HMO Hotspots Most Investors Are Overlooking Right Now
May 14, 2026
Most HMO investors still look in the same places: Manchester, Liverpool and Newcastle.
On paper, those cities make sense. They have large populations, universities, employment, transport links and strong rental demand. The problem is that too many investors have already had the same idea. As more people move like zombies towards the same well-known HMO locations, purchase prices rise, competition increases and net yields often shrink.
A smarter question is not, “Where is everyone buying?”
A better question is, “Where do the fundamentals still work?”
Right now, some of the most overlooked HMO hotspots sit outside the obvious city-centre markets. South Yorkshire, especially Doncaster and Rotherham, continues to offer relative affordability, tenant demand, strong connectivity and numbers that can still make sense for investors seeking both income and long-term growth.
Quick Answer: Where Should HMO Investors Be Looking Right Now?
For investors seeking strong HMO returns without fighting through heavily saturated markets, Doncaster and Rotherham deserve serious attention.
Both towns sit within South Yorkshire, a region supported by affordability, regeneration, transport links, employment access and long-term growth potential. Savills forecasts Yorkshire and The Humber to deliver 28.8% house price growth over the five years to 2030, which places it among the strongest UK regions in its mainstream residential forecast.
That matters because HMO investment should rarely rely on rent alone. Strong investments usually come from two parts: net monthly income and capital appreciation. When a location can offer both, investors are not depending only on yield.
At Foot Forward Property Investments, our 5-bed HMO properties achieve around 9% net yield on average. When that income profile sits alongside strong regional capital appreciation, the combined annual return potential becomes much more compelling. Foot Forward’s own HMO investment page references over 9% net yields and long-term capital growth expectations.
A 9% net yield plus 7% capital appreciation, for example, creates a total return of over 16% per annum. That is not a guarantee. Investors should always consider finance, tax, costs, voids and market movement. It does, however, show why the combination of income and growth matters.
Why So Many Investors Are Looking in the Wrong Places
Manchester, Liverpool and Newcastle have become default choices for many HMO investors.
Familiarity gives these cities an advantage. Investors hear about them in property training, investor groups, social media content and deal-sourcing promotions. For newer investors, that visibility can feel reassuring.
Popularity, though, does not always equal performance.
In HMO investing, too much investor attention can create several problems. Purchase prices may rise faster than achievable room rents. Landlords can end up competing for the same tenant base. Developers may also push into weaker streets, less suitable houses or less proven areas simply to keep deal volume moving.
That is where net yield can suffer.
A property may still look attractive on gross rent, but the real return can look very different once an investor accounts for mortgage costs, utilities, council tax, maintenance, licensing, compliance, management, voids and refurbishment allowances.
Investors should treat “hotspot” claims with care. A city can remain strong overall while certain HMO postcodes become too expensive, too competitive or too restricted to deliver the returns investors expected.
The Saturation Signal Investors Should Watch
One of the clearest warning signs of saturation comes when developers have to keep moving.
A developer may start in one city, then shift to another, then another. Sometimes that reflects a deliberate expansion strategy. Other times, it may suggest that the original market has become harder to make work. Purchase prices may have risen. Article 4 restrictions may have tightened. Room rates may have stopped moving. Too many similar HMOs may have entered the same streets.
South Yorkshire tells a different story for us.
For over 34 years, we have remained in this area. We have continued developing and managing properties for our investors here because the fundamentals have continued to work. In our view, that long-term focus is one of the strongest signs that Doncaster, Rotherham and the wider South Yorkshire market have not reached the same kind of saturation seen in more crowded HMO locations.
Foot Forward’s website also states that the business has more than 33 years of property investment expertise, with an in-house team covering sourcing, refurbishment, tenant finding and the day-to-day running of properties.
That local depth matters because HMO investment is not just about finding a house. Investors need to understand which streets work, which layouts comply, which tenant profiles are realistic, what room standards tenants expect, what management issues may appear and how to protect long-term value.
Why South Yorkshire Is Being Overlooked
South Yorkshire does not always get the same attention as Manchester, Liverpool or Newcastle.
