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Top 10 Locations to Invest in Student HMOs

Male and female students wear a face Chill and stand in front of the university.

Investing in Student Houses in Multiple Occupation (HMOs) can be a rewarding venture for many landlords and property investors, especially in smaller University towns or cities where landlords often see higher returns and plenty of long-term growth.

Research is constantly being conducted by UK banks and finance centres, with the goal being to spot areas for future growth – and therefore areas where landlords can achieve impressive rental yields.

With accommodation shortages and changing trends for what students might look for in their housing needs, it’s more important than ever for buy-to-let landlords to understand the student housing market. See our articles on the benefits of Student HMOs to learn more. 

In recent years, prime property investment locations typically feature smaller cities in the UK, where there is normally just one or two main universities and a student population of less than 25,000. A more modest student demographic tends to offer better returns compared to major urban centres.

A prime example of this is Swansea, which has consistently been ranked as one of the best towns for property investments, thanks to low property prices and high rental yields. Research has suggested that landlords who invest in Swansea – which has just over 20,000 students – can benefit from, on average, gross yields of anywhere between 7 and 9.5%.

Similar research suggests that Hull, with 14,000+ students at its university, boasts a notable rental yield of 8.68% per annum.

Top Student HMO Cities

Here are 10 of the top locations in the UK to invest in Student HMOs:

1.  Hull 

Hull is frequently ranked as one of the best places to invest in Student HMOs. As well as offering high yield potential, the city benefits from low house prices, meaning property investors can purchase these rental properties for lower initial investments than say London. 

2.  Durham 

One of the UK’s foremost university cities – with a bustling local and international population and close links to much larger cities such as Newcastle – Durham has long maintained its status as an excellent place for landlords to buy property, benefit from demand, and earn high yields. It is also much less expensive to buy property here when compared to other noted UK university cities, such as Oxford and Cambridge.

3.  Derby

The historic city of Derby feels poised to grow in the years ahead – offering great opportunities for landlords. With approximately 20,000 students in the city and average yields of an above-average 5%, the city ticks all the boxes when it comes to investing in student HMOs.

4.  Leeds

Leeds is a major university hub, meaning it will always be attractive to those looking to invest in Student HMOs. But beyond this fact, Leeds is noted for having high average rental rates – even higher than larger cities like Manchester according to some reports – meaning potentially massive returns for investors.

5.  Swansea

In recent years, Swansea has become a very attractive prospect for investors in the UK. In this case, it’s the numbers which tell the full story: gross yields on student HMOs in Swansea are, on average, 9.56%. This can mean some eye-watering returns for investors.

6.  Preston

Home to the University of Central Lancashire – and its 25,000-29,000 students – Preston is yet another smaller city whose potential for property investors is still being uncovered. With high average rental prices, low property prices, and the increased growth of UCLan as a national institution, Preston is ambitious in what its future holds – so savvy investors should be equally as ambitious.

7.  Coventry

Recently called one of the Top 50 locations in the world for students, Coventry boasts two cities, approx. 70,000 students, lots of demand, and endless potential for investors. Yields can reach as high as 7.91% in the city, according to recent studies.

8.  Plymouth

Once again, the coastal city of Plymouth is a perfect example of how smaller, one-university cities often present the best opportunities for investors. In a 2024 report by Paragon Bank, average gross yields on properties in Plymouth were listed at 8.14%.

9.  Chester

While major hubs like Manchester have become that bit more difficult for investors in Student HMOs, cities like Chester are very open in terms of what the future might hold. The city has a population of approximately 79,000, of which 13,000 are students at the University of Chester. A smart investor would have no problem in finding properties, demand, and high yields in this city.

10. Lincoln

As with the likes of Chester, Preston, and Derby, Lincoln is a smaller city with a thriving university, which has somewhat flown under the radar when it comes to Student HMO opportunities. However, in recent years, more and more investors have been pointing to the potential for high yields and big returns in this northeastern city. 

Summary

In summary, the UK presents a diverse landscape for investors interested in Student Houses in Multiple Occupation (HMOs), with significant opportunities in various cities.

Each featured location, from the well-established markets such as Manchester and Liverpool to the smaller, emerging cities like Chester and Lincoln, holds unique advantages. Rental yields have been enticing, with Coventry and Plymouth showing particularly high returns.

Savvy investors should look closely at the balance of demand and supply, university presence, and city growth potential. Now is an opportune time to explore these markets, as many areas still offer untapped potential for substantial investment returns.

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