Why Northern England Is Outperforming London for HMO Yields in 2026
September 8, 2026
For more than 34 years, we have developed fully managed HMO properties across the North of England. We acquire the property, develop it into a compliant professional HMO, furnish it, prepare it for tenants and, once completed, our own lettings team manages it for the investor. It is an end-to-end service that we have operated for decades rather than something we have suddenly bolted onto the business because HMOs became popular.
During that time, a large proportion of our investors have come from London and the South of England.
There is a simple reason for it. They can see the difference between living somewhere and investing somewhere.
London may be where they live, work and run their businesses, but that does not automatically make it the best place to deploy capital into a HMO property investment. In 2026, the numbers are becoming increasingly difficult to ignore.
London Has Had a Very Good Run
We are not going to pretend London has always been a bad property investment. It hasn’t.
London has enjoyed decades of strong property growth, international demand and a reputation as one of the world’s major property markets. Investors who bought at the right time made substantial amounts of money.
The problem is assuming that what worked 15 or 20 years ago must still be the best strategy today.
Official UK House Price Index figures for June 2026 put the average London property at approximately £554,000, with prices down 2.5% over the previous 12 months. That was the tenth consecutive month in which London had recorded an annual fall. Yorkshire and the Humber, meanwhile, had an average property price of around £204,000 in May 2026 and was still recording positive annual growth.
The difference becomes even more uncomfortable when you look inside London.
Westminster recorded an average property price fall of 25.4% in the year to June 2026. Kensington and Chelsea was down 14.7%, Hammersmith and Fulham was down 13.3% and Tower Hamlets was down 13.1%. Prime Central London prices have also fallen by around 23% from their mid-2015 peak according to Knight Frank data.
That is not a market we would describe as having unlimited room left to run.
High Property Prices Kill HMO Yield
HMO investment is not about owning the property with the most impressive postcode. It is about the relationship between what you have invested, what the property produces after its running costs and what scope the underlying asset has to increase in value.
London struggles badly on the first two.
If you spend £600,000, £700,000 or considerably more acquiring a property before you have even started converting it into a high-quality HMO, the rental income has an enormous amount of work to do. Add refurbishment, planning where required, licensing, professional fees, furniture, compliance works, fire safety, finance and ongoing management and the amount of capital deployed quickly becomes substantial.
Room rents may be higher in London, but they are not proportionately higher enough to compensate for the property acquisition cost.
That is why we have never understood investors becoming fixated on headline rent while ignoring the money required to produce it. The figure that matters is the NET yield.
For 34 years, that is what we have concentrated on.
In South Yorkshire Your Capital Goes Much Further
This is where Northern HMO investment becomes interesting.
Property prices across South Yorkshire have risen considerably over the years, but they remain inexpensive when compared with much of the South of England and especially London. That gives an investor something London increasingly struggles to provide: an accessible entry price combined with room for further capital growth.
The latest official figures illustrate the difference clearly. The average London property was approximately £554,000 in June 2026. The Yorkshire and Humber regional average was approximately £204,000 in May.
That gap changes what an investor can actually do with their money.
Capital that might acquire and refurbish one London HMO can potentially be spread across several Northern properties, depending on the individual projects involved. Instead of having a large amount of capital concentrated into one expensive building, an investor can begin building a fully managed HMO portfolio.
More properties. More rooms. More individual tenants. More diversification across physical assets.
Yet the investor still owns the underlying bricks and mortar.
Yorkshire Has Been Quietly Compounding for Decades
One of the strange attitudes we still encounter is that Northern property must somehow be inferior simply because it is cheaper.
Cheap and undervalued are not the same thing.
Yorkshire property has produced strong long-term growth across repeated market cycles. Using a long-run annualised figure of around 6%, compounded over roughly five decades, the cumulative increase runs to around 2,000%. The exact figure naturally depends on the index, start date and area measured, but the point is difficult to miss: investors have not needed London property prices to achieve substantial long-term capital appreciation.
More importantly for somebody investing now, Yorkshire is starting from a much lower price base.
We would much rather own property in an area where employment, wages, infrastructure and housing demand have room to feed through into prices than purchase an asset that already costs several multiples more simply because everybody recognises the postcode.
London HMO Saturation Creates Another Problem
Price is only part of London’s problem.
The HMO market has been heavily developed across large parts of the capital. Planning controls reflect that. By 2026, Article 4 restrictions affecting small HMO conversions had been introduced across substantial parts of London, with borough-wide controls operating in areas including Barnet, Brent, Bromley, Croydon, Ealing, Enfield, Greenwich, Hounslow, Newham, Redbridge, Sutton, Tower Hamlets and Waltham Forest, among others. Harrow introduced a borough-wide direction in June 2026.
