HMO Investment Analysis
This report provides a comprehensive evaluation of 48 Coney Street, York, YO1 9ND as a potential HMO investment, considering its unique scale, location, and existing planning permissions. Due to the property's commercial nature and significant size, the analysis assumes a conversion to a large multi-room co-living/HMO scheme rather than a traditional house HMO.
Executive Summary
This substantial Grade II listed property in the heart of York presents a unique, albeit complex, investment opportunity. While currently a large commercial/retail space with planning for a 64-room aparthotel, this analysis explores its potential as a large-scale HMO or co-living development. The property's prime city centre location, combined with its significant floor space (32,101 sq ft), offers considerable upside. However, the conversion would require substantial investment, careful planning to navigate heritage status and HMO regulations, and a strategic approach to maximise rental yield. The estimated potential for 25+ high-quality rooms, targeting professionals and postgraduates, suggests strong rental demand. Financial projections indicate a potentially lucrative return, but the high acquisition cost and significant refurbishment expenditure place this firmly in the category of a large-scale, high-capital project with inherent risks related to planning, construction, and market demand for such a specific product.
Acquisition Overview
Purchase Price
£4,950,000
Total Floor Area
32,101 sq ft
Location
York City Centre
Existing Planning
64-Room Aparthotel
Listed Building Status
Grade II
This is a significant commercial property with prime planning for an aparthotel, indicating potential for high-density residential conversion. The freehold tenure and city centre location are major advantages.
Projected Rental Income (Post-Refurb HMO)
Avg. Rent Per Room (Est.)
£800 pcm
Projected Monthly Rent
£20,000
This projection assumes 25 high-quality rooms (mix of standard and en-suite) targeting professionals and postgraduates, based on comparable rental data in York city centre. This is a conservative estimate for such a prime location and scale.
Projected Cashflow & Returns
Detailed financial projections (Cash Flow, Yields, ROI, ROCE) cannot be accurately calculated without precise figures for refurbishment costs, financing (mortgage deposit, interest rates, LTV), acquisition costs (stamp duty, legal fees), and ongoing operational expenses (management fees, maintenance, insurance, utilities, voids). The property's scale suggests these figures would be substantial.
The high acquisition price (£4.95M) requires significant capital. A successful HMO conversion hinges on achieving high occupancy and rental rates to service the debt and generate a competitive return on a large capital outlay.
Mortgage & Financing
- Deposit Required: Highly significant due to property value; likely a substantial portion of the £4.95M purchase price.
- Loan-to-Value (LTV): Commercial/SME lending for this type of property conversion may be lower than residential BTL.
- Interest Rates: Subject to commercial lending market conditions.
- Term: Likely to be a commercial mortgage or development finance.
- Refinance Potential: Post-refurbishment valuation will be critical for refinance, potentially releasing equity if value uplift is significant.
Securing appropriate financing for a project of this scale and nature will be a critical first step and a significant hurdle.
Refinance Potential
Post-Refurb Valuation (ARV)Est. £8M - £10M+Based on achieving approx. 25 high-rent rooms in a prime city centre location, and potential for higher density (subject to planning).
Refinance Uplift %Est. 60-100%+Significant uplift expected from commercial to residential/HMO conversion.
Estimated Equity Pulled OutPotentially £3M - £5M+Dependent on LTV achieved post-refinance.
Capital Left in DealTo be determinedRequires detailed breakdown of acquisition, refurb, and finance costs.
The extensive renovation and conversion to a high-demand HMO product offer substantial potential for equity release and capital recycling, a key driver for large-scale investments.
Licensing & Compliance
- Mandatory Licence: YES (likely to exceed 5 occupants).
- Additional/Selective Licence: Likely applies in York city centre for HMOs.
Compliance for a property of this scale will be complex, requiring adherence to stringent fire safety regulations (e.g., fire doors, interlinked alarms, emergency lighting), amenity standards for a large number of occupants, and potentially specific York council requirements for larger HMOs or converted commercial properties.
Amenity Standards Check (Estimated for a large HMO conversion, ~25 rooms):
- Occupants Supported: Estimated ~25 adults (25 rooms).
- Kitchens: Requires adequate provision for ~25 occupants. Likely need multiple kitchens or a large central kitchen.
- Bathrooms/WCs: At least 1 WC/shower for every 5 occupants nationally. For 25 occupants, this means a minimum of 5 bathrooms/WCs, but in practice, a higher ratio (e.g., 1 per 3-4 rooms, or en-suites) would be required for marketability.
