Work out the gross yield, net yield, ROI, and monthly cashflow on any HMO deal in seconds. Enter your room rents, purchase costs, and ongoing expenses to get an instant deal quality score and see exactly how the numbers stack up.
Enter each room's monthly rent individually, set your occupancy rate, and work through the four cost sections. Stamp duty calculates automatically based on the purchase price and the 5% additional property surcharge.
What You'll Calculate
Gross Yield
Annual gross room rent as a percentage of the purchase price. The top-line metric used to compare HMOs across different markets and price points.
Net Yield
Annual effective rent minus all operating costs (excluding mortgage), divided by the purchase price. The truer measure of how well the asset itself performs.
Net Monthly Cashflow
What you actually pocket each month after every cost including the mortgage. This is the number that tells you whether the deal works in practice.
Deal Quality Score
A 0-to-10 score combining net yield, ROI, and monthly cashflow. Instantly tells you whether a deal is Excellent, Good, or Marginal, so you can filter fast and focus on the best opportunities.
What's Included
Built for real HMO deal analysis, not back-of-envelope estimates
Covers all key purchase, setup, and ongoing costs including stamp duty (with the 5% additional property surcharge), HMO licence fees, refurbishment, furniture, utilities, and council tax
Lets you add and price each room individually, with a separate occupancy rate to model void periods accurately rather than assuming 100% occupancy
Calculates gross yield, net yield, and ROI simultaneously so you can see how the deal looks from every angle before committing
How It WorkS
Enter your purchase costs
Input the purchase price and your deposit percentage. Stamp duty calculates automatically using the additional property surcharge rules (5% on top of standard rates, as of October 2024). Add legal fees, survey costs, and any sourcing fee.
Enter refurbishment and setup costs
Enter your refurbishment budget, furniture and equipment costs, HMO licence fee, and safety certificate costs. These are added to your deposit and purchase costs to give a total cash invested figure.
Add your rooms and occupancy rate
The calculator defaults to five rooms at £550 per month each. Adjust each room to its actual market rent, add rooms with the button, or remove any that do not apply. Set your expected annual occupancy rate to account for void periods between tenants.
Enter monthly running costs and review results
Work through the ongoing costs section: mortgage rate (interest only), management fee percentage, maintenance, insurance, utilities, council tax, licence renewal, and any other recurring costs. Your gross yield, net yield, ROI, monthly cashflow, and deal quality score update instantly.
Yield tells you how hard your money is working
HMOs consistently produce higher yields than single-let buy-to-let properties. Where a standard BTL in the same street might yield 4-5% gross, a well-managed HMO in the same building often yields 8-12% or more. That gap exists because you are letting to multiple tenants under separate agreements rather than one household on a single rent.
But gross yield is only part of the picture. HMOs carry higher operating costs than single-let properties: utilities are usually landlord-paid, management fees are higher due to the complexity of managing multiple tenants, council tax often falls to the landlord, and compliance costs (licences, safety certificates, inspections) are ongoing rather than one-off.
That is why net yield and ROI matter more than gross yield when evaluating an HMO. A deal with a 12% gross yield and a 5% net yield is often a worse investment than one with a 10% gross yield and a 7% net yield once you factor in all the costs.
Property Filter insight
HMO deals that look attractive on gross yield frequently fall short on cashflow once realistic costs are applied. Use this calculator to run every deal before you make an offer, not after.
How each figure is calculated
The calculator uses straightforward property investment formulas. No black boxes.
Where Annual Effective Rent = Annual Gross Rent x Occupancy Rate, and Operating Costs cover management, maintenance, insurance, utilities, council tax, licence renewal, and other monthly costs (not the mortgage).
Where Annual Net Cashflow = Annual Effective Rent minus all operating costs and mortgage interest, and Total Cash Invested = deposit + stamp duty + legal fees + survey + sourcing fee + refurbishment + furniture + licence fee + safety certificates.
Deal Quality Score: Scored out of 10 using three components: net yield (up to 4 points), ROI (up to 3 points), and monthly cashflow (up to 3 points). Any deal with negative cashflow scores 0 regardless of yield.
The calculator uses a green, amber, and red rating system for each metric.