That may be exactly why the opportunity still exists.
Investors often chase familiar city names, but HMO performance depends on practical factors: purchase price, refurbishment cost, room demand, transport, employment access, tenant affordability, local competition and resale potential. Doncaster and Rotherham score well across many of these fundamentals.
In Doncaster, the average house price was £175,000 in February 2026, up 6.7% from February 2025. Private rents rose to an average of £684 in March 2026, up 5.7% year on year.
In Rotherham, the average house price was £189,000 in February 2026, up 3.3% from February 2025. Private rents rose to an average of £678 in March 2026, up 5.0% year on year.
For HMO investors, that relationship between purchase price and achievable rent matters. In many saturated markets, the property may look attractive until the investor accounts for the true cost of delivery and operation. Higher acquisition costs, higher refurbishment costs, heavier local competition and weaker net returns can quickly change the picture.
In Doncaster and Rotherham, relative affordability gives investors a better chance of making the numbers work from the start.
Doncaster: Affordable, Connected and Still Growing
Doncaster is one of the most compelling HMO locations many investors still underestimate.
Its central UK location gives it a practical advantage. For tenants, connectivity supports access to work and wider opportunity. For landlords, connectivity helps support demand from working professionals who need affordable, well-managed accommodation within reach of employment, transport and local amenities.
Doncaster also remains affordable compared with many better-known northern investment markets. The ONS reported an average house price of £175,000 in February 2026, with terraced properties averaging £137,000 and flats averaging £92,000.
That affordability matters in HMO investment because the entry price has a direct effect on net yield.
A lower purchase price can give investors more room for refurbishment, compliance, contingency and professional management. It can also reduce the pressure to overcharge tenants simply to make the model work.
Doncaster’s recent price growth also supports the capital appreciation argument. Average prices rose 6.7% year on year to February 2026, while private rents also rose over the same broad period.
No investor should assume that past growth guarantees future returns. But when affordability, rental demand and regional growth forecasts align, the investment case deserves serious attention.
Rotherham: A Practical HMO Market With Room to Perform
Rotherham is another South Yorkshire location that deserves more attention from HMO investors.
It benefits from proximity to Sheffield, Doncaster, Barnsley and the wider South Yorkshire economy. For tenants, that can mean access to employment across multiple nearby areas. For investors, it can mean a broader demand base than the local town alone.
Rotherham also remains accessible from a purchase-price perspective. The ONS reported an average house price of £189,000 in February 2026, with terraced properties averaging £148,000 and flats averaging £101,000.
That matters because many HMO conversions start with larger terraced or semi-detached housing stock. The more affordable the purchase price, the more realistic it becomes to create a compliant, high-quality HMO while still protecting the investor’s net return.
Rotherham’s rental data also shows movement. Average private rents rose to £678 in March 2026, up 5.0% from the previous year.
For investors, the key is not to buy anything just because it is in Rotherham. The right micro-location, property layout, room sizing, refurbishment quality and management model still matter. With the right asset and operator, Rotherham can offer a practical balance of affordability and income potential.
Why Affordability Still Matters More Than Hype
A strong HMO investment is not created by buying in a famous city.
It comes from buying the right property, in the right micro-location, at the right price, with the right compliance, refurbishment and management structure.
Affordability protects the investor’s numbers. When the entry price is too high, even strong gross rent can result in weak net yield. Mortgage costs, utilities, maintenance, council tax, insurance, licensing, management and voids all reduce the headline return.
That is why investors should look carefully at net yield rather than just gross yield.
A property may have an impressive rent roll, but if the running costs are heavy and competition is intense, the real return can disappoint. At Foot Forward, our focus is on the net position because that is what investors actually experience.
Across our 5-bed HMO properties, we achieve around 9% net yield on average. That figure comes from our operating experience in this region, where we continue to develop and manage properties for investors after more than three decades in the area.
The Capital Appreciation Case for South Yorkshire
Yield is only one part of the picture.
