Landlords Pivot to HMOs as Shared Housing Demand Rises

April 14, 2026

The UK rental market has shifted sharply. Traditional buy to let no longer offers the comfort it once did for many landlords. Higher borrowing costs, tighter regulation, and weaker margins have pushed investors to look again at the numbers. For a growing share of the market, that has led them toward HMOs. The trend is not speculative. HMO licence applications rose from 41,162 in 2018 to 57,725 in 2024, a 40% increase, showing that more landlords are moving into shared housing as demand for affordable rented rooms continues to grow.

At Foot Forward Properties, we have been developing and managing HMO properties for over 34 years. We have seen strategies come and go, but one principle has stayed consistent. Well located, professionally managed HMOs in the right northern markets continue to outperform large parts of the traditional residential investment sector. What has changed in 2026 is where the best balance now sits. In our view, South Yorkshire has moved into pole position because it offers the combination too many other HMO hotspots are starting to lose: strong rental demand, a central UK location, employment depth, sensible entry prices, and room for growth. Yorkshire and the Humber also recorded the strongest annual rental growth of any English region in March 2026 at 6.6%, ahead of the North West at 6.3% and the North East at 5.9%.

The HMO Shift Is Real, and It Is Being Driven by Hard Economics

Landlords are not pivoting into HMOs because it is fashionable. They are pivoting because the numbers on single lets have become harder to justify. Savills says the private rented sector has been unusually turbulent in recent years, with higher costs, tax changes, and the impact of the Renters’ Rights Act all weighing on landlord profitability. Savills also notes that rental growth has slowed back toward more normal levels after the post-pandemic spike, making it even more important for investors to focus on stronger income models and local supply and demand dynamics rather than relying on broad market uplift alone.

That is where HMOs stand out. Shared housing allows landlords to spread income across multiple tenancies rather than relying on a single household. It also aligns with a tenant base that is still cost conscious and increasingly willing to rent by the room in return for lower monthly living costs and bills included convenience. The State of Shared Living 2025, based on more than 6,000 tenants, shows that the sector has matured well beyond the old stereotype of low quality shared houses. Today’s tenant expects design, compatibility, management quality, and reliability.

Why South Yorkshire Now Stands Out More Than the North West or North East

Many investors still look first at the North West or the North East because those regions have been pushed heavily in property marketing for years. The problem is that popularity and performance are not the same thing.

The North West now holds the highest share of HMOs in the UK at 17.9%, according to Lendlord’s Q4 2025 data. That does not make it a bad region, but it does show how crowded the market has become. When too much investor attention floods into the same areas, competition rises, stock starts to look similar, and operators have to fight harder on pricing, incentives, and specification.

The wider planning picture also shows mounting pressure in both regions. Planning Geek’s 2026 Article 4 tracker lists incoming or active HMO restrictions in places including Preston, Oldham, Warrington, Hartlepool, Redcar & Cleveland, Darlington, and Durham City. That tells its own story. More councils are reacting to HMO concentration, and more investors are entering markets where the easy wins have already been chased.

By contrast, South Yorkshire gives investors something rarer. It sits in a region with the strongest rental growth in England, but it does not carry the same level of HMO crowding that many headline northern hotspots now face. In practical terms, that matters. You are not just buying yield today. You are buying into a market where demand is broad, competition is more manageable, and the long term case still has room to run.

South Yorkshire Has the Fundamentals HMO Investors Actually Need

A good HMO investment market needs more than a catchy headline. It needs tenants, transport, jobs, affordability, and future growth.

South Yorkshire has that mix. The South Yorkshire Mayoral Combined Authority’s growth plan is built around growing the business base and labour market across Barnsley, Doncaster, Rotherham, and Sheffield. Transport for the North also highlights South Yorkshire’s long term transport improvement plans as a tool to support economic growth.

Doncaster, in particular, keeps strengthening the case. iPort describes itself as the UK’s most advanced multimodal logistics hub, while Business Doncaster notes that major occupiers at iPort include Amazon, Lidl, CEVA Logistics, and Fellowes. This is exactly the kind of employment base HMO investors should care about. It is not a one trick student market. It is a live working economy with logistics, transport, warehousing, manufacturing, and linked service jobs.

That central location matters too. Doncaster’s logistics story is built on direct access to the M18, M1 and A1 corridor, alongside rail freight connectivity and easy reach across the wider North. This creates a wider professional tenant catchment than many oversold city markets where demand depends too heavily on one university cluster or one narrow tenant type.

The Capital Growth Story Supports the Income Story

For serious investors, yield alone is not enough. You also want to know whether the underlying area still has room for capital appreciation.

