While most property investors chase traditional buy-to-let opportunities, Sidd Mahajan, Founder and Managing Director of Tulip Real Estate, has discovered what he calls London’s “best-kept secret”; Houses in Multiple Occupation (HMOs). With over 15 years of experience, Sidd Mahajan understands the nuances of London’s property market better than most.
“Everyone talks about London property being expensive, but they’re looking in the wrong places,” says Sidd Mahajan. “HMOs aren’t just an investment strategy—they’re a solution to London’s housing crisis that happens to generate exceptional returns.”
The Numbers Don’t Lie: HMOs Outperform Traditional Rentals
The data supporting Sidd Mahajan‘s confidence in HMOs is compelling. According to recent market data, the average annual rental income for HMOs in Greater London reached £40,169 in Q4 2024, compared to £32,340 for traditional rental properties over the same period. This represents a significant premium of over 24% in rental income alone.
But the real goldmine, according to Sidd Mahajan, lies in the yield potential. Landlords can achieve returns of as much as 15% or even more from HMOs, depending on factors from location and property size to tenant type. In contrast, traditional London buy-to-let properties often struggle to achieve yields above 4-5%.
“When I started Tulip Real Estate, I quickly realized that single-let properties in London were becoming increasingly challenging for cash flow,” explained Sidd Mahajan. “HMOs changed the game entirely. You’re not just buying a property; you’re creating multiple income streams under one roof.”
Why London’s HMO Market Is Thriving
The demand driving London’s HMO market isn’t a temporary trend – it’s a fundamental shift in how people live and work in the capital. With rent continuing to outpace wage growth by 40% compared to wages climbing 28%, affordable housing continues to be in high demand, and lower cost accommodation such as HMOs is likely to fill some of this demand.
Sidd Mahajan identifies three key demographic groups fueling this demand:
- Young Professionals: London’s tech sector and financial services continue to attract graduates who need affordable accommodation close to transport links. They’re willing to share facilities for the right location and price point.
- International Students: With London hosting some of the world’s top universities, the student accommodation shortage creates consistent demand for quality HMO properties.
- Key Workers: Teachers, nurses, and other essential workers often find HMOs the only viable option for living in London while maintaining their careers.
“The beauty of HMO investing is diversification,” noted Sidd Mahajan. “If one tenant leaves, you still have income from the others. It’s risk management and profit maximization combined.”
Also Read: Beyond Business: Sidd Mahajan UK’s Personal Imprint on Tulip Real Estate
Strategic Location Selection: Where Sidd Mahajan Sees Opportunity
Not all London boroughs are created equal when it comes to HMO investments. Some of the best areas for HMOs are Barking and Dagenham and Walthamstow, where property prices are much more affordable than in many other districts. These areas offer the perfect combination of transport connectivity and affordability.
Sidd Mahajan’s location strategy focuses on three key criteria:
- Transport Links: Properties within walking distance of tube or rail stations command premium rents and attract quality tenants.
- Local Amenities: Areas with supermarkets, gyms, and social venues appeal to the demographic that chooses HMO living.
- Council Approach: Understanding local licensing requirements and working with HMO-friendly councils is crucial for long-term success.
“I’ve seen investors fail because they bought the cheapest property they could find without considering the ecosystem around it,” warned Sidd Mahajan. “Location isn’t just about price – it’s about creating a product people actually want to rent.”
The Management Advantage: Why HMOs Require Different Thinking
Traditional property investment often focuses on finding tenants and collecting rent. HMO investment, as Sidd Mahajan explained, is more sophisticated. It requires understanding tenant dynamics, maintaining common areas, and creating environments where people want to live together.
“Managing HMOs taught me more about hospitality than real estate,” reflected Sidd Mahajan. “These aren’t just properties; they’re homes where people build relationships and communities. Get that right, and you’ll have waiting lists of prospective tenants.”
HMO property investment continues to offer high rental yields and diversified income streams in 2025, making it an appealing choice for landlords and investors who want to maximize cash flow in what is a challenging market.
Looking Ahead: The Future of London HMOs
Despite regulatory challenges and licensing requirements, Sidd Mahajan remains bullish on London’s HMO market. He sees current market conditions as creating opportunities for serious investors who understand the sector.
“The barriers to entry are actually benefits for those who do their homework,” explained Sidd Mahajan. “Licensing requirements and regulations eliminate amateur landlords, leaving more opportunities for professional operators like us at Tulip Real Estate.”
With London’s housing shortage showing no signs of abating and rental demand continuing to outstrip supply, HMOs represent more than just an investment opportunity – they’re a vital part of London’s housing solution.
For investors willing to look beyond traditional buy-to-let strategies, Sidd Mahajan’s HMO approach offers a compelling blueprint for building wealth while addressing real market needs. In a city where property investment often seems impossible, HMOs might just be the hidden goldmine that makes it all worthwhile.