That should tell investors something.
When local authorities are actively introducing additional controls because of the concentration and impact of HMOs, it hardly supports the argument that investors should blindly keep piling into the same locations.
Our approach has always been different. We look for areas where professional tenant demand exists without developing directly into excessive HMO saturation. We have worked this way for decades because the long-term performance of the property matters considerably more to us than simply getting another development sold.
We are going to be managing it afterwards.
That changes your attitude towards what you build.
Manchester, Liverpool, Leeds, Hull and the North East
Northern England is obviously not one single HMO market either.
We speak to investors every week who have already been looking around Manchester or Liverpool. The headline rents catch their attention, then they begin looking properly at the number of HMOs, student accommodation, apartments and rental properties fighting for the same tenants.
They look further north towards Middlesbrough, Sunderland, Newcastle, Hartlepool and surrounding areas because the purchase prices appear incredibly cheap. Then they start looking at local deprivation, achievable professional rents, HMO concentration, refurbishment costs and what the finished property may realistically be worth.
Leeds attracts the same attention because of its size and employment market, but HMO concentration and Article 4 restrictions affect various parts of the city.
Hull appears cheap too. Cheap alone has never been enough for us.
This is one reason so many investors eventually arrive at South Yorkshire. They want a property market that is still affordable, but they do not want affordability at the expense of tenant quality, employment demand, resale prospects or long-term value.
Stop Buying HMOs on the Gross Yield
This is probably the biggest difference between our approach and much of the HMO investment market.
Gross yield can make almost anything look attractive.
Take the annual room rent, divide it by the purchase price and suddenly you have a lovely percentage to put at the top of a brochure.
Unfortunately, that is not the money the investor receives.
A HMO has utilities, council tax, broadband, cleaning, maintenance, management, compliance costs, licensing costs, repairs and periods where individual rooms may not be occupied. Those costs are real. Ignoring them does not make the investment better.
For over 34 years we have led with the NET yield because that is the figure an investor can actually judge.
It is also one reason Southern investors tend to understand our model very quickly. Many of them are experienced business owners, landlords or professional investors. They are not impressed by a large gross percentage if half the information required to assess it has conveniently been left underneath the table.
They want to know what lands in their pocket.
So do we.
The Ego Problem With London Property
Sometimes the biggest obstacle is not financial. It is psychological.
There remains a certain prestige attached to telling somebody you own investment property in London. Owning a HMO in Doncaster does not carry quite the same dinner-party appeal.
But your investment portfolio is not there to impress somebody over dinner.
If £1 million can purchase, develop and establish several professionally managed HMO assets in Northern England, while the same amount is swallowed by the acquisition and refurbishment of a single London property, an investor needs to look at the mathematics rather than the postcode.
Particularly when the £554,000 average London property price is currently falling year on year and Prime Central London values remain around 23% below their previous peak.
For many investors, the sensible decision is becoming increasingly obvious.
Leave the ego at the door.
We Develop It, Then We Manage It
There is another reason investors have travelled north to work with us for decades.
We do not simply find a property, charge a sourcing fee and disappear.
Every HMO investment we offer is developed through our own operation. Once development is complete, the property passes into our in-house management structure. We manage the tenants, rents, compliance, licensing, maintenance and day-to-day operation of the HMO for the investor.
We have done this for more than 34 years.
That means we have to think beyond completion day. If we develop the wrong property, choose the wrong area, specify unsuitable materials or produce an unrealistic rental projection, our own team has to deal with the consequences.
That accountability matters.
It is very easy to advertise an enormous projected gross yield when somebody else will be responsible for managing the property once you have collected your fee.
We prefer having our name attached to the property long after the refurbishment has finished.
Northern HMO Investment in 2026
London will continue to be one of the world’s best-known property markets. Nobody is disputing that.
Recognition does not automatically equal return.
HMO investors in 2026 need to look at acquisition cost, refurbishment cost, realistic professional room rents, NET income, HMO saturation, planning, management and the future value of the underlying property.
When those numbers are put next to each other, the North of England starts making considerably more sense.
For our investors, South Yorkshire has offered that balance for decades. Property remains affordable compared with London, professional tenant demand supports the HMO model, the underlying housing market still has scope for long-term growth and the amount of capital required allows investors to build portfolios rather than concentrating everything into one extremely expensive property.
That is why Southern investors have been coming north to us for more than 34 years.
Not because Northern property sounds more impressive.
Because the numbers stack up.
You can view our current fully managed HMO property investments here: