Portsmouth pipeline tilts hard toward HMO conversions as land scarcity bites

Idox returns 37 live applications carrying 109 pending units and an estimated £26.8m of GDV, with no decisions yet logged in the current cycle. The mix is unusual for a city of this size: 24 of the 37 applications are change-of-use proposals taking C3 dwellings or smaller C4 HMOs up to seven, eight or nine bedroom sui-generis HMOs, concentrated in Southsea and the central Portsmouth wards. Specific examples include 50 Chetwynd Road Southsea (26/00426/FUL, 8-bed HMO, ~£2.04m GDV) and 77 North End Avenue (26/00186/FUL, 9-bed HMO, ~£2.29m GDV). The standout conversion is application 26/00313/FUL at Portsmouth Grammar School on Cambridge Road, proposing 16 residential dwellings within an existing Class F1 school building with an accompanying listed building consent application (26/00308/LBC) carrying an estimated combined GDV in the £4m range. Weston Court at 2-6 Canal Walk (26/00249/FUL) is a retrospective hotel-to-17-bed HMO conversion, and 161-165 Highland Road has twin prior-approval submissions converting ground-floor retail and shop space into five flats under permitted development.

Recent transactions confirm a market where the typical deal sits between £200,000 and £300,000. 33 Military Road in PO3 sold for £445,000 on 25 March 2026 as a terrace, while 51 Kirby Road in PO2 went through at £420,000 the same week as a semi. At the entry end, leasehold flats are still trading well below the median: Flat 81 Holmbush Court on Queens Crescent at £110,000 and Flat 10, 22 St Marys Road at £84,000 set the floor for cash and bridging buyers. Mid-market terraces such as 80 Mafeking Road at £205,000 and 50 Winter Road at £220,000 underline the values supporting most of the HMO change-of-use pipeline. The Land Registry recorded zero new-build sales over the 12-month window, which is consistent with a city where almost all output comes from conversion, refurbishment and infill rather than estate-scale new build.

The Portsmouth opportunity is conversion-led, not site-led. Operators running HMO portfolios are the dominant pipeline buyer, refinancing single-let terraces around the £250,000 to £300,000 mark and reworking them into seven to nine bed sui-generis schemes with valuations stretching into the £1.8m to £2.3m range once stabilised. That deal shape suits light-development bridging followed by a commercial term loan against the post-works valuation, with senior development debt typically 65-70% LTGDV and rates in the 9-12% range on smaller schemes. The university of around 28,000 students concentrates student demand into Southsea, Fratton and parts of central Portsmouth, but the city's Article 4 direction across the C4 designated areas means lenders increasingly want to see planning consent in place before drawing down. Larger plays, the Grammar School conversion, the Sentinel House industrial redevelopment on Airspeed Road and the Spencer Court rooftop scheme on Merton Road, will need full development facilities with build-cost contingencies pitched against listed and constrained sites.

Pipeline volume should remain steady through 2026 because the structural drivers, student demand, defence employment, harbour-side regeneration and a near-zero new-build pipeline, are unchanged. We expect HMO licensing and Article 4 conditions to keep tightening, which favours operators who can underwrite planning risk early and brokers who can structure bridge-to-term facilities against post-conversion value. The next signal to watch is the Portsmouth Grammar School determination, which will set the tone for institutional-scale heritage conversions inside the city in the next twelve months.