Do You Get Better HMO Returns in the North of England?

June 15, 2026

Written by Thomas Abram

Quick answer

Yes, in our experience, investors can often achieve better HMO returns in selected parts of the North of England, but only when the area, tenant base, employment market, planning position, purchase price, capital growth potential and management model all make sense together.

It would be far too simple to say “the North is good” and “the South is bad”. Property investment does not work like that. The North is a very large area, with some excellent HMO locations and some areas we would personally avoid. However, it does not take a lot of reading and research to see that a very common pattern has been emerging for some considerable time, and it is still happening as we speak. The South is becoming less and less appealing for many HMO investors, while parts of the North are gaining more and more interest.

At Foot Forward Property Investments, this is not something we are observing from a spreadsheet alone. We have been developing and managing northern HMO properties since the 1990s, over 34 years now, which makes us feel old. During that time, we have seen investor appetite change, tenant expectations rise, compliance become more complex, and the gap between expensive southern entry points and more affordable northern opportunities become harder to ignore.

We now see a constant stream of cash-rich, time-poor London-based investors looking for the same thing: a passive, long-term, high-income HMO property that is professionally developed, properly managed, and positioned in an area with real tenant demand.

This article explains why that shift is happening, why southern capital appreciation is also starting to drag behind many northern regions, which northern areas we would be cautious about, and why South Yorkshire, especially Doncaster, remains one of our preferred HMO investment locations.

What does “better HMO returns” actually mean?

When investors ask whether HMO returns are better in the North of England, they are usually talking about rental yield. That matters, but it is only part of the picture.

A better HMO investment should be judged on several points together:

Rental income after realistic running costs, not just headline gross rent.

The purchase and refurbishment entry point.

The stability of the tenant base.

Local employment and wage patterns.

Planning and licensing risk.

Long-term capital growth potential.

The quality of the refurbishment.

The standard of management.

Void risk, maintenance risk and tenant turnover.

Whether the property can keep performing without the investor needing to be involved every week.

A high advertised yield can look attractive, but if it is based on unrealistic rents, weak tenant demand, poor management, or a location with too much competition, the numbers can quickly become less attractive. This is why we always look at the full investment, not just the headline return.

For most of our investors, the real goal is not to chase the highest possible advertised yield. The goal is usually a strong, sustainable net income from a compliant HMO property in a location where tenants genuinely want to live.

Why the South is becoming less appealing for many HMO investors

The South still contains excellent property markets, and there will always be investors who prefer London and the surrounding counties for personal, strategic or portfolio reasons. However, for HMO investors who are focused on income, the South has become much harder to justify.

The issue is usually the entry price. In many southern locations, property prices are high before the investor even starts thinking about refurbishment costs, compliance works, planning, licensing, furniture, tenanting and ongoing management. That can make it more difficult to create a strong net yield, especially when mortgage costs, tax changes, insurance, utilities and maintenance are all taken into account.

There is also the question of value creation. If an investor pays a premium price for the property shell, the HMO conversion has to work much harder to create a worthwhile income return. That is not impossible, but the margin for error can become much smaller.

This is one of the reasons we see so many London-based investors looking north. Many of them are cash-rich and time-poor. They want exposure to property, but they do not want to spend evenings speaking to builders, chasing tenants, learning local licensing rules, or trying to manage a shared house from hundreds of miles away.

They are not necessarily trying to become hands-on landlords. They want a professionally developed, fully managed, long-term income asset.

That is where carefully selected northern HMO property can make sense.

The South is also dragging behind on capital appreciation

Income is usually the first reason investors look at HMOs, but capital appreciation still matters. A strong HMO should ideally provide high monthly income and sit in a location where the underlying property market has a sensible long-term growth story.

This is another reason the South is becoming less attractive to many income-focused investors. For years, many investors accepted lower yields in London and the South because they expected stronger capital growth to make up for it. That argument is now much harder to rely on.

Recent market data has shown parts of the southern market slowing heavily, and some areas have already entered negative annual growth. London has been particularly affected, with official house price data showing annual falls in 2026. Flats and maisonettes have been even weaker in some data sets, which matters because many southern landlords and investors have historically relied on flats as lower-entry-point investments.

This does not mean the South will never grow again. It does mean investors should be careful about assuming that a southern postcode automatically provides superior capital appreciation.

Savills’ mainstream residential forecasts also show a clear regional difference over the 2026 to 2030 period. Yorkshire and The Humber is forecast to perform significantly ahead of London and the South East over that five-year period. Forecasts are not guarantees, and investors should treat them as guidance rather than certainty, but the direction is important. It supports what many experienced northern property investors have been seeing on the ground for some time.

When the South offers lower income, higher entry prices and weaker capital growth prospects, the investment case becomes harder. When selected northern markets offer stronger income potential, more accessible purchase prices and better forecast capital appreciation, it is easy to understand why more investors are looking north.

Why the North is attracting more HMO investor interest

The North of England can offer a very different balance between purchase price, rental demand and long-term growth potential.

In the right area, investors may benefit from a lower property entry point, a strong working tenant base, less reliance on inflated student rents, and enough rental demand to support good-quality shared accommodation. When that is combined with professional management, the result can be a more passive investment experience.

The best northern HMO markets are not simply cheap. They have a practical reason for tenants to live there. They have jobs, transport, regeneration, affordability and a tenant base that supports consistent room demand.

For HMO investors, the key is not simply “buy in the North”. The key is to buy in the right part of the North, with the right property model, in the right street, for the right tenant profile.

That distinction matters.

The North is a big area, and not every market is right for HMOs

One of the biggest mistakes investors make is treating the North of England as one single investment market.

It is not.

Manchester is different from Doncaster. Liverpool is different from Sheffield. Newcastle is different from Rotherham. Middlesbrough is different from Wakefield. Even within one city, one postcode can behave very differently from another.

In our personal experience, there are some areas where we would be very cautious about buying or developing HMO properties. That does not mean no investor can ever make money there. It means those markets do not fit the long-term, low-stress, professionally managed HMO model that we prefer for our investors.

So, to keep this easy for the investor, let us start with where, in our opinion, we would be careful.

Northern HMO areas we would be cautious about

Manchester and surrounding areas

Manchester is a major city with a strong economy, a large population and global recognition. For many types of property investment, it will always attract attention.

However, for HMO investment, we are cautious.

The reasons are competition, saturation in many investor-targeted pockets, rising entry prices, and planning controls. Manchester has been heavily promoted to investors for years, which means many of the obvious HMO opportunities have already been taken, converted, competed over, or priced accordingly.

In a market like this, investors need to be very careful. A property can look attractive because it carries the Manchester name, but that does not automatically mean it will produce the best income return. Trophy city names can be useful in marketing, but tenants pay rent based on the property, the room, the location, the local competition and their own affordability.

In our view, investors should be careful when a deal is being sold mainly because it is “Manchester”, rather than because the property fundamentals are strong.

Liverpool and surrounding areas

Liverpool is another major northern city that is frequently promoted to HMO investors. It has universities, culture, regeneration and strong name recognition. However, from an HMO investment perspective, many of the same concerns apply.

Competition can be intense in popular investor areas. Article 4 planning controls also mean investors need to understand the exact local planning position before assuming a property can be converted or used as an HMO. A low purchase price on its own is not enough. The property has to work legally, operationally and commercially.

Liverpool has attracted a large number of deal packagers, sourcers and developers over the years. Some are highly professional. Others, in our opinion, do not always have the long-term management experience investors need behind the sale.

That matters because a successful HMO is not just a property transaction. It is an operational business. The property still needs to be let, managed, maintained, licensed, inspected, insured and kept competitive after the sales brochure has disappeared.

Newcastle, Sunderland, Middlesbrough, Stockton-on-Tees and surrounding areas

We are also cautious about Newcastle, Sunderland, Middlesbrough, Stockton-on-Tees and some surrounding areas for HMO investment.

Again, this is not because no investment can work there. It is because we see a combination of factors that can make the HMO model more challenging: competition, localised saturation, planning controls, lower entry price marketing, and in some areas a tenant base that can be more dependent on students or more sensitive to local employment conditions.

Newcastle, for example, is often marketed on its student population and city profile. That may appeal to some investors, but we prefer HMO locations where the tenant base does not depend too heavily on one group. A student-led HMO market can work, but it can also bring seasonal demand patterns, higher turnover, and more competition from other student accommodation.

Sunderland, Middlesbrough and Stockton-on-Tees can also be attractive to investors because of lower purchase prices. However, a low entry point should never be the main reason to invest. Cheaper does not automatically mean better value. If demand is thinner, wages are lower, competition is high, or planning controls are tightening, the investor needs to look beyond the headline yield.

This is where many inexperienced investors can be pulled in by a low price and a big advertised return. The numbers may look exciting, but the real question is whether the property will still perform well in year three, year five and year ten.

Why we are cautious about deal packager-led HMO markets

We have seen this pattern many times.

An area becomes fashionable because it has low house prices, a recognisable city name, or a university population. Deal packagers and sourcers begin promoting it heavily. More investors enter the same streets. More HMOs appear. Competition increases. Planning controls tighten. Tenant choice improves, which means weaker properties struggle. The investor who bought late into the trend then has to work harder to maintain occupancy and income.

This is why we prefer not to chase the loudest market.

A good HMO investment should be based on evidence, local knowledge and ongoing management experience. It should not rely on a glossy brochure, an inflated rent assumption, or the idea that any northern city will automatically deliver high returns.

As a company that develops and manages the properties ourselves, we have to think differently. We are not simply selling a deal and walking away. We have to manage the property, deal with tenants, maintain standards, and protect performance over the long term.

That gives us a very practical view of what works and what does not.

So, where is good to invest in HMOs?

In our opinion, Yorkshire and The Humber remains one of the most attractive regions for HMO investment, particularly South Yorkshire.

This is where we see a strong combination of affordability, transport, tenant demand, employment, regeneration, and long-term growth potential. It is also where our own experience is deepest.

South Yorkshire offers investors something that many crowded HMO markets struggle to provide: sensible entry prices, strong working tenant demand, and locations where professional shared accommodation can still serve a real need.

Within South Yorkshire, Doncaster is one of the locations we know best and continue to favour.

Why Doncaster works well for HMO investment

Doncaster is not always the first place investors think of when they begin researching HMO property. That can be an advantage.

Some investors chase trophy city names. We prefer fundamentals.

Doncaster has a central, hard-to-replicate location, strong transport links, a major logistics and rail presence, access to large employment areas, and a tenant base that does not rely solely on students. That is important. A stable HMO market needs people who need good-quality accommodation because they are working, relocating, training, separating, saving, or moving through life stages where flexible accommodation makes sense.

In our experience, Doncaster has that tenant profile.

It also has a major employment market for HMO tenants. Logistics, warehousing, rail, manufacturing, public sector roles, healthcare, education, construction, airport-related activity and regional supply chains all contribute to demand. The city’s position close to major road networks and rail connections gives it a practical advantage for tenants who need to commute, work shifts, or access employment across South Yorkshire and beyond.

This is one of the reasons Doncaster does not need to rely fully on students. Student tenants can be part of an HMO market, but we prefer locations where the demand is broader. A working tenant base can provide greater stability when the property is well located, well refurbished and professionally managed.

Doncaster’s transport links and central location

Transport matters for HMO tenants.

Many tenants do not choose a room only because of the bedroom size or the ensuite. They choose it because it helps them live more easily. They want access to work, shops, public transport, roads, gyms, town centres, and everyday services.

Doncaster has long benefited from its central location and connectivity. The city sits close to major motorway routes and has strong rail links, while wider regeneration and airport-related plans continue to support the area’s long-term economic story.

For investors, this matters because transport links support tenant demand. A property in the right Doncaster location can appeal to working tenants who need practical access to employment, not just nightlife or university buildings.

That is a very different investment case from student-heavy HMO markets.

Doncaster and capital growth potential

Income is usually the main reason investors look at HMOs, but capital growth still matters.

An investor should ask whether the area has a sensible long-term property growth story. In Doncaster’s case, the wider Yorkshire and The Humber forecast is encouraging. Savills’ mainstream residential forecast for 2026 to 2030 places Yorkshire and The Humber ahead of London and the South East for projected five-year house price growth.