Capital growth can be just as important, especially for investors who want to build long-term wealth rather than simply collect monthly income. This is where South Yorkshire becomes even more interesting.
Savills forecasts Yorkshire and The Humber to achieve 28.8% house price growth over the five years to 2030, compared with 22.2% for the UK as a whole. The same Savills forecast notes that these figures apply to the mainstream second-hand market and that new-build values may move differently.
Forecasts are not guarantees, but they do help investors understand the wider direction of travel.
When a region offers both affordability and forecast capital growth, it gives HMO investors a more balanced investment case.
The question becomes bigger than, “Will this property cashflow?”
It becomes, “Can this property produce strong net income while also growing in value over time?”
That is the combination many investors miss when they only chase the obvious cities.
How a 16% Plus Annual ROI Can Be Achieved
The logic is straightforward.
If an HMO produces a 9% net yield, the income side is already doing a lot of work. If that same property also benefits from capital appreciation, the total return becomes stronger.
For example:
9% net yield + 7% capital appreciation = 16% annual return
This does not mean every property will achieve this every year. It also does not remove the need for proper due diligence, finance planning, tax advice and conservative modelling.
It does show why the combination of income and capital appreciation is so powerful.
South Yorkshire gives investors this possibility because purchase prices have not yet been pushed out of reach in the same way as many saturated markets. Doncaster’s average house price remains below the UK average, while Rotherham also sits below the Yorkshire and The Humber average reported by the ONS.
For investors who want both monthly income and long-term growth potential, that affordability gap deserves attention.
Why Doncaster and Rotherham Work for HMO Tenants
HMO demand is driven by practical tenant needs.
Many tenants are not looking for expensive city-centre living. They want clean, well-managed, affordable accommodation with good access to work, transport and local services.
That is where Doncaster and Rotherham can perform well.
Each location offers access to employment across South Yorkshire. Housing costs remain more affordable than many major UK cities. Regional connectivity and local rental demand also support the case for well-managed shared accommodation.
For tenants, affordability matters.
For investors, tenant affordability matters too. A successful HMO needs rooms that tenants can afford and landlords can price sustainably. When the tenant base is squeezed too hard, voids and arrears risk can increase. In more affordable regional markets, well-managed HMOs can offer a practical housing solution while still delivering attractive investor returns.
What Makes a Strong South Yorkshire HMO?
Not every property in Doncaster or Rotherham will make a good HMO.
The right asset needs careful assessment. Investors should look at local demand, room sizes, layout, fire safety, licensing, planning requirements, communal space, transport access, refurbishment costs, running costs and realistic net rent.
A strong HMO in South Yorkshire usually needs:
- A location with proven tenant demand
- A sensible purchase price
- A layout suitable for compliant room sizes
- Good access to transport and employment
- Durable refurbishment rather than cosmetic shortcuts
- Professional management
- Clear understanding of running costs
- Conservative yield modelling
- Long-term resale appeal
This is where local experience becomes valuable. A spreadsheet can show a projected yield, but it cannot always show street-level demand, tenant behaviour, management issues, licensing risk or hidden refurbishment problems.
A Word of Warning: Not Every “End-to-End” HMO Developer Is the Same
As with any strong property market, HMO investment attracts both experienced operators and short-term opportunists.
One of the biggest risks for investors comes from assuming that every developer who claims to offer an “end-to-end” service has the track record, transparency and operational depth to actually deliver a strong investment.
Some developers will take your money, promise the full package and leave you with an underperforming property. That may mean weak tenant demand, poor refurbishment, poor management, unrealistic projections, hidden costs or numbers that do not reflect what they originally presented.
That is why investors should look beyond glossy brochures and projected yields.
What Investors Should Check Before Handing Over Their Money
Before committing to any HMO investment, ask direct questions.
How long has the developer been operating? How many properties have they delivered? Do they manage the properties themselves? Can they show real examples of completed projects? Do they calculate yield as net return or only gross rent? Can they explain costs, compliance, licensing, refurbishment and ongoing management clearly?
