Is Barrow in Furness Good for HMO Investment?

September 2, 2026

Barrow-in-Furness has become one of those locations that seems to appear with increasing frequency whenever HMO investment opportunities are being pushed online. The attraction is not difficult to understand. Property prices can look remarkably cheap compared with Manchester, Leeds, Sheffield and many other northern cities, BAE Systems provides an enormous employment story to build a sales pitch around, and an inexpensive terraced property makes it much easier for a deal packager to put together an HMO appraisal showing a large percentage return on the cash invested. Look a little closer, though, and Barrow raises some questions that we think HMO investors need to take far more seriously.

We have seen a similar situation develop across parts of the North East over the last few years. Investors flocked into locations where the underlying property was cheap, often encouraged by extremely conservative refurbishment budgets and impressive projected rents supplied by HMO deal packagers. The property might have been inexpensive, but that did not necessarily make the finished HMO inexpensive once the real refurbishment bill arrived. Investors who had based their purchase decision around an optimistic development budget then discovered that electrical work, plumbing, roofing, fire regulations, ensuites, structural alterations, kitchens, heating systems and general building work cost considerably more than the original appraisal suggested.

By that stage the property is already owned, conveyancing has completed and the investor has very little room to manoeuvre. The additional £15,000, £20,000 or £30,000 has to come from somewhere.

The next problem tends to appear when the finished rooms reach the rental market. A projected room rent written on an investment brochure is very different from an achieved rent being paid every month by a real tenant, and a surprising number of HMO deals depend upon every room achieving the upper end of the local market. That optimistic rent is then multiplied across five, six or seven bedrooms, which can add thousands of pounds to the projected annual income and make an otherwise mediocre investment look extremely attractive.

This has become particularly common alongside the obsession with so-called “all money out” HMO deals. To make an aggressive refinance appraisal work, the proposed rental income needs to support an equally aggressive commercial valuation. The refurb budget is kept low, the room rents are pushed upwards and the completed valuation does the rest. On paper, the investor is supposedly going to refinance almost all of the capital back out while retaining an HMO generating an exceptional return.

Real buildings have an inconvenient habit of refusing to cooperate with spreadsheets.

Barrow is cheap, but cheap property is not the same as a good HMO

Barrow sits in the North West rather than the North East, but we are seeing many of the same investment characteristics that have made us wary of heavily packaged HMO locations elsewhere in northern England.

There is a tendency within property investment to treat a low purchase price as though it provides an automatic margin of safety. It does not. A £110,000 house can be an awful investment and a £220,000 house can be a very good one. What matters is the relationship between the completed cost of the asset, genuine sustainable rental income, local supply, tenant depth, running expenses and the long-term value of the underlying bricks and mortar.

For more than 34 years we have developed investment property, and today we specialise in developing and managing professional HMO properties across South Yorkshire. We speak with investors every week who have been looking elsewhere before coming to us, which gives us a fairly broad view of what is being marketed across the HMO sector.

The rise of the social media property guru, property course seller and deal packager has changed that market considerably. There are some experienced operators doing good work, but there are also people with very limited development or management experience selling heavily marked-up property to investors using projected figures that they will never personally have to deliver.

That final part matters.

Selling somebody a spreadsheet showing £700 per month per room is relatively easy. Finding six people prepared to pay £700 every month, keeping those six rooms occupied and managing the property when several competing HMOs appear nearby is considerably harder.

The supply of HMOs in Barrow deserves far more attention

The Barrow HMO story cannot be assessed using employment demand alone because the supply side has been changing quickly.

Recent planning discussions show that HMO concentration has already become a local issue. At a Westmorland and Furness Council planning meeting on 28 July 2026, councillors considered applications for two nine-bedroom HMOs on Hartington Street. One application had attracted an objection from Barrow Town Council, with HMO concentration and parking forming part of the discussion. Council officers presented mapping showing licensed HMO premises in the surrounding area.

There was an even more revealing comment during the same meeting. Planning officers reported that the council was receiving fewer HMO applications than it had at the same stage a year earlier, while more proposals were appearing for self-contained accommodation and aparthotels. Officers specifically described the market as being less keen on shared accommodation.

For somebody thinking about buying an HMO in Barrow during 2026, that deserves more consideration than a brochure telling them how many people BAE Systems employs.

We are not suggesting that one council meeting proves there is no demand for HMO rooms in Barrow. It clearly does not. What it shows is that the local accommodation market is changing, HMO concentrations are visible enough to feature in planning discussions and the council itself is seeing a shift in the type of accommodation being proposed.

The February 2026 planning committee provides another useful example. A proposal to turn a former bakery and two-bedroom flat at 43 Brighton Street into a nine-bedroom HMO came before councillors under the local planning policy covering larger HMOs and subdivision of dwellings. The application was recommended for approval with conditions, but its existence alongside the Hartington Street applications gives some idea of the scale and type of shared accommodation being created.

