Most HMO investors get the budget wrong. Not by a little. By tens of thousands of pounds.

They see a property, run the rental numbers, get a builder’s quote, and think they know what it’ll cost. But the builder’s quote only covers the building work. There’s a whole layer of costs sitting underneath it that nobody mentions until you’re already committed.

This post lists the costs that catch people out. Not the obvious stuff like kitchens and bathrooms. The other stuff.

Stamp Duty

If this isn’t your main home, you’re paying the higher rate. That’s an extra 5% on top of normal stamp duty for additional properties.

On a £450,000 purchase in London, that’s roughly £35,000 in stamp duty alone. A lot of first-time investors forget this or underestimate it. It’s not a hidden cost in the technical sense — it’s public information. But it’s amazing how many spreadsheets leave it out.

Legal and Survey Fees

Solicitor fees for a buy-to-let purchase typically run £1,500–£3,000. You’ll also need a survey. A homebuyer’s report is around £400–£700. A full building survey — which you should get if you’re planning a conversion — is £600–£1,500.

Together with searches and disbursements, legal and survey costs usually land between £2,500 and £4,500.

Planning Application Costs

If your property is in an Article 4 area — and most of London is now — you need planning permission to convert from C3 to C4. The council fee is £610 from April 2026. Add the Planning Portal charge and you’re at roughly £700.

But that’s just the council fee. You also need architectural drawings, a planning statement, concentration analysis, bin and bike storage plans, and sometimes a management plan. Professional fees for a full submission run £1,200–£4,000 on top.

And if it gets refused? You either appeal (more cost, more time) or redesign and resubmit (another £700 fee plus more professional fees). Some boroughs in London refuse over half of all HMO applications.

Fire Safety

This one regularly blindsides people. HMO fire safety is nothing like a normal house. You need FD30 fire doors on every bedroom and kitchen (£150–£400 each, fitted). Interlinked mains-powered alarms. Emergency lighting on escape routes. Fire-resistant partitions. Self-closing devices. Intumescent strips and cold smoke seals.

For a six-bed HMO, fire safety costs typically sit between £3,000 and £10,000. Some builders include this in their quote. Many don’t. Ask.

Sound Insulation

Building regulations require acoustic separation between bedrooms. That means proper insulated stud walls, resilient bars, double plasterboard, and acoustic sealant. If you’re adding new partition walls — which most HMO conversions do — this applies to all of them.

If the original floors between storeys don’t meet the standard, you’ll need to upgrade those too. This can add £3,000–£8,000 to the build, and it’s rarely in the first quote.

Drainage

Adding four en-suites to a house that was built for one bathroom puts serious pressure on the drainage. If the existing soil stack can’t handle the extra load, or if the runs need rerouting, costs climb fast.

Budget £1,000–£3,000 for unexpected drainage work on any conversion adding multiple bathrooms. It almost always comes up.

Electrics and Hot Water

A house built for a family of four can’t support six or eight tenants on the same electrical supply and boiler. Common upgrades include a consumer unit replacement, possible supply upgrade to a larger fuse or three-phase, and additional circuits for individual rooms. That’s £1,000–£3,000.

On hot water, a standard combi boiler won’t cope with six people showering in the morning. You may need a larger boiler, an unvented cylinder, or a completely different system. Budget £2,000–£4,000 if the current setup isn’t up to it.

Licensing Fees

A mandatory HMO licence costs £500–£1,500 depending on the borough. Some London boroughs also run additional licensing schemes, which means a second licence and a second fee.

The fees themselves aren’t huge. But the safety certificates you need to get the licence — gas safety, EICR, fire risk assessment, energy performance certificate — add up. Budget £500–£1,000 for the paperwork.

Party Wall Agreements

If you’re doing structural work on a terraced or semi-detached house, you may need a party wall agreement with your neighbours. That means appointing a surveyor — and you usually pay for both yours and your neighbour’s.

Cost: £700–£1,500 per neighbour. On a mid-terrace with two adjoining properties, that’s up to £3,000 you weren’t expecting.

Furnishing

Most London HMOs are let fully furnished. That means beds, mattresses, wardrobes, desks, chairs, and bedside tables for every room. Plus a full kitchen fit-out for the communal area — dining table, chairs, appliances, crockery.

A decent standard for six rooms plus communal areas runs £10,000–£18,000. Go cheap and your rooms look cheap. Go too high and you won’t get the money back in rent. This cost is almost never in the builder’s quote.

Lost Rent During the Build

This is the big one nobody puts on the spreadsheet. While your property is being converted, it’s earning nothing. A six-bed HMO in London at £850 per room is £5,100 per month in potential rent.

A typical conversion takes 14–20 weeks. That’s four to five months of lost income — £20,000–£25,000 that never appears in a builder’s quote. Add planning delays and it gets worse.

The Contingency Rule Always add 10–15% on top of your total estimated build cost. On a £100,000 project, that’s £10,000–£15,000 set aside for things you didn’t see coming. In our experience, you’ll use most of it. Projects that come in under budget are the exception.

How We Can Help

At hmoconversionbuilders, we give you the full picture before you commit. Not just the build cost. The planning fees, the fire safety work, the drainage, the sound insulation, the licensing, the lot.

We’ve done this enough times to know where the surprises are. Our job is to make sure there aren’t any.

Get in touch for a free, no-obligation consultation.

Disclaimer: This article is for general informational purposes only and does not constitute financial or construction advice. Costs vary by location, property condition, and project scope. Always get project-specific quotes and professional advice before committing to an HMO conversion.