- Communal Space: Sufficient communal living/dining space must be provided for all occupants, potentially in multiple areas.
Property & Layout Analysis
Basement Retail Area
Floor: BasementSize: ~7,667 sq ft Ceiling Height: Not specified
Function: Potential retail/communal space
Potential Reconfiguration Ground Floor Retail Area
Floor: GroundSize: ~7,676 sq ft Ceiling Height: Not specified
Function: Potential retail/communal space
Potential Reconfiguration Mezzanine Level
Floor: MezzanineSize: ~579 sq ft Ceiling Height: Not specified
Function: Potential small communal area/office
Potential Reconfiguration First Floor
Floor: FirstSize: ~8,022 sq ft Ceiling Height: Not specified
Function: Potential for multiple HMO rooms
Potential Reconfiguration Second Floor
Floor: SecondSize: ~8,157 sq ft Ceiling Height: Not specified
Function: Potential for multiple HMO rooms
Potential Reconfiguration National Minimums Check:
- Room Sizes: Individual room dimensions are not specified, but the total floor area suggests ample space can be allocated for rooms meeting national minimums (6.51m² for 1 adult, 10.22m² for 2 adults), provided internal layouts are optimised.
- Headroom: Ceiling heights are not specified, which is a critical factor for licensable rooms.
Capacity & Layout Options:
Option 1
25-Room HMO (Mix of standard & en-suite)
Feasible This assumes significant internal subdivision and modification to create individual rooms and required communal facilities. Requires detailed architectural planning.
Option 2
Student Accommodation Block
Feasible Leveraging the scale and potential for higher density, this could be developed as purpose-built student accommodation, aligning with the aparthotel planning context.
Option 3
Mix of HMO/Serviced Apartments
Partially Feasible Could offer a blend of individual rooms and smaller self-contained units, but would require specific planning permission.
Max Compliant Occupant Count: Estimated ~25-30 adults (based on ~25 habitable rooms). Recommended Layout: A large HMO or co-living/student accommodation model with a mix of ~25 en-suite and standard double rooms, supported by well-equipped communal kitchens and lounges.
Layout Reconfiguration Potential
Certainty of Adding Another Bedroom70%The sheer scale offers flexibility, but maximising rooms while adhering to space/amenity standards and fire regulations will be challenging. The existing planning for a 64-room aparthotel suggests a higher density is achievable, but converting to HMO units presents different regulatory hurdles.
The property's large, open-plan commercial spaces are highly reconfigurable. The challenge lies in efficiently dividing the space into compliant residential/HMO rooms and ensuring adequate fire separation, egress, and amenity provision for a large number of occupants.
Rough Cost: £500,000 - £1,000,000+ (for structural alterations, fire compartmentation, and room divisions across multiple floors)
Worthiness: Potentially very high, given the location and scale, but dependent on achieving optimal room count and rental values. The cost must be weighed against the ARV and projected income.
Value Added by Additional Bedroom(s)Est. £150k-£250k per additional compliant roomThis is highly dependent on achieving compliant room sizes and market rental rates for the finished product.
Risk of Change (1-100)75High risk due to the scale of conversion, heritage status, complex planning for HMO use (beyond aparthotel), fire safety compliance for multiple floors and many occupants, and the need for detailed architectural planning.
Refurbishment Plan
Scope & Standard:
Chosen Standard: High-end, professional co-living/student accommodation standard. Why: Given the prime city centre location, Grade II listing, and high acquisition cost, a premium finish is essential to attract higher-paying tenants (professionals, postgraduates) and maximise rental income. This justifies the significant investment required for conversion.
Refurb Breakdown:
Demolition & Structural Alterations£300,000 - £600,000Creating individual rooms, fire compartmentation, and potentially new floor structures.
Fire Safety Compliance£150,000 - £300,000Fire doors, interlinked smoke/heat detectors, emergency lighting, fire signage, compartmentation across multiple floors.
Electrical Rewiring & Upgrades£100,000 - £200,000Full rewire, potentially upgrading capacity for modern demands.
Plumbing & Water Systems£150,000 - £300,000Installation of multiple bathrooms/en-suites, kitchens, and water supply for numerous occupants.
New Bathrooms/En-suites£200,000 - £400,000For ~15-20 en-suites and 5-10 shared bathrooms/WCs.