This is exactly where investors can get caught out when they arrive late to a fashionable HMO location. Demand might have been excellent when the first twenty high-standard properties entered the market. That tells you very little about what happens after another fifty landlords identify the same opportunity.

BAE Systems is a huge positive for Barrow, but it also creates concentration

Any sensible analysis of Barrow has to acknowledge the enormous positive impact of BAE Systems. The company is a major employer, its submarine business is based in the town and defence spending is supporting substantial economic activity across the area.

BAE’s economic footprint is not marketing fiction. Its 2025 Oxford Economics report describes Barrow as the focus of its submarine business within its North West operations, while BAE has previously stated that it employs more than a quarter of Barrow’s working population.

For landlords, that creates genuine demand from employees, contractors, engineers and people moving into the area for work. We understand why investors find that attractive.

Our concern starts when almost the entire HMO investment argument becomes “BAE”.

We regularly see Barrow promoted on the basis that contractors working for BAE will fill the rooms. Fine, but a long-term HMO investment deserves a deeper tenant appraisal than that. We want to understand how many unrelated employment sources exist within practical travelling distance of the property, how many different industries are producing professional tenants, what somebody does if the contractor market softens and how much competing accommodation is chasing precisely the same group of workers.

Barrow does have employment outside BAE. Healthcare, retail, education, local government, engineering businesses and companies connected to the wider defence supply chain all contribute to the economy. Pretending everybody in Barrow works directly for one employer would be plainly inaccurate.

The economic dependence is still unusually concentrated, though.

We prefer HMO locations where tenant demand comes from a wider collection of employers and industries because it reduces the extent to which the investment depends on one employment story continuing to feed the rental market. That has influenced our approach to South Yorkshire for decades, where logistics, manufacturing, healthcare, engineering, construction, public-sector employment and numerous large private businesses produce a much broader working tenant population.

An HMO is normally intended to be owned for years. We therefore want more than one obvious answer when somebody asks who is going to rent the rooms.

Oversupply changes the economics surprisingly quickly

Oversaturation does not require every HMO in a town to become empty. The damage starts much earlier than that.

Imagine an area where good ensuite rooms comfortably achieve £600 per month and landlords have very little difficulty filling vacancies. More developers arrive because those rents make the development appraisals attractive. The number of rooms increases, tenants suddenly have considerably more choice and landlords have to compete harder for the same person.

One landlord accepts £575 because a room has been empty for a few weeks. Another goes to £560 rather than lose a tenant. Somebody offers a better furniture package without increasing the rent. A nearby landlord includes cleaning. The next development has bigger rooms and better bathrooms.

The headline demand has not disappeared, but the economics have changed.

This is one of the reasons we have been so critical of the HMO gold rush into parts of Newcastle, Sunderland, Middlesbrough, Hartlepool, Durham and other inexpensive northern locations. Low property prices allowed developers and packagers to produce spectacular-looking yields, which attracted more investors, which produced more HMOs, which increased competition for tenants. In some places it became a circular process where the impressive original yield helped create the additional supply that later put pressure on the yield.

Barrow is not Newcastle and should not simply be bundled into the North East HMO market. The warning from those locations is still relevant because the behaviour of investors and packagers can follow exactly the same pattern.

A town does not need another HMO merely because the purchase price is low enough to make the spreadsheet work.

The refurbishment budget is where many packaged deals begin to unravel

We are particularly sceptical when we see HMO development appraisals containing refurbishment numbers that bear little resemblance to what it costs to carry out substantial building work properly.

Our own HMO developments are generally taken back extensively. Depending upon the property, that can involve new plumbing, rewiring, heating, insulation, plastering, fire protection, sound reduction work, doors, windows, kitchens, bathrooms, ensuites, flooring, decoration, furniture, roofing work, external works and extensions. The exact specification changes from property to property because older houses rarely present the same problems.

This is not an area where inventing a low number before purchase makes the actual work cheaper afterwards.

Yet a low refurbishment allowance has an enormous effect on how attractive a packaged deal appears. Reduce the projected development spend by £25,000 and the return on cash deployed suddenly looks much stronger. The investor sees a higher percentage yield and potentially a larger amount of capital being released on refinance.

Once the project starts, the building decides what it really costs.

We have heard enough stories over the years from investors who were sold a property based around a refurbishment figure which subsequently moved substantially once work began. In some cases the original person packaging the deal is nowhere near the property by the time those conversations happen. The investor owns the asset and therefore owns the problem.

Our price lock approach exists largely because we spent decades seeing why investors hate that uncertainty. When we agree the development price on one of our HMO projects, the investor needs to know what the finished investment is actually going to cost rather than discovering the number halfway through construction.

Inflated room rents are even more dangerous

An understated refurbishment cost hurts once. An overstated rent can hurt every month.

If a six-bedroom HMO is advertised to an investor using room rents £75 per month above what the market consistently supports, the annual gross income has been exaggerated by £5,400 before allowing for the effect that a higher asking rent may have on occupancy.

That incorrect income figure then feeds into everything else.

