Why It Is Not Wise to Focus Solely on Student HMOs

July 28, 2026

For many years, student HMOs were presented as one of the most dependable areas of the private rental market.

The investment case often sounded straightforward. Universities would continue expanding, student numbers would keep rising, groups would sign for a full academic year and another intake would arrive every September.

However, several of those assumptions no longer look as dependable as they once did.

The student accommodation market now faces pressure from weaker occupancy in some cities, falling overseas student recruitment, affordability concerns, changing tenancy rules, rising operating costs and substantial competition from purpose-built student accommodation.

These pressures became particularly visible in July 2026, when City AM reported that Unite Students, the UK’s largest student landlord, had recorded a £417 million pre-tax loss for the six months to June 2026.

That figure represented a dramatic reversal from the £186 million pre-tax profit reported during the equivalent period one year earlier. Unite’s property portfolio revaluation reduced its profit by £530 million, while earnings slipped by 2% to £142 million.

It is important to explain the figures accurately. Unite did not simply lose £417 million in rental cash. A major part of the statutory loss arose from the reduction in the assessed value of its property portfolio.

Nevertheless, the results remain highly relevant to student HMO investors.

If a company of Unite Students’ size, experience, resources and national reach is facing lower occupancy, rent reductions and falling property values, what chance does a small landlord have when their entire strategy depends on one or two student HMOs in a highly saturated trophy city?

What happened to Unite Students?

According to the figures reported by City AM, Unite Students recorded:

• A £417 million pre-tax loss for the six months to June 2026
• A £186 million pre-tax profit during the equivalent period one year earlier
• A £530 million reduction in profit following a property portfolio revaluation
• A 2% reduction in earnings to £142 million
• Up to £400 million of planned property disposals
• A strategy that could remove as many as 20,000 beds from its portfolio
• Expected rental growth of just 1% to 2% for the current academic year

Unite had also been dealing with lower occupancy and had introduced targeted rent reductions in cities including Leicester, Nottingham and Sheffield to help fill rooms.

The company forecast occupancy of between 94% and 96%, although that remained behind the levels achieved in previous years.

Unite Students remains a substantial property business. It benefits from national scale, professional management, university relationships, institutional finance and the ability to spread risk across numerous locations.

A small student HMO landlord generally has none of those protections.

If a major student landlord is under pressure, smaller landlords should take notice

Unite Students can respond to market pressure in ways that are unavailable to most private landlords.

It can reduce rents in selected cities, dispose of hundreds of millions of pounds of property, acquire competitors and redirect its portfolio towards universities where it expects demand to remain stronger.

An individual landlord with one student HMO cannot rebalance a national portfolio.

Their property may be tied to one university, one neighbourhood and one type of occupant. When demand weakens, that landlord cannot move the building to another city or quickly change its entire customer base.

They may instead need to reduce rents, accept empty rooms, increase incentives or spend considerable money changing the layout and specification for another tenant market.

This is why we do not believe investors should purchase HMOs in highly saturated trophy cities for one reason alone: students.

The presence of a large university does not automatically make every HMO nearby a safe investment.

Student HMO demand is built on assumptions that are becoming less reliable

Traditional student HMO investment has often depended on two central assumptions:

1. Students will remain in the property for a full academic term.
2. Student numbers will continue rising.

Neither assumption should now be treated as guaranteed.

Students have become increasingly sensitive to accommodation costs. Some remain at home and commute, while others seek shorter, more flexible or lower-cost arrangements.

Students may also withdraw from a course, transfer to another university, spend part of their course abroad or decide that the cost of living independently is no longer affordable.

At the same time, universities can no longer assume that domestic and overseas enrolment will grow year after year.

A landlord who bases the entire investment case on automatic annual growth may therefore be relying on historic market conditions that no longer exist.

Falling overseas student numbers create a major risk

One of the most significant concerns for the student accommodation sector is the reduction in overseas student recruitment.

International students have played a major role in supporting UK universities and accommodation markets, particularly in larger university cities. They have often been more likely to move away from home and require furnished accommodation close to a campus.

However, recent evidence suggests that overseas recruitment has become less dependable.

Home Office immigration statistics provide official data on sponsored study visas, while surveys of UK universities have shown continuing recruitment difficulties across the sector.

The British Universities International Liaison Association reported that around 70% of surveyed UK universities experienced a reduction in international postgraduate enrolments for the January 2026 intake compared with the previous year.