Forecasts are not guarantees. They should never be treated as promises. However, they do help investors understand the wider regional direction, especially when combined with local factors such as affordability, employment, infrastructure and tenant demand.

In simple terms, we like locations where the income works from day one and the long-term regional growth story also makes sense.

Doncaster’s HMO market is not risk-free

A credible property article should be clear about risk.

Doncaster is not a magic answer. No HMO location is. Investors still need proper due diligence.

There are Article 4 areas in Doncaster, which means planning permission may be required for some HMO conversions depending on the exact location and property use. Licensing requirements also need to be checked carefully. Investors should never assume they can convert any house into an HMO just because it is in a strong rental area.

Street selection is also critical. One part of Doncaster can perform very differently from another. Property condition, room sizes, parking, tenant profile, local competition and management standards all affect performance.

This is why our approach is selective. We do not believe in buying anything just because it is cheap. We look for properties that can be developed into high-quality, compliant HMOs in areas where tenants actually want to live.

Why low saturation and competition matter

Some competition is healthy. It shows there is a market.

Too much competition is different. When too many HMOs are created in the same streets, tenants have more choice and weaker properties suffer. Rents can become harder to increase. Void periods can rise. Poorly finished rooms can sit empty. Landlords may need to spend more on incentives, upgrades or management just to stay competitive.

This is why we pay close attention to saturation.

In our experience, parts of Doncaster still offer a healthier balance than many heavily promoted HMO markets. There is demand, but there is not the same level of investor crowding that we see in some major city markets. That does not remove risk, but it can make the investment case more attractive when the property is selected properly.

A strong HMO market should have enough tenant demand to fill good rooms, but not so much investor activity that every street is fighting for the same tenant.

Why employment-led tenant demand is important

For long-term HMO performance, tenant demand needs to be practical and repeatable.

We prefer employment-led markets because they create a broader pool of potential tenants. A working tenant may need a room because they have taken a new job, relocated to the area, separated from a partner, moved out of family accommodation, or want bills-included living while saving for a deposit.

This demand can be more stable than a market that relies too heavily on one seasonal tenant group.

Doncaster’s employment base gives it strength here. The area is connected to logistics, rail, manufacturing, public services and wider regional employment. That mix helps support a steady tenant pool.

Compared with markets such as Newcastle and parts of the North East, where many HMO investors focus heavily on students or lower entry prices, Doncaster fits our preferred model more closely. We want working tenant demand, sensible competition, and a property that can perform without needing constant investor attention.

Why passive investors need more than a property deal

Many of the investors who come to us are not looking for a project.

They are busy professionals, business owners, London-based investors, overseas investors, or people who have built capital and now want income. They do not want to manage builders, understand every licensing change, or take calls about maintenance issues.

For this type of investor, the area matters, but the management model matters just as much.

A passive HMO investment needs:

A suitable property in the right location.

A compliant refurbishment.

A realistic rental appraisal.

A clear understanding of planning and licensing.

Professional tenanting.

Ongoing management.

Maintenance systems.

Transparent reporting.

Long-term support.

Without those elements, the investment may not feel passive at all.

This is why we develop and manage our own HMO properties. We want investors to understand exactly what they are buying, how the property is expected to perform, and who is responsible for running it after completion.

What investors should check before buying a northern HMO

Before buying any HMO investment in the North of England, investors should ask several practical questions.

Is the area employment-led, student-led, or dependent on a narrow tenant type?

Are there Article 4 planning controls?

Does the property need planning permission?

What licence is required?

Are the advertised rents based on current evidence?

How many similar rooms are available nearby?

What standard are competing rooms offering?

Is the property close to transport, employment and local amenities?

What are the realistic net returns after costs?

What is the capital growth outlook for that region?

How has the local market performed compared with the South?

Who will manage the property?

What experience does the developer or provider have?

Are the forecasts cautious, fair and evidence-based?

What happens if refurbishment costs increase?

What happens if a tenant leaves?

These questions are not designed to make investment feel complicated. They are designed to protect the investor from weak deals.

