Cardiff HMO market: 18 months on, is the door still closing?
Cardiff Council has stood by its proposed restrictions on new Houses in Multiple Occupation, despite challenges during an independent planning examination. Here's where things stand and what it could mean for landlords and property investors.
Back in March 2025, we published an article titled ‘Cardiff HMO market set to become a closed shop’, warning that Cardiff Council's proposed planning policies could make it significantly harder to create new Houses in Multiple Occupation (HMOs), particularly in student-heavy areas such as Cathays and Roath.
More than a year and a half later, the Council's Replacement Local Development Plan (RLDP) has progressed through public consultation and into independent examination.
And despite challenges to the proposed restrictions, the Council is still standing firm on its plans to limit new HMOs.
A quick reminder of what's being proposed
Under Policy H5 of the RLDP, applications to create new HMOs would face strict concentration limits:
- Cathays and Plasnewydd (Roath): No more than 20% of residential properties within a 50-metre radius could be HMOs.
- Everywhere else in Cardiff: The limit would be 10% within the same radius.
Applications exceeding these thresholds would ordinarily be refused, unless exceptional circumstances or overriding planning considerations justified permission.
There's also a separate restriction designed to prevent an ordinary residential property (Class C3, typically a family home) from being 'sandwiched' between two HMOs. In other words, an application could be refused if converting a property into an HMO would leave a neighbouring home with an HMO immediately on either side, even where the overall concentration limit hasn't been exceeded. This only applies to adjoining properties sharing the same street frontage, so it wouldn't apply to properties separated by a road or those situated back-to-back on different streets.
These percentages aren't entirely new. Cardiff Council has attempted to control HMO concentrations using the same limits through its Supplementary Planning Guidance (SPG) since 2016.
The important difference is that the RLDP would place the limits directly into the adopted development plan, giving them considerably greater planning weight.
That's particularly significant in Cathays, where many streets already exceed the proposed 20% threshold. In practical terms, opportunities to convert more family houses into HMOs would become extremely limited.
The proposed limits have been challenged
The RLDP was formally submitted for independent examination in December 2025, with public hearings taking place in June 2026.
During those hearings, the Planning Inspectors specifically questioned whether the proposed HMO concentration limits were justified by evidence of harm.
Indeed, CPS Homes was named in the representations identified for this particular issue.
The Council defended its position, pointing towards research undertaken with neighbouring local authorities. It argued that high HMO concentrations can affect community stability, reduce the availability of family housing and contribute to problems involving waste, noise and parking.
These are legitimate matters for a planning authority to consider, and we recognise the importance of maintaining balanced communities.
However, there's an interesting distinction in the Council's evidence, as the regional study they have relied upon does not actually prescribe the specific 20% and 10% limits. The Council acknowledges this but maintains that the research supports a threshold-based approach.
For us, the question is whether restricting development according to a fixed percentage is sufficiently flexible to recognise the different characteristics, needs and housing demands of individual streets. Ultimately, that judgement rests with the independent Inspectors.
So, has the Council changed its position?
In October 2026, Cardiff Council published a fresh schedule of proposed changes to its RLDP, following the examination hearings.
There have been amendments to various policies, but the proposed 20% and 10% concentration limits remain completely unchanged.
That doesn't mean the Inspectors have approved them. The examination is ongoing, and their final report has yet to be published.
It does, however, indicate that the Council has not been persuaded to relax its approach.
What about student accommodation and office conversions?
Our original article also highlighted restrictions on purpose-built student accommodation (PBSA) and the conversion of offices into other uses.
The broad direction of these policies remains, although there are some important details worth clarifying.
Under Policy H6, new PBSA would generally need to be located within the Central and Bay Business Areas or close to existing university and college campuses. That second option means there is some flexibility for suitable sites outside the city centre and Cardiff Bay.
Meanwhile, Policy EC6, which seeks to protect office accommodation in the Central and Bay Business Areas, has undergone more substantial revisions.
Rather than simply requiring an office to have stood empty for two years, the proposed wording expects evidence of genuine marketing for continued office use, normally for at least 24 months, alongside consideration of whether the premises could be refurbished or adapted. It's a more detailed test than simply establishing how long a building has been vacant.
What does this mean for Cardiff landlords?
For existing HMO landlords, there may be something of a silver lining.
If/when it becomes increasingly difficult to create new HMOs in established student areas, the supply of traditional shared housing will become more constrained. That could strengthen the investment position of properties already benefiting from lawful HMO planning permission, particularly if demand remains strong.
But it's important to consider the other side of the coin.
Restricting new HMOs could make it harder for prospective landlords to enter the market, reduce opportunities to repurpose suitable properties and potentially limit the choice of accommodation available to students and other sharers.
There's also the question of how these restrictions would affect owner-occupiers looking to sell in areas where HMO investment has traditionally formed an important part of the market.
None of these outcomes is guaranteed. Property values and rents depend on several factors, including student numbers, affordability, competition from purpose-built accommodation and wider market conditions.
Nevertheless, the potential consequences are significant.
For landlords considering purchasing a property for HMO conversion, our advice is straightforward: establish the planning position before committing to the purchase. The fact that neighbouring properties operate as HMOs does not mean a new conversion will be permitted, even now.
Similarly, existing owners considering switching from a non-HMO to a HMO should not assume that planning approval will automatically follow.
What happens next?
Cardiff Council is currently consulting on further evidence and proposed changes arising from the examination hearings.
That consultation closes on Friday 6th November 2026, although responses must relate to the additional information and proposed amendments rather than reopening the entire Deposit Plan consultation.
You can find the documents and details of how to respond on the Cardiff RLDP consultation website.
Once the independent Inspectors have completed their examination, they will issue their findings and any recommendations necessary before the plan can be adopted.
Until then, the existing adopted Local Development Plan remains in place, although Welsh Government's Development Plans Manual says the emerging replacement policies may already be taken into account when planning applications are considered.
Our view
When we first wrote about these proposals in March 2025, we warned that Cardiff's established HMO market could become something of a closed shop.
Eighteen months later, that possibility – or likelihood – remains very much on the table.
We understand why Cardiff Council wants to protect family housing and prevent areas from becoming overly dominated by HMOs. Those are reasonable objectives.
At the same time, HMOs provide an important source of accommodation in a university city, and we believe planning policy needs to recognise that demand while allowing suitable developments to be assessed fairly on their individual merits.
The Council has made its position clear. What we're now waiting to see is whether the independent Inspectors agree.
We'll continue following the examination and report on any developments that could affect Cardiff's landlords and property investors.
For straightforward landlord tips, property updates and practical advice, follow me over at The Cardiff Letting Agent on Instagram.
The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.
