You've bought a standard three-bed house. It's in a great location, near a university or city centre, with strong rental demand. The numbers look solid for converting it into a five-bed HMO.
Now comes the hard part: actually doing the conversion.
HMO conversions aren't just about adding bedrooms. They're about navigating planning regulations, meeting fire safety standards, obtaining licenses, managing contractors, and financing the whole project without running out of cash halfway through.
Get it right and you'll double your rental income. Get it wrong and you'll end up with a half-finished project, regulatory fines, and a property you can't legally rent out.
This article walks you through the entire HMO conversion process: planning permission, building regulations, finance options, compliance requirements, and how to avoid the costly mistakes that trip up first-time converters.
Step 1: Understand the Planning Landscape
Before you buy a screwdriver, you need to understand whether you're even allowed to convert your property into an HMO.
Do You Need Planning Permission?
It depends on where you are.
Article 4 Directions
In many areas with high concentrations of HMOs, local councils have imposed "Article 4 Directions" which remove permitted development rights for HMO conversions.
If your property is in an Article 4 area, you'll need full planning permission to change from a standard dwelling (Use Class C3) to a small HMO (Use Class C4).
How to Check:
- 1. Visit your local council's planning portal
- 2. Search for Article 4 directions in your area
- 3. Check whether your specific address falls within the zone
If you're in an Article 4 area and convert without permission, the council can:
- • Force you to revert the property back
- • Fine you
- • Make you apply for retrospective permission (which might be refused)
If You Need Planning Permission:
Your application will be assessed on factors like:
- • Concentration of HMOs in the area (councils often have thresholds, like "no more than 10% HMOs per street")
- • Parking availability
- • Impact on the character of the neighbourhood
- • Whether the property has adequate facilities
Planning applications take 8-12 weeks minimum and cost £500-1,000. There's no guarantee of approval.
Areas Without Article 4 Directions
If your area doesn't have an Article 4 direction, you usually don't need planning permission to convert a house into a small HMO (3-6 people).
Large HMOs (7+ people) or properties with three storeys and 5+ people may still require planning permission depending on local policies.
The Bottom Line: Always check with your local planning authority before buying a property for HMO conversion. An assumption that planning isn't needed can cost you tens of thousands if you're wrong.
Step 2: Design Your HMO Conversion
Once you've confirmed planning is either granted or not required, it's time to design the conversion.
Key Design Considerations:
Minimum Room Sizes
Most councils require:
- • Single rooms: Minimum 6.51 m²
- • Double rooms: Minimum 10.22 m²
- • Communal kitchens: Minimum 7 m² (larger for more occupants)
Check your local authority's specific standards—they vary.
Number of Bathrooms
Minimum standards usually require:
- • Up to 4 occupants: One bathroom
- • 5 occupants: Two bathrooms (or one bathroom + separate WC)
- • 6+ occupants: Two full bathrooms
Kitchen Facilities
You need adequate:
- • Fridge/freezer space (individual mini-fridges per tenant)
- • Cooking facilities (minimum two hobs per person, or one per person if ≤4)
- • Sink and food prep areas
- • Storage (cupboard space)
Fire Safety
Your design must accommodate:
- • Fire doors (FD30 standard on escape routes)
- • Smoke and heat alarms
- • Emergency lighting
- • Clear escape routes
Common Conversion Types:
Loft Conversion
Adding one or two bedrooms in the loft. Usually costs £20-40k and is the most popular HMO conversion type.
Garage Conversion
Turning a garage into a bedroom (requires building regulations approval). Costs £8-15k typically.
Extension
Adding a rear or side extension to create additional bedrooms or bathrooms. Costs £15-30k+.
Reconfiguration
Changing the layout—maybe splitting a large lounge into two bedrooms, or converting a dining room. Minimal cost (£5-10k) but can add significant rental income.
En-Suite Additions
Professional HMOs increasingly feature en-suite bathrooms. These command premium rents but cost £4-8k per room.
Step 3: Building Regulations and Compliance
Even if you don't need planning permission, you definitely need to comply with building regulations.