Universities UK research has also indicated that a large proportion of institutions missed their international recruitment forecasts, highlighting how uncertain overseas demand has become.

This matters directly to student landlords.

An international student who does not travel to the UK does not need a bedroom in Manchester, Liverpool, Newcastle, Sheffield or any other university city.

When overseas recruitment falls, the effect does not stop at university finances. It can flow through to private halls, purpose-built student accommodation, student HMOs, local shops and other businesses that depend on the university population.

International recruitment can change quickly

Overseas student demand can be affected by factors that a landlord cannot control.

These include:

• UK visa policy
• Rules concerning student dependants
• Visa refusal rates
• International currency movements
• Tuition fee levels
• Living costs
• Competition from universities in other countries
• Political relations
• Economic conditions in major student recruitment markets
• Perceptions of post-study employment opportunities
• Changes to the Graduate Route

A landlord may complete an expensive HMO conversion based on current overseas student numbers, only for visa policy or international demand to change before the next academic cycle.

That creates a level of external dependency that many property investors underestimate.

The property may be located in the UK, although a significant part of its potential demand can depend on decisions made by students and families thousands of miles away.

Student demand is not one national market

Investors sometimes discuss the student accommodation sector as though every university town shares the same conditions.

In reality, student demand varies considerably between institutions and locations.

Some highly ranked universities may continue attracting strong domestic and overseas applications. Other institutions may struggle with recruitment, finances, course closures or reputational challenges.

Unite Students’ decision to focus more heavily on what it considers the UK’s strongest universities reinforces this distinction. The company is not treating every university location as equally attractive. It is disposing of assets and reshaping its portfolio around the institutions where it expects demand to remain most resilient.

A small landlord needs to apply the same level of caution.

A city may have several universities, although that does not mean every institution is expanding. Nor does it mean that every neighbourhood has sufficient demand to support all the student rooms being offered.

Trophy cities can hide considerable saturation

Cities such as Manchester, Liverpool, Leeds, Newcastle and Sheffield are regularly promoted to property investors because they have recognisable names and large student populations.

However, well-known university cities can also contain substantial levels of competition.

A traditional student HMO may compete against:

• Other licensed HMOs
• University-owned halls
• Private student halls
• Purpose-built student accommodation
• Studio apartments
• Large co-living developments
• Newly refurbished shared houses
• Landlords offering reduced rents
• Accommodation with gyms, cinema rooms and communal facilities

The overall student population may look substantial, although the relevant question is how many suitable tenants remain after every competing room has been considered.

Investors also need to establish whether the local student population is rising, stable or falling.

Buying in a trophy city simply because it contains a university can therefore create a false sense of security.

Purpose-built student accommodation has changed expectations

Modern purpose-built student accommodation often provides facilities that a traditional student HMO cannot easily replicate.

These may include:

• On-site gyms
• Private study rooms
• Cinema rooms
• Reception teams
• Parcel collection
• Security
• Social spaces
• High-speed internet
• Inclusive utility packages
• On-site maintenance
• Modern ensuite rooms

A traditional student HMO may still compete effectively when it offers the right location, space, price and quality.

However, older or lightly refurbished properties can struggle when tenants compare them with newer developments.

Unite acknowledged that older student accommodation can become obsolete because of its age, running costs and inability to provide the quality of experience students increasingly expect.

Small landlords should not assume that an old HMO will remain desirable simply because students rented it in previous years.

Students no longer provide the same predictable letting cycle

Historically, student HMO landlords benefited from a relatively predictable annual pattern.

Groups would begin searching months in advance, sign together and remain for the academic year. The landlord would then repeat the process for the next intake.

That model has weakened.

Students may change their plans, leave their course, struggle with affordability or choose different accommodation after signing. In addition, changes to tenancy law mean landlords must understand the current legal position rather than relying on historic fixed-term assumptions.

The Renters’ Rights Act has also changed the regulatory environment for private landlords.

Landlords considering student accommodation should obtain independent legal advice regarding possession grounds, tenancy structures and the specific provisions applying to student landlords.

The important investment point is that the traditional expectation of a guaranteed full academic term should not be accepted without scrutiny.

Falling valuations matter even when rooms remain occupied

Unite Students’ £530 million property revaluation hit illustrates another risk that smaller landlords should consider.

A property may continue producing rent while falling in value.

