✏️ Updated March 2026 — 2026 cost figures
Full Cost Breakdown2026 FiguresMoney-Saving Tips
Rent to Rent HMO Setup Costs:
The Complete 2026 Breakdown
Every cost involved in setting up a rent to rent HMO — itemised and explained with 2026 figures, money-saving tips, and a total budget you can use for your deal analysis.
One of the most common mistakes beginners make in rent to rent is underestimating the setup costs — leading to undercapitalisation, cash flow problems, and deals that do not perform as expected. This guide gives you every cost, itemised, so your budget is accurate before you sign anything. For more detail, see our complete beginner’s guide to rent to rent.
Section 1
Pre-Contract Costs
First month’s rent to landlordPaid upfront before tenants move in — this is your first fixed cost
£1,000–£1,800
Holding deposit / contract depositSome landlords request a small deposit — negotiate to keep this minimal
£0–£500 (often zero)
Land Registry ownership checkVerify landlord ownership before signing — £3 per title via gov.uk
£3–£10
HMO licence application feePay at time of application — non-refundable, so apply only when ready
£500–£1,500
Section 2
Legal and Compliance Costs
Solicitor — contract review and adviceEssential for your first deal. Reuse the template on subsequent deals.
£300–£600
Gas Safety Certificate (CP12)Annual requirement — by a Gas Safe registered engineer
£70–£120
EICR (Electrical Installation Condition Report)Required every 5 years — cost varies by property size and condition
£150–£350
Fire alarm system installationInterlinked alarms throughout — cost depends on number of floors
£200–£600
Fire doors with self-closersRequired on all habitable rooms in an HMO — £100–£200 fitted per door
£400–£1,000
CO alarm(s)Required adjacent to boiler and any solid fuel appliances
£25–£60
HMO landlord insurance (first 3 months)Specialist HMO policy — essential, not optional
£120–£250
Deposit protection (admin fee per tenancy)Government-approved scheme — typically £25–£50 per deposit
£125–£250 (5 rooms)
Section 3
Refurbishment Costs
Deep clean throughoutProfessional deep clean before any work starts
£200–£400
Decoration (paint throughout)Full repaint — walls, ceilings, woodwork. Cost per room roughly £200–£400
£800–£2,500
Carpet or flooring replacementMid-range carpet in rooms — £10–£15/m² fitted
£500–£2,000
Kitchen refurb (if needed)Often cosmetic only — new units only if essential
£0–£2,500
Bathroom refresh (if needed)Re-seal, new taps, shower head — keep cosmetic where possible
£0–£800
General repairs and maintenanceFix what needs fixing — budget a contingency
£200–£600
⚠️ Never Skip the Schedule of Condition
Before any work begins, document the property’s condition with photos and a written schedule. This protects you when the contract ends — proving which defects existed before you took over and which occurred during your tenancy.
Section 4
Furnishing Costs
Beds and mattresses (× 5)Budget: £120–£200/room. Mid: £200–£350/room. Premium: £350+/room
£600–£1,750
Wardrobes / storage (× 5)Flat-pack is fine — IKEA, Argos. Professional assembly if needed.
£300–£750
Desks and chairs (× 5)Professional tenants expect a workspace in their room
£250–£600
Living room furnitureSofa, TV unit, coffee table — communal areas matter for marketing
£300–£800
Kitchen appliances and equipmentFridge, washing machine (if not present), microwave, kettle, toaster, pots/pans, crockery
£400–£1,000
Bedding packs (× 5)First set of bedding per room — budget option is fine
£150–£350
Smart TV per room or communalNow expected in most professional HMOs
£100–£400
Section 5
Operational Setup Costs
Utility accounts setup (gas, electric, water)May require deposits with energy providers if no existing account
£0–£300
Broadband installationFast broadband is essential — minimum 100Mbps for professional tenants
£50–£100 (setup) + £30–£60/mo
Bills float (2–3 months upfront)Cover bills before rooms fill up — builds a safety buffer
£600–£1,200
SpareRoom featured listing (optional)Speeds up room fill — £20–£40/month per listing
£100–£200 (first 3 months)
Professional photographyMakes a significant difference to enquiry rate and room fill speed
£80–£200
Section 6
Total Budget Summary
| Category | Budget Range | Mid-Range Estimate |
|---|
| First month’s rent + pre-contract | £1,000–£2,300 | £1,600 |
| Legal and compliance | £1,390–£2,730 | £2,000 |
| Refurbishment | £1,500–£8,000 | £3,500 |
| Furnishing | £2,100–£5,650 | £3,800 |
| Operational setup | £830–£2,000 | £1,400 |
| Total | £6,820–£20,680 | £12,300 |
Recommended Starting Budget (5-bed HMO)
£10,000–£15,000
Always build in a 10–15% contingency above your calculated budget. First deals always produce unexpected costs — a boiler service, an additional fire door, a delayed licence. Having a buffer means these do not derail your operation. For more detail, see how to land your first rent-to-rent deal.
Section 7
7 Ways to Reduce Your HMO Setup Costs
💡 Money-Saving Tips
1. Negotiate a longer rent-free period. Every extra week saves you £250–£400. Push for 8–10 weeks on vacant properties. This alone can reduce your effective setup cost by £1,500–£2,500.
2. Buy furniture second-hand. Facebook Marketplace, Gumtree and local auction houses offer near-new furniture at 20–30% of retail. A 5-room HMO furnished this way costs £1,200–£2,000 instead of £4,000–£6,000.
3. Do simple refurb yourself. Painting and minor repairs done personally (if you are able) can save £800–£1,500. Leave electrics, gas and structural work to qualified tradespeople.
4. Use a 0% purchase credit card for furnishing. Spread the furnishing cost over 20–28 months at zero interest. Only do this on deals with strong cashflow where the monthly repayment is well covered.
5. Target properties that need minimal work. A property in good condition reduces refurb costs to near zero. Slightly higher landlord rent may be justified by the lower setup cost — run the numbers both ways.
6. Reuse your contract template. Pay a solicitor to review your first contract properly (£300–£600). Every subsequent deal uses the same template — you have already paid for the legal advice.
7. Ask the landlord to fund part of the refurb. On run-down properties with motivated landlords, negotiate for them to contribute to refurbishment costs in exchange for a slightly longer contract term. A landlord facing months of void is often willing to invest £2,000–£5,000 to secure a 5-year guaranteed rent arrangement.
Frequently Asked Questions
How much does it cost to set up a rent to rent HMO?
Setting up a 5-bedroom rent to rent HMO typically costs between £7,000 and £20,000 depending on the property condition, your city, and the furnishing standard you choose. The mid-range budget for a typical professional HMO in a major UK city is around £10,000–£15,000. This covers first month’s rent, legal and compliance costs, refurbishment, furnishing, and an operational float to cover bills until the property is fully occupied. For more detail, see furnishing an HMO on a budget.
What is the single biggest cost in setting up an HMO?
For most operators, furnishing is the largest single cost category — typically £2,500–£6,000 for a 5-bedroom HMO at mid-range quality. Refurbishment comes second, but varies enormously based on property condition — from near zero on a well-maintained property to £8,000+ on one that needs significant work. Always request a refurb quote before signing your management agreement so you know your true setup cost. For more detail, see our guide to rent-to-rent management agreements.
Do I pay all setup costs upfront before any income arrives?
The majority of setup costs are paid before tenants move in — refurbishment, furnishing, compliance certificates, and the HMO licence application. Your first income arrives when the first tenants move in and pay their first month’s rent. The rent-free period (4–8 weeks) means you are spending without income initially. This is why having the full setup budget plus a contingency available before you start is so important. For more detail, see HMO licensing requirements.
