Why the North of England Leads the Country for HMO Property Investment
For HMO investors, the North of England continues to offer a combination of affordability, rental demand, and capital growth that is increasingly difficult to find in many parts of London and the South.
Over the past eight years, large parts of the London and Southern property markets have experienced comparatively subdued house price growth, while several Northern markets have continued to record stronger capital appreciation. This widening regional difference has helped make Northern cities particularly attractive to investors who want their capital to work across both rental income and longer-term property value growth.
View evidence of this here: https://www.ft.com/content/2314dac6-b5e0-458a-ae39-7102d3a1c11f
Expertly Developed HMOs in High-Growth Northern Cities
Our approach is based on direct experience in the markets where we develop and sell HMO properties. Rather than spreading our attention across dozens of locations, we focus on Sheffield, Doncaster, Rotherham, Wakefield, and Barnsley, where our team has developed detailed knowledge of local streets, tenant demand, property values, licensing requirements, and achievable rents.
Working in these areas every day gives us a much clearer view of what makes an individual HMO investment commercially viable. Before presenting a property to an investor, we consider recent comparable sales, current room rents, local tenant demand, development costs, planning or licensing requirements, and the suitability of the property for long-term HMO use.
That local knowledge matters because headline regional averages rarely tell an investor enough about the performance of a specific property. Two houses in the same city can produce very different results depending on their purchase price, location, configuration, specification, tenant profile, and ongoing management.
Lower Entry Prices Can Create More Room for Growth
One of the strongest advantages we see across our Northern markets is the relationship between acquisition cost and income potential.
Property prices in cities and towns such as Sheffield, Doncaster, Rotherham, Wakefield, and Barnsley can remain considerably more accessible than comparable investment property in London and many parts of Southern England. For an HMO investor, that lower starting point can make it possible to achieve attractive rental yields without committing the level of capital required in more expensive markets.
It can also make portfolio growth more achievable. Instead of concentrating a substantial amount of capital into a single high-value property, investors may be able to spread their available funds across multiple assets over time, subject to their own financing position, risk tolerance, and investment strategy.
From our own experience developing HMOs in these locations, well-bought and carefully developed properties can benefit from both strong rental performance and capital appreciation. Some of the HMOs we have sold have subsequently experienced capital growth exceeding 7%, alongside ongoing rental income.
HMO Returns Depend on the Property, Not Just the City
Choosing a growing Northern city is only the starting point. The performance of an HMO is heavily influenced by the individual property and the way it is developed.
When assessing an opportunity, we look closely at whether there is proven demand for shared accommodation in the immediate area, whether the proposed room sizes and layout suit the intended tenant market, and whether the finished property can compete effectively with other HMOs nearby.
We also consider compliance from the beginning of the project. Licensing, planning requirements, fire safety, amenity standards, building regulations, and local authority policies can all influence whether a property works as an HMO investment. Incorporating those requirements into the development strategy early can reduce unnecessary complications later and helps create a property that is easier to operate over the long term.
Strong Rental Demand Supports the Investment Case
Capital appreciation is only one part of the Northern HMO opportunity. For most investors we work with, dependable rental demand is equally important.
Shared accommodation continues to serve a broad range of tenants, including professionals, graduates, contractors, key workers, and people who want good-quality accommodation without the cost or commitment of renting an entire property.
However, demand varies considerably between neighbourhoods. Our experience has shown us that proximity to employment, transport connections, hospitals, universities, major employers, town centres, and established rental communities can make a significant difference to occupancy and achievable room rents.
That is why we assess HMO opportunities at street level rather than simply deciding that an entire city is a good investment location.
We thoroughly check every area we invest in, and we test all areas with our own money. We actively turn down HMO properties if we know the areas are weak for demand. If our HMO properties perform well for a consistent time, we continue to develop in the area
Professional Development and Management Protect Long-Term Performance
A successful HMO needs to continue performing long after the refurbishment has finished.
Every property we develop is approached with its long-term operation in mind. We consider tenant expectations, maintenance requirements, durability of materials, compliance, energy efficiency, layout, and management practicality throughout the development process.
Once occupied, professional management becomes an important part of protecting both rental income and the condition of the asset. Tenant selection, rent collection, inspections, maintenance, compliance monitoring, and day-to-day communication all influence the consistency of an HMO’s performance.
For investors who do not want to manage these responsibilities themselves, having experienced local management in place can make owning an HMO considerably more straightforward.
Why We Continue to Focus on Northern HMO Markets
We continue to invest our time and resources in the North of England because the fundamentals we see on the ground remain compelling.
Selected Northern locations can offer lower acquisition costs, established tenant demand, attractive HMO rental yields, and the potential for continued capital appreciation. When those conditions are combined with careful property selection, professional development, regulatory compliance, and experienced management, they can create a strong foundation for long-term HMO investment.
Our view is based on developing, selling, and managing properties within these markets rather than observing them from a distance. We know the areas we operate in, understand what tenants are looking for, and assess every opportunity individually before deciding whether it is suitable for an investor.
For investors looking to build or expand an HMO portfolio, that combination of local experience and disciplined property selection is one of the main reasons we believe the North of England remains one of the strongest regions in the UK for HMO property investment.
You can view the Savills report for yourself here
