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Repurposing Commercial Properties for Profitable HMOs

With the demand for affordable, high-quality rental accommodation rising across the UK, investors are seeking creative ways to maximise property value. One of the smartest strategies? Repurposing commercial buildings into Houses in Multiple Occupation (HMOs).


At Aura Ventures, we’ve seen first-hand how commercial-to-HMO conversions offer outstanding returns while revitalising underutilised spaces. Here’s why this strategy works and how investors can benefit.


The 3 P’s of a Successful Commercial-to-HMO Conversion


1. Price – Lower Purchase Costs, Higher Value Potential


  • Commercial properties cost less per square metre than residential ones, offering investors greater value for money.

  • With recent tax changes, residential Stamp Duty has risen, while commercial properties still benefit from lower SDLT rates, saving thousands at purchase.

  • VAT reductions on conversions (from 20% to 5%) further cut costs, making large-scale HMO projects more financially viable.


2. Profit – Maximising Returns Through Smart Investment


  • Higher rental yields—HMOs generate more income per square metre than single lets.

  • Commercial valuations—Unlike traditional HMOs, mixed-use buildings can be appraised based on income potential, often leading to higher valuations.

  • Capital recycling—Refinancing at a higher valuation allows investors to pull out initial capital and reinvest in new projects while keeping cash-flowing assets.


3. Possibility – Unlocking New Investment Opportunities


  • Flexible layouts—Commercial buildings offer larger floor plans that can be adapted for premium co-living HMOs.

  • Faster planning approvals—Mixed-use schemes that retain commercial elements often align with council priorities, making approval more likely.

  • Sustainability advantages—Starting with a blank slate allows investors to integrate green energy solutions, reducing operational costs and increasing tenant demand.


Case Study: A Commercial-to-HMO Success Story


A former office building in Stockport, dubbed 250WRS, was strategically converted into 7 high-spec co-living flats, featuring 20 bedrooms in total. Designed for young professionals and tailored for the high-end Manchester co-living market. 


  • Purchase Price: £370,000

  • Development Features: Spacious en-suite rooms, high-end communal spaces

  • Monthly Rental Turnover: £13,965

  • Estimated GDV: £1,465,000


By leveraging smart design, efficient space utilisation, and premium amenities, this project now generates exceptional rental yields while enhancing the local rental market.


Through strategic planning, smart reconfiguration, and high-quality finishes, this project now delivers strong rental yields and long-term investment value.





Final Thoughts: Why Commercial-to-HMO is a Winning Strategy


Repurposing commercial buildings isn’t just profitable—it’s also an opportunity to revitalise local communities and contribute to the growing demand for quality rental housing.


At Aura Ventures, we specialise in high-yield property conversions that unlock the full potential of overlooked assets. If you’re looking for sustainable, high-return investment opportunities, get in touch today!





 

DISCLAIMER


Aura Property Ventures Ltd works with High Net Worth or Sophisticated Investors only. Any information provided here is not for public promotion and is not to be regarded as an FCA-approved regulated investment.


Please read our terms and conditions relating to the use of this site for further information.

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