Track record matters. Transparency matters. Local experience matters.
Foot Forward is not a pop-up developer moving from one trend to the next. We have remained focused on South Yorkshire for over 34 years because the area continues to offer the fundamentals our investors need.
Investors should also carry out their own checks. Companies House lists Foot Forward Property Investments Ltd as active, company number 09495572, with a registered office in Doncaster and an incorporation date of 18 March 2015. Companies House also states that it does not check the accuracy of filed information, so investors should treat it as one part of a broader due diligence process.
A good HMO investment should be clear, compliant and supported by evidence. When a developer cannot show their track record, explain the numbers or remain transparent about their history, investors should think carefully before handing over their capital.
Due Diligence Checklist for HMO Investors
Before buying any HMO investment, ask for evidence rather than promises.
Useful questions include:
- Is the quoted return net or gross?
- What costs have been deducted from the yield calculation?
- Who manages the property after completion?
- What happens if rooms are vacant?
- What evidence supports the expected room rents?
- Does the property already have the correct licence?
- Do planning rules or Article 4 restrictions apply?
- What refurbishment specification comes included?
- Who handles maintenance after completion?
- Can the developer show completed examples?
- Can investors check the company history publicly?
- Does the operator have long-term local experience?
This does not mean investors should approach every opportunity negatively. It means they should approach HMO investment professionally. The right operator should welcome proper due diligence because transparency builds trust.
Why Investors Should Act Before the Market Becomes Obvious
The best property opportunities often become clearest in hindsight.
By the time a location becomes widely accepted as the next hotspot, the early advantage may already have disappeared. Prices rise, competition increases and the best stock becomes harder to secure.
That pattern has played out in many obvious HMO cities.
South Yorkshire still offers investors a different proposition. Doncaster and Rotherham have not been overlooked because the fundamentals are weak. Many investors have simply continued chasing familiar names.
For investors who care about net yield, capital appreciation and long-term fundamentals, that gap in attention could be the opportunity.
FAQs: HMO Investment in Doncaster and Rotherham
Are Doncaster and Rotherham good areas for HMO investment?
Doncaster and Rotherham can be strong HMO investment locations when the property, street and management model are chosen carefully. Both areas offer relative affordability, access to employment, regional connectivity and potential for long-term growth.
Why are some investors moving away from Manchester, Liverpool and Newcastle?
Many investors still like these cities, but higher competition, higher purchase prices and greater HMO saturation in certain areas can reduce net yields. For investors focused on income and total return, less crowded markets may offer better opportunities.
What net yield can investors expect from a 5-bed HMO?
Foot Forward Property Investments achieves around 9% net yield on average for 5-bed HMO properties in this region. Actual performance depends on purchase price, refurbishment cost, finance, management, occupancy and running costs.
Why is South Yorkshire attractive for HMO investors?
South Yorkshire combines affordability, connectivity, employment access and regional growth potential. Savills forecasts Yorkshire and The Humber to achieve 28.8% house price growth over the five years to 2030, above the UK forecast of 22.2%.
Is capital appreciation important for HMO investors?
Yes. Net yield provides income, while capital appreciation can build long-term wealth. The strongest HMO investments often combine both, rather than relying only on monthly rent.
How can investors avoid poor HMO developers?
Investors should look for track record, transparency, completed projects, realistic net yield calculations, clear management processes and public company information. Companies House checks can help investors review basic company information, but they should sit alongside wider due diligence.
Work With a South Yorkshire HMO Specialist
Investors do not need to follow the crowd into over-competed HMO markets.
South Yorkshire deserves a closer look, especially Doncaster and Rotherham. Property is still affordable enough for the numbers to work, the region has strong capital appreciation potential, and well-managed 5-bed HMOs can still deliver attractive net yields.
Foot Forward Property Investments has spent over 34 years developing and managing properties in this region. We continue to focus on Doncaster, Rotherham and surrounding South Yorkshire locations because the fundamentals still make sense for our investors.
View current HMO opportunities here: www.footforwardproperties.co.uk/hmo-for-sale