5 UK Cities With the Highest HMO Yields Right Now

Why the Yield Map Looks Nothing Like You'd Expect

Most people new to HMO investing assume the biggest cities equal the best returns. London, Manchester, maybe Bristol. That instinct is wrong — and the data from multiple 2025–2026 sources makes it embarrassingly clear.

According to COHO's June 2025 analysis (reported by [property118.com](https://www.property118.com/best-city-in-england-for-hmo-yield-revealed/)), Bradford's six-bedroom HMOs are delivering 15.2% gross yield, based on an average asking price of £228,750 and £482 per room per month. That's the highest recorded yield for any English city in their dataset. London, by contrast, sits at roughly 6.8% gross on HMOs according to [thehmomortgagebroker.co.uk](https://www.thehmomortgagebroker.co.uk/hmo-market-report/) — and that's before you factor in higher management costs, licensing complexity, and the capital tied up in a £684,000 average HMO property (whatMORTGAGE/Lendlord, Q4 2025).

Vann Vogstad, CEO of COHO, put it plainly: "The most profitable HMOs are located in cities in or towards the north of England where property prices are significantly lower than the likes of London and the south."

So here are the five markets I'd actually look at right now — ranked by yield strength, with the caveats that matter.

The North East: 15.1% Gross and Still Flying Under the Radar

The North East as a region leads the UK on HMO gross yield at 15.1%, according to whatMORTGAGE and Lendlord's Q4 2025 data. Bradford specifically hits 15.2% on six-bedroom HMOs per COHO's research — which makes it the single highest-yielding HMO city in England by their measure.

Newcastle also deserves attention. [hmobuilders.com](https://www.hmobuilders.com/blog/best-cities-hmo-investment-uk-2026) puts Newcastle at 8–11% gross, with average room rents of £605/month (SpareRoom, January 2026) and a partial Article 4 direction — meaning there are still postcodes where you can convert without full planning permission. COHO's data shows Newcastle topping the three-bedroom HMO yield table at 10.7% nationally.

The trade-off here is real: lower property values mean lower absolute capital growth. If your exit strategy depends on selling at a premium in ten years, the North East carries more uncertainty than Manchester or Leeds. But if you're building for cashflow — which most HMO investors should be — this region is hard to ignore.

Due diligence note: licensing requirements vary sharply between councils. Newcastle operates mandatory plus selective licensing. Always check the specific council before committing.

Liverpool: 9–13.5% Yield With Multiple Bedroom Configurations

Liverpool is the most consistent performer across bedroom sizes in the data I've seen. COHO's research puts Liverpool at 10.8% for six-bedroom HMOs and 11.9% for four-bedroom HMOs — the highest four-bed yield of any English city in their dataset. [propertywiki.ai](https://propertywiki.ai/uk/investing/hmo-investing) estimates a five-bedroom HMO at 13.5% gross based on SpareRoom and Rightmove data from early 2026, with average room rents around £450–£555/month.

[thehmomortgagebroker.co.uk](https://www.thehmomortgagebroker.co.uk/hmo-market-report/) shows Liverpool's average gross yield at 9.1% across their brokerage transactions — up 0.5% year-on-year, the strongest YoY growth in their dataset.

Three universities, a large young professional population, and entry prices that still make sense. That combination is increasingly rare in 2026. The regulatory picture is more complex: Liverpool operates mandatory plus additional licensing, with partial Article 4 directions. Certain postcodes are more restricted than others — L6, L7, and L15 are areas where Article 4 is already in force.

I'd prioritise Liverpool for investors who want yield now and aren't banking on short-term capital appreciation. The fundamentals are solid. The tenant demand is structural, not cyclical.

Nottingham, Leeds, Sheffield, and Birmingham: The 8–12% Middle Ground

These four cities form what I'd call the core HMO investment belt — yields that justify the effort, regulatory environments that are manageable if you do the work, and tenant demand that's structurally supported by universities and growing professional populations.

