A Guide to HMO Investment in 2025

September 15, 2025

It is no secret that HMO property investment remains the strongest and most popular form of property investment in the United Kingdom, far outpacing the standard buy to let. The valuation of the HMO market in the UK currently sits at £78 billion, generating an annual rental income of £6.3 billion. Each year, more landlords are adding HMO properties to their portfolios to diversify and strengthen their rental income.

Rising housing costs, inflation, and wage pressures are the main reasons the HMO rental market is experiencing its strongest period in years.

England and Wales have a combined total of over 362,000 HMO properties, a number that continues to grow year on year to meet demand.

HMOs are more rewarding than buy to lets but they require much more management.

Whilst the HMO investment market is a goldmine for property investors, it is important to highlight that HMO properties are an entirely different undertaking compared to a single let. From compliance to management and regulation, they demand constant attention, which is why all of our HMO investments are completely hands free for the investor. We handle everything from refurbishment and fire safety to licence renewal and more.

You can view our HMO investment properties for sale here.

HMOs in the North of England

HMO investment in the North of England continues to be a lucrative market for property investors seeking high returns on deployed capital. For over 33 years we have pioneered the HMO development and management market, working closely with investors who share their results and findings with us.

We focus solely on HMO investments in the North of England, particularly in South Yorkshire where capital appreciation is consistently strong. For example, in Doncaster capital appreciation sits at 7 percent per annum, while the average monthly rent across our properties has increased by approximately 6 percent each year. This significantly outperforms the South of England, where property prices are already extremely high and have seen limited growth, creating a far higher barrier to entry for HMO investment. More investors are leaving London and heading North in search of better returns.

HMOs in the South of England

There is still some demand for HMO properties in the South of England, but they are becoming less attractive due to low capital appreciation and high entry costs. Many investors we speak to are moving away from London and concentrating fully on opportunities in the North of England. London currently sees growth of only 1.3 percent, compared with 7 percent in the markets where we operate.

What makes an HMO lucrative?

The answer lies in security. With a single buy to let, if the tenant loses their job and cannot pay rent, the property produces no income. With an HMO, if one tenant leaves, the other tenants continue to pay, ensuring ongoing rental income.

Are student HMO properties still worth it?

In our view, no. Student HMOs are too dependent on university funding and international students, both of which are trending downward. As soon as a university faces funding cuts or cancels courses, demand can drop sharply.

Is now a good time to invest in an HMO?

The answer is that it is always a good time to invest in an HMO property, especially a fully managed HMO in the North of England. Some investors hesitate because of politics or economic conditions, but these are short term distractions. The reality is that the HMO sector has grown consistently year on year, and tenant demand has remained strong regardless of who is in power or the wider economy.

What if my HMO refurb costs spiral out of control?

With many HMO developers, this is unfortunately common, and we are hearing about it more often. With Foot Forward, your investment is protected by our price lock promise. The price you see is the price you pay. We never have and never will pass on increases to investors, even if material costs rise or unexpected issues arise during refurbishment.

The benefits of a commercial valuation

HMO properties also benefit from commercial valuations, allowing you to refinance at a commercial rate and leverage your portfolio growth. We only advise refinancing at a comfortable level of leverage, unlike many other developers who encourage excessive borrowing.

Commercial refinancing takes into account both the rental income and improvements made, often achieving a significantly higher valuation than a standard residential property. For example, if a family home on the same street is valued at £150,000, an HMO could be valued closer to £300,000 due to increased rental income and the addition of new bedrooms and bathrooms.

What to be aware of when looking for an HMO investment deal

The internet has led to an influx of inexperienced HMO developers and mentors with little track record, often relying on what they learned from short courses while experimenting with real investors’ money. Always ensure you partner with a reputable HMO developer. With over 33 years of experience, our investments have consistently stood the test of time.