Do you get better HMO returns in the North of England?

In selected areas, yes, you can.

In our experience, the North of England can offer stronger HMO income potential than many southern locations because the entry price is often more sensible and rental demand can still be strong. The capital appreciation argument is also changing. Many southern areas no longer have the same clear growth advantage they once had, while several northern and regional markets are forecast to outperform over the medium term.

However, the best results usually come from being selective.

We would not buy in a northern location just because it is cheap. We would not buy just because a city name looks impressive. We would not buy just because a deal packager says the yield is high.

We prefer South Yorkshire, and specifically locations such as Doncaster, because the fundamentals are stronger for the type of HMO investment we believe in: working tenant demand, strong transport links, a large employment market, sensible entry prices, lower relative saturation in selected areas, and long-term growth potential.

The right northern HMO can provide high income, long-term demand and a genuinely hands-off experience. The wrong northern HMO can become a management problem.

That is the difference.

Our view

The shift toward northern HMO investment has not happened overnight. It has been building for years, and we are still seeing it now.

The South has become harder for income-focused HMO investors because entry prices are high, yields are often squeezed, and capital appreciation is no longer clearly outperforming many northern markets. In fact, recent data has shown parts of the southern market moving into negative annual growth, which makes the old argument for accepting low yields in return for southern capital growth much less convincing.

The North, especially well-selected parts of Yorkshire and The Humber, continues to attract investors who want stronger income and a more practical long-term investment model.

For us, South Yorkshire remains one of the most compelling regions, and Doncaster continues to stand out. It has the employment base, transport links, tenant demand and entry price that suit the type of fully managed HMO investments we develop.

That does not mean every Doncaster property is suitable. It does mean that, with the right due diligence and the right management, Doncaster can offer the kind of HMO investment profile many passive investors are looking for.

At Foot Forward Property Investments, we have spent more than 34 years developing and managing northern property, with over 24 years focused heavily on HMOs. We have seen markets rise, become overhyped, oversaturate, and fall out of favour. Our view is simple: follow the fundamentals, not the noise.

If you are looking for a passive, fully managed HMO investment in carefully selected northern locations, you can view our current opportunities here:

View our fully managed HMO properties for sale

Frequently asked questions

Are HMO returns usually higher in the North of England?

They can be higher in selected northern areas because purchase prices are often lower than in the South, while room-by-room rental demand can remain strong. However, returns depend on the exact property, location, refurbishment cost, tenant demand, management quality and compliance position.

Is capital growth better in the North than the South?

In some regions, forecasts and recent data suggest the North and wider regional markets are currently more attractive than London and parts of the South. However, capital growth is never guaranteed. Investors should look at long-term fundamentals, including employment, affordability, infrastructure, supply, demand and local regeneration.

Is Doncaster a good area for HMO investment?

In our experience, Doncaster can be a strong area for HMO investment when the property is in the right location and aimed at the right tenant base. The city benefits from transport links, employment demand, logistics, rail, manufacturing and public sector employment. It does not need to rely fully on students, which can support a more stable tenant mix.

Should investors avoid Manchester and Liverpool HMOs?

Not always, but we are cautious. Manchester and Liverpool are heavily promoted HMO markets with strong competition, planning controls and many investor-targeted areas. Some opportunities may still work, but investors should not buy simply because of the city name.

Why is South Yorkshire attractive for HMO investors?

South Yorkshire can offer a good balance of affordability, tenant demand, employment, transport links and long-term growth potential. For passive investors, it can provide a more practical entry point than many southern markets, especially when the property is professionally developed and managed.

Is HMO investment risk-free?

No. HMO investment carries risk, including void periods, maintenance costs, regulatory changes, licensing requirements, planning restrictions, tenant issues, interest rate changes and property market movement. Investors should carry out due diligence and take independent tax, legal, mortgage and financial advice where appropriate.

Does Foot Forward provide financial advice?

No. Foot Forward Property Investments Ltd does not provide regulated financial advice. We provide property investment opportunities, development experience, management support and due diligence information to help investors make informed decisions. Investors should seek independent professional advice where needed.