Building Regs Apply To:
- • Structural changes (loft conversions, extensions)
- • New bathrooms and kitchens
- • Electrical work
- • Fire safety installations
- • Insulation and energy efficiency measures
The Process:
- 1. Submit a building notice or full plans application to Building Control
- 2. Pay the fee (usually £500-1,500 depending on scope)
- 3. Building Control inspects at key stages
- 4. Upon completion, you receive a completion certificate
Don't Skip This
Some landlords try to cut corners by not notifying Building Control. This is reckless because:
- • You won't get a completion certificate (needed for licensing and sale)
- • Insurance may be invalidated
- • The council can force you to expose and inspect work retrospectively
- • You can't prove compliance if questioned
Just do it properly from the start.
Step 4: Fire Safety Requirements (The Non-Negotiables)
Fire safety is the most critical aspect of HMO conversions. Get this wrong and people die. Councils take it very seriously, and so should you.
Minimum Fire Safety Requirements for HMOs:
Fire Detection and Alarms
- • Mains-powered smoke alarms on every floor
- • Heat alarms in kitchens
- • Alarms interlinked (if one goes off, they all go off)
- • Tested regularly
Fire Doors
- • All rooms opening onto escape routes need FD30-rated fire doors
- • Doors must be self-closing
- • Must have intumescent strips and smoke seals
- • Must fit properly (no gaps over 3mm)
Escape Routes
- • Clear, unobstructed escape routes from every room
- • Adequate width (750mm minimum)
- • Emergency lighting on escape routes
- • Travel distances within prescribed limits (7.5m if one direction, 18m if two)
Fire Extinguishers and Blankets
- • Fire blanket in the kitchen
- • Extinguishers on each floor (check local authority requirements)
Fire Risk Assessment
Large HMOs legally require a professional fire risk assessment. Even small HMOs benefit from one—it protects you and your tenants.
Costs:
- • Fire doors: £150-250 each (including fitting)
- • Alarm system: £1,000-2,000 for a full interlinked system
- • Emergency lighting: £500-1,000
- • Fire risk assessment: £200-500
Total fire safety costs: £2,500-5,000 depending on property size.
Step 5: HMO Licensing (Mandatory Compliance)
Once your property is converted, you need to license it (if required).
Who Needs a License?
Mandatory Licensing (England-wide)
Required if your property has:
- • Five or more occupants
- • From two or more households
- • Across three or more storeys
Additional Licensing (Council-specific)
Some councils require licensing for smaller HMOs (3-4 tenants) in designated areas. Check your local authority's website.
Selective Licensing (Council-specific)
Some areas require licenses for all rental properties, not just HMOs.
How to Apply:
- 1. Check whether you need a license
- 2. Ensure property meets all standards (room sizes, fire safety, amenities)
- 3. Submit application to local authority (usually online)
- 4. Pay fee (typically £500-1,200)
- 5. Council inspects property
- 6. License granted (usually for 5 years)
Consequences of Not Licensing:
- • Fines up to £30,000
- • Rent repayment orders (tenants can reclaim up to 12 months' rent)
- • Criminal record
- • Cannot evict tenants using Section 21
- • Cannot claim housing benefit
Bottom line: If your property needs licensing, get the license. The cost is trivial compared to the consequences of not having one.
Step 6: Financing Your HMO Conversion
Now let's talk about the money. How do you actually pay for all of this?
Option 1: Cash
The simplest option. Pay for everything out of pocket: property purchase, conversion costs, furnishings, licensing.
Pros: No finance costs, clean ownership
Cons: Ties up significant capital, limits portfolio growth
Option 2: Purchase Mortgage + Cash
Buy the property with a standard mortgage (or cash), then pay for conversion works out of pocket.
Pros: Requires less upfront cash than full cash purchase
Cons: Still need £30-80k for conversion costs
Option 3: Bridging Finance (Our Recommendation)
Use bridging finance to cover purchase + conversion costs, then refinance onto a long-term HMO mortgage once complete.
How It Works:
- 1. Day 1: Buy property with bridging loan (75% LTV)
- 2. Months 1-6: Complete conversion works (paid from your capital)
- 3. Month 6: Get property valued (now worth more)
- 4. Month 7: Refinance onto HMO mortgage (75% of new higher value)
- 5. Extract capital from refinance to fund next project
Example:
• Purchase: £180,000 (borrow £135k bridging, you pay £45k deposit)
• Conversion: £35,000 (you pay cash)
• Total invested: £80,000
• Post-conversion value: £240,000
• Refinance: 75% of £240k = £180,000
• Pay off bridging: £135,000
• You extract: £45,000
• Net capital left in: £35,000
• Annual rental income: £27,000
• Return on invested capital: 77% per year (before costs)
This strategy—often called BRRR (Buy, Refurbish, Refinance, Rent)—is how serious HMO investors scale portfolios without tying up all their capital in every property.
