HMO vs Serviced Accommodation: Best UK Property Investment Strategy for 2025

HMO’s vs SA as an Investment in 2025: Which Strategy Delivers Stronger Returns?

As the UK property market evolves in 2025, two investment models continue to dominate conversations among serious investors: Houses in Multiple Occupation (HMOs) and Serviced Accommodation (SA). Both offer compelling returns, but choosing the right strategy requires a nuanced understanding of market trends, regulatory shifts, and the value of expert execution.

HMOs: Stable, High-Yield, and Resilient

HMOs remain a cornerstone for investors seeking consistent cash flow. With a national housing shortage and rising rental demand—particularly among young professionals and key workers—well-managed HMOs are achieving strong occupancy rates. Yields can typically reach 8–12%, especially in regions with mature university populations or large employers.

Regulatory scrutiny around licensing and minimum room sizes continues in 2025, but with the right guidance, these barriers can be turned into advantages. Properties that exceed compliance standards command higher rents and longer tenancies. The key? Strategic sourcing and meticulous planning—both of which O Johnston & Co specialise in.

Serviced Accommodation: Agile, Lucrative, but Operationally Intensive

Serviced Accommodation offers exceptional nightly rates and high occupancy in tourist and business hubs. Investors have seen returns upwards of 15–20% gross, particularly in cities like Manchester, Birmingham, and parts of coastal Wales. However, the SA market is increasingly driven by customer experience, branding, and seasonal volatility.

2025 has seen increased regulation—especially in licensing and planning restrictions in saturated urban areas. Tech-enabled management and dynamic pricing are no longer optional—they're essential to remain competitive.

The Verdict: Strategy Over Product

Neither strategy is inherently superior. The right choice depends on your goals, time horizon, and appetite for involvement. HMOs offer more predictable monthly income and long-term stability. SA can deliver outsized short-term gains—but demands sharper operational execution. Overall, property has been proven over decades as one of the greatest asset classes. If you are unsure on either of these strategies, check out our blog on ‘what property investment you should buy’

Why Partner with a Specialist Like O Johnston & Co

Navigating these strategies alone can be costly. At O Johnston & Co, we apply creative investment strategies to unlock potential in overlooked markets—using property as the vehicle for accelerated returns. Our tailored approach means we can deliver clients full return on capital in as little as 12 months, with long-term rental income built in.

Whether you're diversifying an existing portfolio or entering the market at a high level, our end-to-end sourcing and investment management solutions ensure that every asset performs to its highest potential. Read more about what a property sourcing agent is here.