The advertised gross yield increases. The projected NET yield increases. The commercial valuation may increase. The supposed refinance becomes more attractive. The return on capital looks stronger.

Several individual assumptions can therefore appear reasonable when viewed separately, while collectively producing an appraisal that bears little resemblance to the investment somebody eventually owns.

This is why we only want to discuss NET income with investors once realistic expenses have been included. Gross yield can be useful as a quick comparison, but it is not the money that ends up in the investor’s bank account. Utilities, council tax where applicable, broadband, management, cleaning, maintenance, compliance, insurance and voids do not disappear because somebody wants a brochure to show 12% gross.

Across the hundreds of HMO developments we have been involved with, we have learned that slightly boring assumptions tend to age considerably better than exciting ones.

Barrow’s planning position is beginning to attract attention

There is one point that needs to be stated accurately because Article 4 is often misunderstood.

Westmorland and Furness Council does have Article 4 Directions in parts of its area, but its current guidance says these generally concern external changes to buildings and do not usually remove the permitted development right allowing a house in C3 use to become a small C4 HMO. In most cases, a small HMO accommodating up to six people can therefore still fall within permitted development, subject to the individual property and any other restrictions.

Larger HMOs are different and can require planning permission, which is why nine-bedroom proposals are appearing before the planning committee.

We would not tell investors that Barrow currently operates an HMO Article 4 Direction when the council’s own guidance says otherwise. There is already enough genuine information to make investors think carefully without exaggerating it.

What catches our attention is the increasing discussion around HMO concentrations, parking and the character of streets. The July 2026 Hartington Street hearing involved exactly those issues. Officers did not believe the existing concentration justified refusal under the policy they were applying, and they also pointed out that a six-person HMO represented a permitted-development fallback position.

For us, the important part is not pretending that the council has shut the door on HMOs. It plainly has not. The useful information is that local HMO density has become significant enough to be mapped, debated and considered as part of current planning decisions.

That is a very different environment from an untouched HMO market with little competing supply.

We would rather own the right HMO than the cheapest one

Our approach has never been to search the entire North of England for whichever town has the cheapest terraced houses that month.

We have operated in South Yorkshire for more than 34 years because we know the streets, tenant movements, employment areas, planning environment, achievable rents and the type of houses that work properly as professional HMOs. We also manage the properties we develop, so an unrealistic development appraisal eventually becomes our own management problem.

That relationship between development and management changes how we assess a property before buying it.

A room needs to be genuinely rentable rather than simply meeting a minimum measurement on a floorplan. Parking matters. Gardens matter. The surrounding street matters. Bedroom proportions matter. Having enough shared living space matters. The number of competing rooms already available nearby matters far more than whether a deal packager can produce a 12% gross yield using an optimistic rent figure.

We also deliberately concentrate on five and six-bedroom professional HMOs rather than chasing increasingly large room counts simply because another bedroom makes the spreadsheet look better.

The finished property still has to function as somebody’s home.

Would we invest in a Barrow-in-Furness HMO?

We would not say that every HMO in Barrow-in-Furness is a bad investment because that would be lazy analysis.

There will be landlords in Barrow operating profitable, well-located HMOs with strong occupancy. Some will have exceptionally low historic purchase prices, sensible borrowing levels and established tenant demand. BAE Systems is investing heavily in the area and provides an employment base that many towns would be delighted to have.

Our concern is with investors being sold Barrow as though those facts automatically make any cheap property a good HMO development.

They do not.

If we were assessing a Barrow HMO today, we would want actual achieved room rents from genuinely comparable properties rather than asking rents copied from an advert. We would examine current room availability within the immediate area, licensed HMO concentrations, competing developments, historic occupancy, parking, the employment profile of existing tenants and the finished cost of the conversion using a realistic building specification. We would also stress-test the appraisal without assuming maximum rent, full occupancy or an exceptional refinance valuation.

If the investment still produced sensible numbers after doing that, there would be something worth investigating.

If it only worked with a cheap purchase, suspiciously cheap refurbishment, top-of-market rents, near-perfect occupancy and a huge commercial valuation at the end, we would leave it alone.

The HMO market has changed considerably since every cheap northern terrace could be presented as the next fantastic BRRR opportunity. Investors now have to pay much closer attention to supply, and Barrow is a good example of why. Planning officers were openly reporting in July 2026 that they were seeing fewer HMO applications than the year before and greater interest in self-contained accommodation, with the market becoming less keen on shared accommodation. That is current information from the people dealing with development applications on the ground, not somebody trying to sell an investment.

We would give that considerably more weight than a deal packager’s projected yield.

At Foot Forward Property Investments, we have spent more than 34 years developing investment property and specialise in developing fully managed professional HMOs across South Yorkshire. We develop the properties, our own management operation looks after them afterwards, and the same team therefore has to live with the assumptions made at the development stage.

Our currently available fully managed HMO developments can be found at www.footforwardproperties.co.uk/hmo-for-sale.