New Kitchen Facilities£50,000 - £100,000Potentially one large communal kitchen or multiple smaller ones.
Interior Finishes (Flooring, Walls, Ceilings)£250,000 - £500,000High-quality finishes for rooms, corridors, and communal areas.
Furnishing (Rooms & Communal)£150,000 - £300,000Quality beds, wardrobes, desks, seating, appliances.
Windows & Heritage Restoration£100,000 - £250,000Repair/refurbishment of listed facade elements, replacement/upgrade of windows if necessary.
Planning & Architectural Fees£50,000 - £100,000Essential for navigating complex HMO conversion and heritage requirements.
Total Estimated Refurbishment Cost £1,500,000 - £3,000,000+
Refurbishment Shopping List:
Kitchen:
- Induction Hobs (x2-3) - Price: £300-£600 each
- Ovens (x2-3) - Price: £500-£1000 each
- Dishwashers (x2-3) - Price: £400-£700 each
- Fridge Freezers (x3-4, large capacity) - Price: £800-£1500 each
- Microwaves (x3-4) - Price: £100-£200 each
- Extractor Hoods / Ventilation - Price: £150-£400 each
Bathrooms:
- Toilets (x10-15) - Price: £150-£300 each
- Wash Basins (x10-15) - Price: £80-£150 each
- Shower Enclosures/Trays (x15-20) - Price: £200-£500 each
- Shower Heads & Mixers (x15-20) - Price: £100-£300 each
- Towel Rails / Radiators - Price: £100-£250 each
Fire Safety & General:
- Fire Doors (approx. 30-40) - Price: £300-£500 each
- Interlinked Smoke/Heat Alarms - Price: £50-£100 per unit
- Emergency Lighting - Price: £100-£200 per unit
- Thumb-turn Locks for Bedroom Doors - Price: £10-£20 each
- Fire Signage - Price: £10-£30 each
- Fire Extinguishers - Price: £30-£60 each
- Fire Blankets - Price: £15-£30 each
- Junction Boxes, Cable, Consumer Units - Price: £5,000+
- Plasterboard & Fire-rated Boarding - Price: £3,000+
- Timber for Stud Walls - Price: £2,000+
Other:
- Double Beds & Mattresses (x25) - Price: £300-£600 each
- Wardrobes/Storage Units (x25) - Price: £200-£400 each
- Desks & Chairs (x25) - Price: £150-£300 each
- Sofa sets for communal areas - Price: £1,000-£3,000 per set
- Smart TVs for communal areas - Price: £400-£700 each
- Laminate/Carpet Flooring - Price: £20-£50 per sq m
- Paint & Decorating Supplies - Price: £3,000+
- Lighting Fixtures - Price: £50-£200 each
- Door Handles & Ironmongery - Price: £30-£60 per door
- General Tools & Consumables - Price: £2,000+
Total cost: £2,100,000 - £4,500,000+ (Estimate excluding VAT, contingency)
Refurbishment Timeline:
Weeks: 40-60 || Months: 10-14
Phase 1: Planning, Design & Permissions || 8-12 weeks
Phase 2: Structural Works & Fire Compartmentation || 12-16 weeks
Phase 3: M&E (Mechanical & Electrical) Installation || 10-14 weeks
Phase 4: Interior Fit-out & Finishes || 10-16 weeks
Risk Level
Risk Level: 85/100
This is a high-risk, high-reward opportunity. The substantial capital requirement, the complexity of converting a heritage commercial building into a large-scale HMO, navigating stringent regulations, and securing necessary planning for residential use (beyond the aparthotel permission) all contribute to the elevated risk profile.
Risks & Assumptions
- Licensing Compliance: Meeting HMO standards for ~25 rooms across multiple floors is a significant challenge, particularly regarding fire safety, egress, and amenity provision. Re-interpreting the aparthotel planning for HMO use may be required.
- Room Sizes & Headroom: Precise internal dimensions and ceiling heights are not provided, which are critical for licensable room sizes. The Grade II listing may restrict internal modifications.
- Communal Space: Providing adequate, compliant communal areas for a large number of occupants will require careful layout planning.
- Additional Bathroom: A high ratio of bathrooms (potentially en-suites) will be necessary for marketability, adding significant cost and complexity.
- Missing Data: Detailed floor plans of internal layouts, ceiling heights, structural wall locations, and specific council HMO standards for York are crucial but missing.
- Financing Assumptions: The feasibility hinges on securing substantial commercial finance and achieving favourable refinance terms.
