For many years, Liverpool was widely viewed as a strong location for HMO property investment. However, while it once offered genuine opportunity, the landscape has changed dramatically. As a result, investors now need to approach the city with far greater caution than ever before.
Why Liverpool’s HMO Market Has Shifted
Initially, Liverpool attracted experienced investors who focused on quality, compliant shared housing. Over time, though, the city became a hotspot for deal sourcers, inexperienced developers, and investment firms chasing fast returns. Consequently, large numbers of HMOs were created in a very short space of time, often with little regard for long-term demand or sustainability.
Because of this oversupply, Liverpool is now seeing a significant number of empty HMO properties. In many areas, supply has far outstripped demand. Furthermore, large volumes of social housing HMOs and high-density apartment blocks have been added, which has only increased competition for tenants.
Article 4 Directions and Their Impact in Liverpool
Another major issue affecting Liverpool’s HMO market is the rapid introduction of sweeping Article 4 Directions. These changes often appear almost overnight, restricting the ability to convert family homes into HMOs without full planning consent.
These regulations have largely been driven by the extremely high concentration of HMOs in certain districts. In turn, investors who purchased under hype-driven assumptions are now finding themselves with properties that are harder to refinance, harder to fill, and in some cases impossible to develop as originally intended.
Empty HMOs and the Reality on the Ground
Despite what some marketing material may suggest, the reality is that many Liverpool HMOs are currently sitting vacant. The issue is not a lack of people needing accommodation, but rather too many similar properties competing in the same postcodes.
When investors all chase the same “hot city,” prices rise quickly, yields compress, and tenant choice increases. As a result, only the very best located and professionally managed HMOs continue to perform well.
Why We Believe the North East May Face Similar Challenges
Looking ahead, we predict that parts of the North East, particularly Newcastle, could face similar problems. Much like Liverpool in its peak hype phase, developers and sourcers are currently flocking there in large numbers.
Unless development is carefully controlled, this level of concentration risks creating the same imbalance between supply and demand. History shows that when too many HMOs are delivered too quickly, regulation soon follows.
Why Doncaster Is a Stronger Alternative for HMO Investment
In contrast, Doncaster represents a far more balanced and sustainable HMO investment location. Unlike Liverpool, Doncaster has not been driven by short-term hype. Instead, demand has grown steadily over many years.
We have been actively investing, developing, and managing HMOs in Doncaster for over 23 years. That longevity alone proves one thing very clearly, this is not a bubble market.
Key Reasons Doncaster Outperforms Liverpool for HMOs
Firstly, capital appreciation in Doncaster has remained strong, with consistent long-term growth rather than sharp, unstable spikes. Secondly, rental demand continues to be driven by working professionals seeking affordable, high-quality shared accommodation.
In addition, Doncaster benefits from excellent transport links, including direct rail connections to London, Leeds, Sheffield, and Manchester. Ongoing regeneration and infrastructure investment further strengthen the city’s long-term outlook.
Most importantly, the HMO market in Doncaster remains far better balanced. Supply has not run ahead of demand, which protects yields, occupancy levels, and long-term value.
Experience Matters in HMO Investment
Having operated in Doncaster for over two decades, we have seen markets rise, stabilise, and evolve. The fact that we continue to invest and operate successfully in the same area year after year demonstrates genuine, proven demand rather than speculation.
This is precisely why many investors are now choosing stable regional markets like Doncaster over over-saturated cities such as Liverpool.
Final Verdict, Is Liverpool a Good City for HMO Investment?
While Liverpool was once an attractive HMO investment location, it has become increasingly challenging due to oversupply, widespread Article 4 restrictions, and rising vacancy levels. For many investors, the risk now outweighs the reward.
By comparison, Doncaster offers a more sustainable, regulation-balanced, and demand-led alternative, supported by long-term capital growth, strong transport links, and over 23 years of proven performance.
To view current HMO opportunities in stable, high-demand locations, visit
https://www.footforwardproperties.co.uk/hmo-for-sale