Strong: above 10%
Average: 8-10%
Poor: below 8%
Strong: above 6%
Average: 4-6%
Poor: below 4%
Strong: above 15%
Average: 8-15%
Poor: below 8%
8-10: Excellent deal
5-7: Good deal
0-4: Marginal or poor
⚠️ Disclaimer: This calculator provides estimates based on the figures you enter. Actual results will vary depending on local market conditions, lender criteria, management arrangements, and regulatory requirements. Stamp duty calculations assume standard investor surcharge rates for England; different rules apply in Scotland and Wales. This tool is for informational purposes only and does not constitute financial or investment advice. Always consult with qualified professionals before making property investment decisions.
Common Questions
What is a good HMO yield in the UK?
A good HMO gross yield is typically 10% or above, though this varies by location. Northern cities such as Manchester, Leeds, Sheffield, and Liverpool often support gross yields of 10-14% due to lower purchase prices and strong room rental demand. London and the South East tend to produce lower gross yields of 7-9% because purchase prices are significantly higher relative to room rents. Net yield is more meaningful: aim for 6% or above to have a deal that genuinely cashflows after all operating costs.
What is the difference between gross yield and net yield on an HMO?
Gross yield is the annual room rent divided by the purchase price, with no costs deducted. It is useful for quick comparisons but tells you nothing about what you actually keep. Net yield deducts all operating costs (management, maintenance, insurance, utilities, council tax, licence fees) before dividing by the purchase price. Net yield gives a much truer picture of the asset's performance. For HMOs, operating costs typically reduce gross yield by 3-6 percentage points, so a 12% gross yield might produce a 6-8% net yield.
Does the calculator include stamp duty?
Yes. Stamp duty is calculated automatically using the additional property surcharge rules applicable from October 2024 (a 5% surcharge on top of standard residential SDLT rates). The result updates as you type. You should cross-check your position with HMRC's stamp duty calculator for your specific circumstances, particularly if you are a first-time buyer or purchasing through a company.
Should utilities and council tax be included in the HMO yield calculation?
Yes, always. For most HMOs, the landlord pays utilities and council tax rather than passing them to individual tenants. Leaving these costs out inflates your net yield figure significantly. On a five-room HMO, utilities and council tax together can easily amount to £4,500-6,000 per year, which is the difference between a deal that cashflows and one that does not. The calculator includes both as monthly inputs so you can model your actual numbers.
What ROI should I target on an HMO?
An ROI above 15% is considered strong, meaning your invested cash (deposit, refurb, fees) is working significantly harder than other asset classes. An ROI of 8-15% is good. Below 8% on a leveraged HMO investment, you need to question whether the complexity and management burden of an HMO justifies the return compared to simpler alternatives. ROI varies significantly depending on how much cash you put in: a larger deposit reduces your mortgage costs but lowers your ROI since more of your own capital is deployed.
How does occupancy rate affect HMO returns?
Occupancy rate has a direct multiplier effect on income. At 100% occupancy, a five-room HMO at £550 per room generates £33,000 per year. At 90% occupancy, that drops to £29,700. A 5-room HMO at 95% occupancy (approximately 2-3 weeks void per room per year) is a realistic target in strong rental markets. Setting occupancy too high in your projections is one of the most common ways investors overestimate HMO returns. The calculator defaults to 95% as a sensible baseline.
What is the Deal Quality Score and how is it calculated?
The Deal Quality Score is a 0-to-10 summary rating combining three metrics: net yield (scored out of 4), ROI (scored out of 3), and monthly cashflow (scored out of 3). A score of 8-10 indicates an excellent deal. 5-7 is a good deal worth progressing. Below 5 is marginal or poor. Any deal producing negative monthly cashflow automatically scores 0. The score is designed to give you an at-a-glance filter so you can move quickly when evaluating multiple deals at once.
What management fee should I use for an HMO?
HMO management fees are higher than single-let BTL because the work involved is significantly greater: multiple tenants, more frequent tenant changeovers, bill management, and ongoing compliance. A typical HMO management fee is 10-15% of gross rental income. The calculator defaults to 12%, which is a reasonable mid-market rate. If you plan to self-manage, entering 0% will show you the uplift in cashflow, but factor in a realistic value of your own time and the cost of covering urgent issues yourself.
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