Nottingham: Two major universities create sustained student HMO demand. [hmobuilders.com](https://www.hmobuilders.com/blog/best-cities-hmo-investment-uk-2026) puts gross yields at 8–11%, with average room rents of £589/month (SpareRoom, January 2026). The regulatory picture is the most complex of any city on this list — Nottingham operates mandatory, additional, and selective licensing simultaneously. That complexity deters some investors, which is exactly why yields have held up.

Leeds: [hmobuilders.com](https://www.hmobuilders.com/blog/best-cities-hmo-investment-uk-2026) shows 8–15% gross yield with £565/month average room rents. COHO's data puts Leeds five-bedroom HMOs at 9.8% nationally. [thehmomortgagebroker.co.uk](https://www.thehmomortgagebroker.co.uk/hmo-market-report/) records 8.7% average across brokerage transactions. The spread in that yield range is wide because Leeds is a city of micro-markets — Headingley is not Hyde Park, and Hyde Park is not Burley. Postcode-level research is non-negotiable here.

Sheffield: Two universities, affordable entry points, 8–11% gross per [hmobuilders.com](https://www.hmobuilders.com/blog/best-cities-hmo-investment-uk-2026), with £521/month average room rents — the lowest of any city on this list, which keeps yields competitive. COHO shows Sheffield at 10.2% for four-bedroom HMOs. [thehmomortgagebroker.co.uk](https://www.thehmomortgagebroker.co.uk/hmo-market-report/) puts it at 8.5% on average transactions.

Birmingham: Regeneration projects — HS2, Paradise, Smithfield — are reshaping the city's rental geography. Digbeth and the Jewellery Quarter are seeing rental growth. [thehmomortgagebroker.co.uk](https://www.thehmomortgagebroker.co.uk/hmo-market-report/) shows 8.9% average gross yield, up 0.4% YoY. [hmobuilders.com](https://www.hmobuilders.com/blog/best-cities-hmo-investment-uk-2026) puts the range at 7.5–10% with £618/month average room rents. Article 4 is city-wide, so planning due diligence is essential before any purchase.

All four cities reward investors who go granular. National averages — including the ones I've cited above — are starting points, not decisions.

Why London Keeps Appearing on These Lists (And Why I'd Skip It for Yield)

London makes every HMO yield comparison because it's London. Average HMO property values hit £684,724 in Q4 2025 (whatMORTGAGE/Lendlord), up from £660,227 the previous quarter. Average annual HMO rent in London hit £55,017 — the highest in the UK by a significant margin.

And yet the gross yield sits at 6.8–8.0% depending on the source and borough. [propertywiki.ai](https://propertywiki.ai/uk/investing/hmo-investing) puts outer London five-bedroom HMOs at 8.0% gross. [thehmomortgagebroker.co.uk](https://www.thehmomortgagebroker.co.uk/hmo-market-report/) records 6.8% across their brokerage transactions — the only city in their dataset showing negative YoY yield movement (-0.2%).

If you're buying for capital growth over a 15-year horizon and have the deposit to stomach a £684,000 average entry price, London has a case. Vann Vogstad of COHO noted the emerging co-living sector as a potential yield booster for London landlords — but that's a different asset class with different planning requirements.

For HMO yield investors in 2026? The opportunity cost of London capital deployed in Bradford or Liverpool is simply too large to justify. That's my position. Consider consulting a qualified financial adviser before making any investment decision.

Here's what this data actually tells me: the yield advantage of northern cities over London isn't narrowing — it's holding, and in some cases widening. The investors who moved into Bradford, Liverpool, and Newcastle five years ago weren't lucky. They were reading the fundamentals correctly. The same fundamentals still apply in 2026. The question is whether you act on them or spend another year watching London yields compress while the North delivers double-digit cashflow.

One thing that trips up even experienced investors at this stage isn't finding the city — it's financing the deal. HMO mortgages are specialist products, and freeing up equity from an existing portfolio to fund the next acquisition is genuinely difficult without the right broker. That's a problem worth solving before you find the property, not after.