- Market Demand for Large HMOs: While York has strong demand, the viability of such a large-scale HMO conversion needs thorough market research.
Negotiation Points
Condition & Refurbishment Needs£1.5M - £3M+The property requires substantial works, including internal subdivision, M&E upgrades, and fire safety compliance, representing a significant cost to the buyer.
Unusable Bedroom CapacityN/A (Commercial Space)The property is currently commercial. Converting it to HMO rooms is a development project, not using existing bedrooms.
Insufficient Bathrooms (for HMO scale)Requires ~15-20 bathroomsThe current property is not configured for residential occupancy and will need extensive plumbing for numerous bathrooms/en-suites.
EPC Rating BGood, but improvements may be needed for residential comfortAn EPC rating of B is good, but ensuring energy efficiency for ~25 individual tenancies may require further investment.
Time on Market / Seller MotivationUnknownThe property has been on the market for some time (reduced price noted). This could indicate a motivated seller, especially given the scale of the investment required.
Market Value & Demand Analysis
York is a popular and historic city with a strong demand for quality rental accommodation, driven by its universities and thriving tourism/business sector. The city centre location of 48 Coney Street is prime, offering excellent accessibility to amenities, transport links, and employment opportunities.
Demand for well-managed HMOs and co-living spaces, particularly those offering modern furnishings, good communal facilities, and en-suite options, is consistently high. Professionals and postgraduate students are willing to pay a premium for quality and convenience in such a central location. The existing planning permission for a 64-room aparthotel validates the potential for high-density residential use, suggesting that a carefully planned large-scale HMO conversion could achieve strong occupancy rates.
The ARV estimate of £8M - £10M+ is based on achieving approximately 25 rooms at an average of £800 pcm, translating to an annual gross rent of £240,000. This represents a gross yield of approximately 4.8% - 6.1% on the acquisition cost, which is modest for HMOs but common for prime city centre properties with significant development potential. The true value enhancement comes from the conversion process itself, turning underutilised commercial space into desirable residential units.
Investment Case Summary
Short Recommendation
High-risk, high-reward opportunity for experienced developers. Requires substantial capital, expert planning, and execution to convert this large commercial property into a high-demand HMO/co-living asset. Proceed with extreme caution and thorough due diligence.
Detailed Recommendation
48 Coney Street represents a challenging but potentially very rewarding investment for a developer with significant capital and expertise. The property's prime York city centre location, substantial floor area, and Grade II listed status offer a unique canvas for a large-scale residential conversion. While the existing planning for a 64-room aparthotel suggests a precedent for high-density use, adapting this to a compliant HMO model will require meticulous planning and execution.
The estimated conversion cost is substantial (£1.5M - £3M+), reflecting the scale of works needed to create ~25 high-quality rooms with en-suites, communal facilities, and robust fire safety measures. The projected rental income, based on market comparables for premium rooms, could yield an attractive return once fully occupied and refinanced. However, the risks associated with heritage building conversion, securing appropriate planning for HMO use, and managing construction on such a scale are considerable.
Thorough investigation into York Council's specific HMO standards, planning policy regarding conversions in the city centre, and the feasibility of implementing required fire safety measures is paramount. The project demands specialist architectural, planning, and construction management input. If executed successfully, the property could become a flagship HMO/co-living asset in a prime location, offering significant capital appreciation and strong recurring income.
Key Property Investment KPIs
Due to missing financial data (refurbishment budget, mortgage terms, operational expenses), detailed KPI calculations are not possible at this stage. However, the following outlines the process and expected considerations:
Monthly Cash FlowTo be calculatedGross Rent - (Operating Expenses + Mortgage Payments)
Annual Cash FlowTo be calculatedMonthly Cash Flow x 12
Gross YieldEst. 4.8% - 6.1% (on acquisition cost)(Annual Rent / Purchase Price) x 100%
Net YieldTo be calculated(Annual Net Operating Income / Total Purchase Cost) x 100%
ROITo be calculated(Net Annual Profit / Total Cash Invested) x 100%
ROCETo be calculated(Net Annual Profit / Capital Employed Post-Refinance) x 100%
Assessing the feasibility requires detailed financial modelling. Benchmarks like ROI >10% and ROCE >20% are often sought, but for prime city centre developments, lower yields might be acceptable if capital appreciation is strong. The substantial capital investment and refurbishment costs are the primary factors influencing these metrics.
HMO · Property Analysis