At Hampshire Heights, we’ve been deeply involved in the property investment scene across England for years, with a strong focus on HMOs (Houses in Multiple Occupation). For a long time, HMOs offered strong returns and filled a crucial demand in the rental market. But as we’ve been cautioning for some time now, the HMO market is becoming increasingly saturated — and investors need to adapt.
We’re seeing a significant shift — one that savvy investors should pay close attention to.
Councils Are Paying Premiums for 1–3 Bed Flats
Local authorities across the country, especially in London, are actively seeking 1, 2, and 3-bedroom flats — and they’re offering rents as much as 30% above market value to secure them. Why? Because councils are under pressure to find quality accommodation for families and individuals, and flats provide a more stable, manageable solution than single HMO rooms.
This demand is creating a new kind of opportunity for property investors. Rather than competing in the crowded HMO space, you can pivot to a market segment with higher demand, less tenant turnover, and potentially better returns — all with less hassle.
Stamp Duty and Market Timing Make This the Right Moment
With high stamp duty charges, many investors are cautious. But this environment also means that buyers who move decisively can secure 1–3 bed flats at better prices, especially in areas where larger landlords or developers are offloading stock.
The math starts to make sense: secure a flat at a good price, rent it to the council on a long-term contract, and enjoy higher-than-average returns with minimal day-to-day management.
The Hampshire Heights Perspective
As a property company rooted in experience and innovation, Hampshire Heights is focused on helping our clients make smart, forward-thinking decisions. We believe now is the time to reconsider where your capital is going. Instead of more HMOs, look at strategic acquisitions of 1–3 bedroom flats — especially in London, where councils are actively seeking quality homes.
If you’re an investor looking to reposition your portfolio, or someone exploring the rental market for the first time, let’s have a conversation. We’re here to guide you through the new landscape and help you capitalise on it.
