjaminfountain/

I post daily about HMO operations, cost control, and landlord systems.

Frequently Asked Questions

What is the average HMO operating cost percentage in the UK?

Many landlords assume 20–25%, but real-world operating costs are often closer to 30–40% once utilities, maintenance, compliance, and voids are fully included.

How can I reduce HMO running costs?

• Automate tenant issue triage
• Track costs per property monthly
• Review contractor usage
• Monitor void periods
• Reduce reliance on high management fees

Are HMOs still profitable in 2026?

Yes, but profitability depends heavily on operational efficiency and accurate cost tracking.

Final Thought

Good HMOs aren’t built on optimistic spreadsheets.

They’re built on good business sense, care for the tenants and operational clarity.

If you don’t know your real HMO operating cost percentage, you’re not investing with precision.

You’re hoping.

If you’d like to track each HMO as its own business unit and reduce unnecessary management costs, explore Netmo at Netmo.co.uk. Special pricing currently available for UK HMO landlords.