How to Hub
5 types of HMO tenants and why brokers should know the difference
In the HMO market, the type of tenant occupying a property has a significant impact on performance. It influences rental yields, void periods, affordability calculations, and ultimately, a landlord’s profitability. For brokers is not just useful – it’s essential for placing cases efficiently with the right lender and avoiding delays or declines.
According to our recent research study with Pegasus, the Landlord Trends report for Q2 2025, 71% of landlords report ‘strong’ tenant demand in the areas where they let – with 33% saying it is ‘very strong’. Demand is currently highest in Wales, where 80% of landlords say it is strong, and lowest in London and the East Midlands, at 64% and 63% respectively. This context matters because understanding regional demand alongside tenant profile can make a case more compelling.
Young professionals remain one of the most attractive HMO tenant groups. These tenants are concentrated in commuter towns and thriving city centres, where they drive steady, year-round demand. They look for well-presented accommodation close to work or transport links and are often willing to pay a premium, which can mean strong rental yields and reliable incomes – factors that both landlords and lenders value highly.
Students, while on shorter rental cycles, bring predictable demand year after year. Many have parental guarantors in place, which adds reassurance for lenders. Properties in the right locations, especially near universities, can deliver impressive returns, and the right lender will understand and cater to the student-let market.
Shift workers and key workers, such as those based near hospitals, logistics hubs, or infrastructure sites, value convenience and stability. They tend to stay longer than expected and offer a reliable income stream, which can strengthen affordability checks.
Contract workers tend to move frequently, following projects or specialist roles to different locations. They’re often willing to pay higher rents for flexible, short-term accommodation in the right location. This can push yields up and improve affordability metrics – as long as the lender is comfortable with varied tenancy lengths.
Then there’s the LHA or benefit tenant market. While it’s more niche, it can be a steady source of income when managed well, with payments supported by Housing Benefit or LHA. Our Landlord Trends report with Pegasus shows that 38% of landlords currently let to tenants in receipt of benefit support, with 18% letting to LHA claimants specifically. Knowing which lenders accept these tenant types can make the difference between a smooth placement and a rejected application.
The same report also highlights that singles and couples remain the most common tenant type, with 75% landlords answering that they let to this group. Followed by families with children at 58%, and retirees at 18%. These insights underline the importance of understanding the tenant mix in any HMO application – lenders will look at the stability and reliability of each group.
For brokers, understanding tenant profiles isn’t just background knowledge – it’s a practical tool. It means you can pinpoint the lenders who will work with a given case, position the property in the best light, and help landlords boost yields while reducing voids.
At Foundation Home Loans, HMO lending is part of our core expertise. We take a flexible, case-by-case approach, covering small HMOs of up to six bedrooms, large HMOs with unlimited bedrooms, and more complex setups, including those above commercial premises. We welcome both SPV and individual applicants, as well as student lets, unusual layouts, and expat landlords. Our affordability criteria are consistent across our HMO range – 125% ICR for limited companies and basic rate taxpayers, and 145% for higher rate taxpayers – with no minimum income requirement and no cap on background properties. Every case is manually reviewed by experienced underwriters who understand the realities of the HMO market.
The right tenant type can make all the difference to a case. For brokers, it’s not just about knowing the property – it’s about understanding who’s in it, and choosing a lender who sees the potential. If you have a HMO case that’s out of the ordinary, whether it’s a complex layout , a niche tenant base, or an expat landlord with a portfolio, we’re here to help you get it across the line.
For intermediaries only