This matters because refinancing depends partly on the lender’s assessment of the asset. A lower valuation may reduce the amount that can be borrowed or prevent the owner from recovering the capital they originally expected.

For highly leveraged landlords, a falling valuation can also narrow the equity buffer within the property.

Student HMOs may face additional valuation concerns when:

• Local student numbers fall
• Competing room supply increases
• Achievable rents reduce
• Article 4 restrictions affect the local market
• Licensing requirements become more demanding
• Operating costs rise
• The property requires major refurbishment
• Investors lose confidence in the city
• Alternative residential demand is weak

The headline rental yield may therefore provide only part of the investment picture.

What happens when the students do not arrive?

Before purchasing a student HMO, an investor should ask what happens when the expected student group fails to materialise.

Could the property attract professional tenants?

Does the surrounding area have a meaningful employment market?

Would corporate tenants consider the location?

Is the property too close to a campus but too far from major employers?

Does the layout provide enough communal space for professionals?

Are the bedrooms and furnishings suitable for longer-term working tenants?

Could the property remain viable at lower rents?

These questions matter because a student-only HMO may have very limited alternative demand.

A resilient HMO should not depend entirely on one institution, one annual intake or one overseas recruitment market.

Why we have always focused on professional and corporate lets

At Foot Forward Property Investments, we have always focused solely on professional and corporate lets.

We have never built our HMO strategy around students, and we do not intend to change that approach.

Our experience has shown us the importance of developing properties in areas supported by diverse employment sectors, transport connections and long-term economic activity.

Professional HMO demand can come from people working in:

• Logistics and distribution
• Manufacturing
• Engineering
• Healthcare
• Construction
• Public services
• Infrastructure
• Warehousing
• Technology
• Local and regional businesses

Corporate accommodation can also provide demand from companies housing contractors, relocated staff, project teams and employees working away from home.

This approach reduces dependence on one university, one academic calendar and one annual intake.

Professional tenants move throughout the year

Professional demand does not operate only around September.

Working tenants move throughout the year because of new jobs, relocation, relationship changes, changing housing needs and temporary employment contracts.

This can create a broader and more continuous letting market.

Professional tenants may include:

• Employees moving into the area
• Contractors working on local projects
• Healthcare workers
• Engineers
• Logistics employees
• Graduates entering employment
• People leaving the family home
• Individuals seeking furnished accommodation
• Employees on temporary assignments
• Corporate tenants housing staff

No rental market is without risk. However, professional demand can arise from several industries rather than one education provider.

Why we focus on South Yorkshire

We focus heavily on South Yorkshire because its rental market does not depend solely on universities.

Doncaster and the wider region benefit from central transport links, logistics, manufacturing, distribution, healthcare and infrastructure employment.

This provides a broad pool of professional tenants who require good-quality, furnished accommodation.

We assess each HMO development according to genuine working-tenant demand. We do not simply select properties because they fall within walking distance of a university campus.

Our HMOs are developed around the needs of professional tenants and commonly include:

• Private ensuite bathrooms
• Fully furnished bedrooms
• Proper communal living space
• Modern kitchens
• High-speed internet
• Outdoor space
• Off-street parking where possible
• Energy-efficient heating
• High standards of fire safety
• Full licensing and compliance
• Ongoing professional management

We also undertake substantial back-to-brick refurbishments rather than basic cosmetic work.

This helps create durable, attractive homes that can compete in the professional rental market over the longer term.

We only manage the HMOs we develop

Our investment model benefits from an integrated approach.

Our acquisition team identifies properties with the right footprint, location and potential. Our design and development teams then create a compliant HMO suitable for the professional market.

Once completed, our in-house lettings and management team takes responsibility for tenant marketing, referencing, rent collection, inspections, compliance and ongoing management.

We only manage the HMOs that we develop ourselves.

That means we understand the layout, specification, compliance position and intended tenant market from the beginning.

Are all student HMOs bad investments?

No.

Some student HMOs may continue performing well, particularly when they are located near strong universities with resilient demand and limited accommodation supply.

Experienced local landlords may also understand their market well enough to operate successfully.

However, that does not mean every student HMO represents a sensible investment.

The risk becomes greater when an investor:

• Buys solely because a university is nearby
• Relies on overseas student growth
• Assumes every room will remain occupied
• Pays a premium for a trophy city
• Ignores purpose-built competition
• Uses optimistic rental assumptions
• Has no alternative tenant market
• Depends on refinancing at a higher valuation
• Underestimates regulation and maintenance
• Purchases through a deal packager with limited local experience

A well-performing student HMO and a poorly selected student HMO can look very similar in a marketing brochure.