Option 4: Refurbishment Finance
Some specialist lenders offer refurbishment finance that covers both purchase and works costs with staged drawdowns.
How it works: Lender advances purchase funds upfront. Conversion costs released in stages as work completes. You refinance onto a mortgage at the end.
Pros: Don't need full conversion costs upfront
Cons: More expensive than cash, requires detailed cost breakdowns
Step 7: The Conversion Process (Practical Timeline)
Let's walk through what actually happens during a typical HMO conversion:
Weeks 1-2: Planning and Permissions
- • Finalise designs
- • Submit building regulations application
- • Order materials and book contractors
Weeks 3-6: Structural Works
- • Loft conversion (if applicable)
- • Extensions (if applicable)
- • Reconfiguration of existing layout
Weeks 7-10: First Fix
- • Plumbing and heating
- • Electrical wiring
- • Fire alarm system installation
Weeks 11-12: Building Control Inspection
- • Building Control inspects structural and first-fix work
- • Address any issues raised
Weeks 13-16: Second Fix and Finishing
- • Plastering
- • Decorating
- • Bathrooms and kitchens fitted
- • Flooring
- • Fire doors hung
Weeks 17-18: Final Compliance
- • Final Building Control inspection
- • Receive completion certificate
- • Gas and electrical safety certificates
- • EPC
- • Fire risk assessment
Weeks 19-20: Furnishing
- • Furniture delivered and assembled
- • Curtains, bedding, kitchen equipment
Week 21: Licensing Application
- • Submit HMO license application (if required)
- • Council inspection
Week 22: Marketing and Lettings
- • Photograph property
- • List rooms online
- • Begin viewings
Week 24+: Tenants Move In
Begin collecting rent and managing property
Total timeline: 5-6 months from start to full occupancy is realistic for a well-managed conversion.
Step 8: Costs Breakdown (Real Numbers)
Let's be brutally honest about what HMO conversions actually cost:
Three-Bed to Five-Bed Conversion Example:
These numbers are realistic for a quality conversion in a mid-sized city. You can do it cheaper with budget finishes, or more expensively for luxury professional HMOs.
Common Conversion Mistakes (And How to Avoid Them)
Mistake 1: Skipping Planning Checks
Assuming you don't need planning permission when you actually do.
Solution: Check with the council before buying the property.
Mistake 2: Underestimating Costs
Budgeting £30k for a conversion that realistically costs £60k.
Solution: Get detailed quotes. Add 20% contingency. Be conservative.
Mistake 3: Cutting Corners on Fire Safety
Using cheap doors that aren't FD30-rated, or skipping intumescent strips to save £50.
Solution: Fire safety is non-negotiable. Use certified products and competent installers.
Mistake 4: Not Getting Building Regs Approval
Hoping to fly under the radar.
Solution: Just get approval. The cost and hassle are minimal compared to the risks.
Mistake 5: Poor Quality Furnishings
Buying the cheapest furniture possible. It breaks within six months.
Solution: Invest in mid-range, durable furniture. It lasts longer and tenants treat it better.
Mistake 6: Ignoring Licensing Requirements
Assuming you'll never get caught.
Solution: Councils actively enforce licensing. Don't risk it.
Is HMO Conversion Worth It?
If you're still with me after all that, you're probably wondering: is this whole process actually worth the hassle?
The answer: Absolutely—if you do it properly.
A well-executed HMO conversion can:
- Double your rental income
- Add 20-30% to property value
- Generate exceptional yields (7-12%+)
- Provide a scalable model for portfolio growth
But it requires:
- • Proper planning and permissions
- • Full compliance with all regulations
- • Adequate finance and contingency funds
- • Quality conversions, not corner-cutting
- • Professional management
At Black Props, we finance HMO conversions regularly. We know what works, what good conversions cost, and how to structure deals so you're not running out of money halfway through.
If you're serious about HMO conversion, let's talk. Because the difference between a profitable HMO and a regulatory nightmare often comes down to proper planning and adequate finance from the start.