Savills’ late 2025 research says the strongest growth over the next five years is expected to shift toward the more affordable northern regions, with the North and other late stage markets set to outperform less affordable southern markets. Savills also said average UK house prices were expected to rise 23.4% by the end of 2029, with regional performance continuing to be shaped by affordability and a wider rebalancing between North and South.

That matters for South Yorkshire because it sits squarely inside the affordability story that Savills says should continue driving stronger regional performance. Yorkshire and the Humber is already leading England for rental growth in 2026, and the broader northern rebalance remains intact. In our view, that is why investors from the South, the North West, and the North East are increasingly looking at South Yorkshire. They are not just chasing headline yield. They are looking for a stronger overall balance between income, entry price, competition, and future growth.

What the Modern HMO Tenant Expects

The HMO market has become more selective. Tenants are no longer simply choosing the cheapest room available. They are comparing quality, speed of management, and how a house feels to live in.

COHO’s State of Shared Living 2025 found that more than 85% of tenants said poor property management or slow maintenance would encourage them to leave sooner. The report also found that compatibility, design, and good management now matter as much as affordability. That should be a warning to amateur landlords and a major advantage for professionally run operators.

This is exactly why we have always believed in fully managed HMOs rather than patchwork investing. A good HMO is not just a property. It is an operating model. The quality of the refurbishment, the way the rooms are laid out, the standard of communal space, the speed of maintenance response, and the consistency of management all feed directly into occupancy, tenant retention, and net performance.

Regulation Is Tighter, But That Favors Experienced Operators

Some landlords still see regulation as a reason to avoid HMOs. We see it differently.

The regulatory bar is undeniably higher. Savills highlights the pressure created by the Renters’ Rights Act, rising standards, and increased maintenance obligations. More councils are also tightening their HMO approach through licensing and Article 4 restrictions.

But tougher regulation usually hurts weak operators most. Investors who buy poor stock, self manage badly, or cut corners on compliance are the ones exposed. Investors who work with experienced HMO specialists are in a very different position. In fact, as more councils restrict new supply, well run and already compliant HMOs can become even more valuable because future competition is harder to bring forward.

Why Foot Forward Properties Focuses So Heavily on South Yorkshire

We have been in this sector for over 34 years, and experience teaches you to separate noise from fundamentals.

The North West has scale, but it also has heavy competition. The North East can still produce strong returns in the right hands, but more investors are now crowding into the same locations and more councils are acting to control HMO growth. South Yorkshire, by contrast, offers something much harder to find. It is central. It has strong employment drivers. It benefits from a major regional growth strategy. It sits inside one of England’s best performing rental regions. And it still offers investors an opportunity to buy into a market that feels commercially grounded rather than overhyped.

That is why we continue to believe South Yorkshire is the golden area for HMO property investment in 2026.

Our End to End HMO Service

At Foot Forward Properties, we provide a complete end to end solution for landlords and investors who want to enter or expand in the HMO market.

We handle:

Property sourcing in the strongest northern locations
Refurbishment and HMO development
Licensing and compliance
Tenanting and lettings
Ongoing management
Strategic portfolio guidance

For first time investors, that means a far clearer route into the HMO market. For experienced landlords, it means the chance to restructure away from weaker single let stock and into a model with stronger income potential and better long term fundamentals.

Frequently Asked Questions

Why are more landlords moving into HMOs?

Because the economics of traditional buy to let have become harder to justify. Rising costs, tighter rules, and weaker margins are pushing landlords to look for stronger income producing models. HMO licence applications rising 40% since 2018 shows that this shift is already happening at scale.

Why is South Yorkshire attractive for HMO investment?

Because it combines strong rental growth, a central UK location, major transport links, a broad employment base, and less obvious HMO saturation than some of the more heavily marketed North West and North East hotspots.

Is the North West still good for HMOs?

There are still opportunities, but investors need to be much more selective. The region now has the highest HMO share in the UK, which means more competition and less room for average stock to stand out.

Does regulation make HMOs too risky?

Not for investors who buy and manage properly. The risk has increased most for poor operators. For compliant, professionally managed HMOs, tighter regulation can actually support long term value by limiting weaker future competition.

Looking to Invest in a High Yield HMO in South Yorkshire?

The landlord move toward HMOs is no longer a passing trend. It reflects a deeper shift in the UK rental market. The stronger question in 2026 is no longer whether HMOs work. It is where they work best.

For us, South Yorkshire keeps making the strongest case.

If you want to view our available fully managed HMO investments, visit www.footforwardproperties.co.uk/hmo-for-sale.