By using this website, you agree to our use of cookies to enhance your experience.


Rental update – new HMO licensing rules, green spaces and low supply

In this market update, PIT looks at how HMO licensing will potentially impact Westminster’s rental market, the rising demand for green spaces among tenants, and the latest research that suggests demand continues to outstrip supply.

Will HMO licensing changes affect Westminster’s rental market?

Research from Bective has revealed how new houses in multiple occupation (HMO) licensing rules will impact London’s biggest rental market, Westminster.


The new rules came into force in Westminster at the end of August 2021, stating that shared houses or flats where three or more people from two or more households share facilities now require licensing as HMOs.

This replaces the old rule that stated an HMO license wasn’t mandatory until five or more people were sharing facilities. Westminster council hopes that this change will help improve living standards and create a safer, fairer tenant experience.

The rules are of particular significance in Westminster, the largest private rental market in London. In the capital, private rental stock accounts for 27% of all dwellings. In Westminster, this number rises to 42% of dwellings, more than any other borough, followed by the City of London (41%) and Kensington & Chelsea (37%).

Furthermore, the borough also has the sixth largest number of existing HMOs (9,539) of all London boroughs, trumped only by Ealing (20,429), Brent (16,984), Lambeth (12,000), Tower Hamlets (10,000), and Enfield (10,000).

Over the past three years, Westminster has also seen the eighth largest increase in the number of HMOs, up 19% between 2017 and 2020, behind Hillingdon (668%), the City of London (614%), Lambeth (532%), Tower Hamlets (67%), Newham (58%), Waltham Forest (53%), and Harrow (36%).

It ranks 12th in terms of current HMO numbers as a percentage of all rental stock (18%), a list that is topped by Ealing (53%), Brent (46%), and Enfield (32%).

However, with these changes now in force, it's likely that the number of HMOs within the borough will now spike. 

Because of Westminster’s large rental market and growing HMO market, the new licensing rules will have a more profound and long-lasting effect on the borough than it will on most others.

Tom Dainty, head of lettings and property management at Bective, comments: “The impact of these new rules will be two fold. Yes, it’s undeniable that additional HMO licensing and tighter scrutiny when dealing with rule-breakers will benefit tenants by raising the standard of living.”

“But, at the same time, this increased scrutiny, along with the additional costs, might tempt landlords to up sticks from Westminster and find more profitable investments elsewhere.”

He adds: “This exodus will be of detriment to tenants. Less landlords means less stock, and less stock means higher rent prices. With Westminster’s average rent already more than £2,600 a month, this could further price more tenants out of the borough.”


Private rental % of total stock



City of London


Kensington and Chelsea




Tower Hamlets


Hammersmith and Fulham












Sources - ons.gov.uk


Renters prioritise green space over living close to work – study

Renters in the UK are prioritising local green spaces over living close to work, according to a recent survey carried out by Wise Living.

The Built to Rent (BTR) specialist surveyed 1,000 renters living in the UK about their priorities and key considerations when finding their next home.

Only around one-third of renters (34%) who took part, said living close to work was an important factor.

Living near to green spaces came out on top, with almost half (45%) putting it in their top three priorities, while good transport links (38%) and access to local amenities (37%) took the other top spots.

The survey shows a potential change in attitude for what people see as important for the location of their home. In the last 18 months, the pandemic has transformed the way many people work, with remote or hybrid working now common for large parts of the UK workforce – making living close or within easy access to work far less important.

Mark Gratton, land and partnerships director at Wise Living, believes remote working has had a knock-on effect with people now wanting a flexible lifestyle, not just flexible working.

He says: “People have really enjoyed the flexibility of being able to work where they want and that’s created a ripple effect, especially for renters who now have the opportunity to move somewhere that matches their wants, rather than their needs. It’s now about living well rather than living close.”

“Our research places green spaces ahead of living near to work. I think many of us have realised the importance of having access to green spaces, especially during the lockdowns when exercise became key to maintaining our physical and mental health.”

Gratton says people want to be able to go for a walk in their local park on their lunch, or go for a jog before work, without having to worry about getting caught up in the commuter rush.

“People don’t want to give up that flexibility and most employers recognise this and are further supporting it by adopting flexible working policies for the long term,” he adds.

‘’This change in attitude will undoubtedly be applicable to all tenures of residential housing and increasingly I expect developers to add greater weight to the potential amenities serving a site, or the potential to provide green spaces on site.”

“In addition, alongside many others in the industry, we’re already reviewing the flexibility of our house type designs to future occupants and whether tweaks are required to further accommodate people’s changing needs, which was a key driver for this piece of research.”

According to Gratton, Wise Living’s rental properties in Mansfield were snapped up online within a matter of weeks, with high interest in its other active developments in Wolverhampton and Boston, Lincolnshire.

“Undoubtedly, there are still people who do want to live close to work and live in inner cities, but I think the trend towards living closer to green spaces will continue to grow as people realise that flexible working is here to stay,” he concludes.

Rental market hit by storm as demand trumps supply

‘Room wanted’ ads are currently outnumbering ads for ‘rooms available’ on SpareRoom for only the third time in over six years.

According to the flatshare site, the last time this happened was in September 2019 and before that, August 2015. All three times were the result of a drop in supply, combined with an increase in demand.

This comes as the UK slowly shifts back to normality, with people returning to offices and other places of work creating ‘a storm in the rental market’.

SpareRoom notes the increase in demand isn’t just down to people moving again, but down to people entering the market rather than moving within it.

Its new poll of 6,206 people reveals demand is unusually high because people are moving back out of parents’ or friends’ houses, flatsharing after renting on their own or owning a property, and overseas students (and students in general) starting to return to cities.

This results in a lot of people looking for rooms without vacating their current property, putting pressure on the market.

The research uncovers exactly where these people are moving from:

  • Another Flatshare - 29% 

  • Parent’s home - 25%

  • Outside UK - 14%

  • A friend’s house/flat - 10%

  • My own rented properly (not shared with anyone else) - 6%

  • Partner’s house/flat - 5%

  • Student accommodation - 4%

  • A property I own - 1%

  • Other - 6%

Declining confidence amongst landlords could also be contributing to the lack of supply. A SpareRoom survey of 1,471 landlords and agents in September 2021 revealed they’re becoming less confident about the rental market, with just 44% having confidence in the rental market, down 52% from June.

In London, just 37% felt confident, down from 38% in June, putting further pressure on the market.

SpareRoom director Matt Hutchinson comments: “Last summer we had record levels of supply in the rental market, alongside demand at an all-time low. Now that’s completely flipped and there are more ads from people looking for rooms than there are rooms available.”

“We’ve been in this position before a couple of times over the past six years, but this time things feel a little different. A peak in supply is always followed by a sharp dip, but supply has fallen further than usual this time. However, the real change right now is on the demand side of the equation.”

He says pent-up demand, following 18 months of lockdown, restrictions and uncertainty, is being released back into the market – coinciding with huge numbers of people who moved home for lockdown starting to look for their own places again.

“If people are largely moving within the market, rooms are taken, but also freed up as people move out,” he adds. “What we’re seeing is more people coming into the market – they’re not freeing up supply, just adding to demand. That creates the squeeze we’re seeing right now.”


Please login to comment

MovePal MovePal MovePal
sign up