The difference often becomes clear only when rooms need to be filled.

Lessons from Unite Students’ £417 million loss

The Unite Students results do not prove that the entire student accommodation sector is failing.

However, they do show that even the largest participants remain exposed to weaker occupancy, discounting, changing demand and falling valuations.

City AM reported that Unite moved from a £186 million pre-tax profit to a £417 million pre-tax loss, with a £530 million property revaluation hit. The company also planned to dispose of up to £400 million of property and remove as many as 20,000 beds while focusing on stronger universities.

Small landlords should consider how they would respond to similar pressures.

Most cannot dispose of hundreds of properties, redirect investment nationally or negotiate large-scale relationships with universities.

They may own one highly leveraged HMO in a city where many landlords are competing for the same declining or changing pool of students.

Add falling overseas recruitment into that picture, and the concentration risk becomes difficult to ignore.

Why we will continue to avoid student HMOs

Our decision to focus exclusively on professional and corporate lets comes from more than 34 years of property experience.

We prefer locations where rental demand is connected to employment, infrastructure and the wider local economy.

We also prefer HMOs that can attract tenants throughout the year rather than depending on one short letting window.

This does not mean professional HMOs are free from risk. Property values can change, tenants can leave and local markets can weaken.

However, a professional HMO in a carefully selected area may draw demand from several employers, industries and tenant groups.

A student HMO may depend almost entirely on one university and the assumption that the next intake will be large enough to fill every available room.

For us, that level of concentration is unnecessary.

Explore fully managed professional HMO investments

Foot Forward Property Investments has more than 34 years of specialist property experience and has completed over 450 HMO developments.

We source, design, develop, furnish, let and manage professional HMOs for investors.

Our developments focus on realistic NET yields, substantial refurbishments, compliant layouts and locations supported by genuine professional and corporate demand.

We do not develop student HMOs, and we do not base an investment strategy on the assumption that domestic or overseas student numbers will rise indefinitely.

Learn more about our fully managed professional HMO investments.

As with any property investment, investors should obtain independent legal, financial, tax and valuation advice. Rental income, occupancy, refinancing outcomes and property values cannot be guaranteed.

Frequently Asked Questions

Why are student HMOs becoming riskier?

Student HMOs face increasing competition from purpose-built accommodation, changing tenancy patterns, affordability pressures, regulation and uncertain student recruitment.

Some cities also contain more student rooms than the local market can comfortably absorb.

What was Unite Students’ reported loss?

Unite Students reported a £417 million pre-tax loss for the six months to June 2026, compared with a £186 million profit during the equivalent period a year earlier.

Its property portfolio revaluation reduced profit by £530 million.

Did Unite Students lose £417 million in cash?

The £417 million figure was a statutory pre-tax loss and was heavily affected by a reduction in property valuations.

It should not be interpreted as an equivalent cash outflow. However, lower valuations can still affect asset values, financing, disposals and investor confidence.

Are overseas student numbers falling?

Recent Home Office data and university-sector surveys indicate that overseas recruitment has weakened.

A BUILA survey found that around 70% of participating universities reported lower international postgraduate enrolment for the January 2026 intake.

Why do overseas student numbers matter to HMO landlords?

Many overseas students need furnished accommodation near their university.

When fewer international students arrive, demand can fall across student halls, purpose-built accommodation and private HMOs.

Can student HMOs still perform well?

Yes, some student HMOs may perform well near strong universities with limited housing supply.

However, investors should examine university strength, local competition, international recruitment, achievable rents and alternative tenant demand before purchasing.

Why can professional HMOs offer broader demand?

Professional HMOs can attract tenants from several employment sectors throughout the year.

They do not necessarily depend on one university, one academic intake or one international recruitment market.

Does Foot Forward Property Investments develop student HMOs?

No. We focus solely on professional and corporate lets.

Our developments target locations supported by employment, transport, infrastructure and genuine demand from working tenants.

What should investors check before buying an HMO?

Investors should review:

• Local tenant demand
• Planning and Article 4 restrictions
• HMO licensing
• Room sizes
• Fire safety
• Achievable rents
• Operating costs
• Management arrangements
• Financeability
• Alternative tenant markets
• Local property values
• Competition from other HMOs