5 Cities Where HMO Licence Applications Are Exploding

Why Growth Rate Beats Absolute Volume Every Time

Most investors chase the obvious markets. Edinburgh. Oxford. Bristol. And those cities do dominate on raw volume — Edinburgh alone averaged 5,158 HMO applications per year between 2018 and 2024, according to [Just Landlords' April 2026 FOI research](https://www.landlordtoday.co.uk/breaking-news/2026/04/surge-in-new-hmos-as-landlords-seek-better-returns/). Oxford sits at 2,458. Bristol at 1,491.

But here's what that volume figure doesn't tell you: those markets are already saturated with investors who got there years ago. Entry prices reflect that. Competition for the best streets is fierce. The yield compression is real.

Growth rate is a different signal entirely. It tells you where landlord appetite is just starting to accelerate — where the market hasn't yet priced in the demand. That's the window. And across Britain, annual HMO applications climbed from 41,162 in 2018 to 57,725 in 2024, a 40% national increase per the same [Just Landlords FOI dataset](https://theintermediary.co.uk/2026/04/hmo-market-surges-by-40-since-2018-research-reveals/). The five areas below are growing at multiples of that national average.

#1 Sandwell, West Midlands — 964% Growth

Sandwell went from 28 HMO applications in 2018 to 298 in 2024. That's the [highest percentage growth of any area in Britain](https://www.mpamag.com/uk/mortgage-types/buy-to-let/hmo-licence-applications-climb-40-since-2018/571055), per the Just Landlords data. Nearly ten times the applications in six years.

The West Midlands has been on the radar of serious investors since the HS2 conversation started reshaping regional connectivity expectations. Sandwell sits between Birmingham and Wolverhampton — two cities with genuine employment anchors and growing young professional populations who need affordable, flexible housing. That's exactly the tenant profile that fills HMO rooms.

One caveat worth flagging: Sandwell's application refusal rate sits at 48%, per the same FOI data. That's the third-highest in Britain. So the opportunity is real, but you need to go in with planning diligence done properly. A refused application in a high-refusal area isn't a surprise — it's a planning failure. Consider consulting a qualified planning consultant before committing to a conversion here.

#2 West Lancashire — 886% Growth

West Lancashire doesn't get mentioned in many property podcasts. That's exactly why it's interesting.

886% growth since 2018, per [Just Landlords' research published via Landlord Today](https://www.landlordtoday.co.uk/breaking-news/2026/04/surge-in-new-hmos-as-landlords-seek-better-returns/). The area covers Skelmersdale, Ormskirk, and the surrounding commuter belt that feeds into both Liverpool and Manchester. Lower entry prices than either city, with improving transport links and a student population anchored by Edge Hill University in Ormskirk.

This is the kind of market where you can still buy a suitable HMO property at a price that makes the numbers work on a five-room conversion. That window won't stay open indefinitely — when growth rates like this sustain over multiple years, entry prices eventually catch up. I'd be looking at this area seriously right now.

#3 Tower Hamlets, London — 750% Growth

Tower Hamlets is the outlier in this list because it already has high absolute volume — 1,394 applications per year on average, fifth-highest nationally per the [Just Landlords FOI data](https://www.dailymail.co.uk/money/mortgageshome/article-15715373/HMO-applications-surge-nearly-1-000-six-years-parts-Britain.html). But it also achieved 750% growth since 2018. That combination — high volume AND high growth — is unusual and worth paying attention to.

The East London story is well-documented: Canary Wharf employment, Crossrail access, a dense young professional population that actively prefers co-living arrangements over isolated studio flats. HMOs in Tower Hamlets serve a tenant base that genuinely wants the format, not just one that accepts it because it's cheap.

The trade-off is entry price. London property costs what London property costs. Your yield calculation needs to account for that honestly. But if you're already operating in London and looking at where the licensing activity is concentrated, Tower Hamlets is giving you a clear signal.

#4 Guildford, Surrey — 742% Growth

Guildford surprises people. Surrey is not the first county that comes to mind when you're thinking about high-growth HMO investment. But 742% growth is not a rounding error.

The University of Surrey has a student body of roughly 15,000, and the town's proximity to London via a 35-minute train journey means it also attracts young professionals priced out of the capital. That dual tenant pool — students and commuters — is a strong foundation for HMO demand. Clark Ross, managing director of Just Landlords, noted in the April 2026 research release that growth has been strong in "high-demand university cities and growing regional investment hubs." Guildford ticks both boxes.

Entry prices are higher than the Midlands or Lancashire options. But rental rates in Guildford reflect that — the commuter premium is real and it flows through to room rates. This one suits investors who already have capital deployed and are looking at a more defensive, lower-void-risk location.

#5 Waltham Forest, London — 481% Growth

Waltham Forest rounds out the list with 481% growth since 2018. Still nearly five times the national average of 40%.

This is a borough that's been through visible regeneration — Walthamstow in particular has shifted significantly over the past decade, with improving retail, restaurant, and transport infrastructure. The Victoria line runs through it. Overground connections are good. And it sits at the more affordable end of London, which means the HMO model — offering individual rooms at rates below a one-bed flat — genuinely solves a housing problem for the people who live there.

Enforcement activity is worth monitoring across all London boroughs. The [Just Landlords data](https://www.mpamag.com/uk/mortgage-types/buy-to-let/hmo-licence-applications-climb-40-since-2018/571055) shows council inspections nationally are up 83% since 2018 and enforcement actions up 180%. In London specifically, boroughs like Lewisham (288 enforcement actions per year on average) and Wandsworth (146) are running active compliance programmes. Waltham Forest isn't on that high-enforcement list, but you'd want to verify the local council's approach before committing. Standards compliance isn't optional — it's the baseline for operating professionally in this sector.

What the Regulation Surge Actually Means for Investors

Some landlords see the 83% rise in council inspections and 180% jump in enforcement actions as a red flag. I read it differently.

Tighter regulation filters out the operators who cut corners. That's good for professional landlords. When sub-standard HMOs get shut down or forced to improve, it reduces supply of poor-quality stock and pushes tenants toward well-run properties. Your occupancy improves. Your reputation in the local market improves. And the sector as a whole becomes more defensible against political pressure.

The areas to genuinely avoid are those with refusal rates above 50% — Blackpool at 70% and Fenland at 51% per the Just Landlords data. High refusal rates signal a council that is actively hostile to new HMO applications, and fighting that is expensive, slow, and often futile. Pick your battles based on data, not optimism.

If you're building a serious HMO portfolio, the smart approach is to treat licensing and compliance as a competitive advantage, not an administrative burden. The landlords who do this well are the ones who will still be operating profitably in five years.

The national HMO picture — 57,725 applications in 2024, up 40% since 2018 per Just Landlords — tells you the sector is growing. But the five areas above tell you something more specific: the growth is dispersing away from the established capitals and into mid-sized towns, commuter belts, and urban boroughs that still have room for new entrants. Edinburgh's 5,158 annual applications represent a mature market. Sandwell's 964% growth represents a market in formation. Those two things require completely different investment strategies. The investors who'll do well in the next cycle are the ones who understand which market they're actually entering — and price their risk accordingly. The data exists. The question is whether you're reading it.