Manchester is a city on the rise. With a population of over 550,000, it’s the sixth largest local authority in England and the most densely populated in the North West. The city has grown by 9.7% since 2011, outpacing the North West (5.2%) and England (6.6%). Greater Manchester, including surrounding areas, has a population of over 2.8 million. By 2026, the city’s population is expected to hit 600,000, with the city centre alone projected to reach 100,000 residents. This growth drives demand for housing, especially rentals, making HMOs a smart investment.
The local economy is another draw. Manchester’s £63 billion economy is the largest city-region economy outside London. Over the past 20 years it has boomed, driven by universities, football clubs, and major firms relocating to the city. Job growth has been strong, with an 84% rise in employment between 2002 and 2015, twice the rate of the North overall. Sectors like finance, media, tech, education, and life sciences thrive here, attracting young professionals and students who fuel the HMO market.
Manchester’s Housing Market: A Snapshot
Manchester’s housing market is dynamic and competitive. As of Q1 2025, the average property price is £246,000, up 5.3% year-in-year. Rental prices are strong, with average rents at £1,309 per month, an 8.5% increase from 2024. High occupancy rates and yields of 4.5% to 6.5% make it attractive for investors. The market is tight, with demand outstripping supply, especially in central areas and near universities.
The city has a diverse housing stock. There are around 230,000 households, with 32.5% renting privately and 29.5% renting socially, far above national averages (20.6% and 17.1%). Homeownership is low at 38%, reflecting a strong rental culture. Housing types vary: 25% of households live in terraced houses, popular for HMO conversions, while over half of licensed HMOs are in flats. The rest are a mix of semi-detached and other use classes. High density in areas like the Northern Quarter (M4), Fallowfield (M14), and Hulme (M15) supports smaller living spaces, ideal for HMOs.
HMO Statistics: What Investors Need to Know
Manchester’s HMO market is thriving. There are approximatly 13,500 licensed HMOs in Greater Manchester, covering areas within and just outside the M60 motorway, including Worsley, Middleton, Oldham, Stalybridge, Stockport, and Trafford (but not Sale). The biggest HMO hotspots are Fallowfield, Salford, Trafford, and the city centre, followed by Openshaw and Harpurhey. Peripheral areas like Droylsden, Ashton-under-Lyne, Denton, and Stockport are seeing rising demand due to Article 4 restrictions in central zones.
Of these HMOs, 70% have six bedrooms or fewer, while 30% have seven or more. Over half are in flats, 25% in terraced houses, and the rest in mixed-use properties. Article 4 restrictions, introduced over a decade ago, have limited new HMO conversions in many areas, boosting the value of existing HMOs. This has led to higher room rents and property valuations, making licensed HMOs a premium asset.
A Brief History: Why Manchester Grew
Manchester’s transformation began during the Industrial Revolution, when it was a global textile hub. By the mid-1990s, the city reinvented itself through regeneration and investment. Areas like the Northern Quarter and Ancoats, once deprived, are now vibrant, attracting young professionals. The city’s skyline has seen some of the tallest developments outside London, reflecting its ambition.
Key drivers of growth include:
- Universities: Manchester’s four central universities host 105,000 students, one of the UK’s largest student populations. Graduates often stay, with 51% remaining post-graduation, boosting the rental market.
- Football clubs: Manchester United and Manchester City draw global attention and investment.
- Corporate relocations: Firms like the BBC, ITV, Google, and Amazon have moved to Manchester, creating jobs and attracting workers.
- Regeneration: Projects like MediaCityUK in Salford and Ancoats have transformed the city, making it a desirable place to live.
People move to Manchester for its vibrant culture, job opportunities, and affordability compared to London. The city’s music scene, nightlife, and sporting legacy add to its appeal, especially for the 18-35 age group who dominate HMO rentals.
The Local Economy: Who Works in Manchester?
Manchester’s economy is diverse and robust. It’s the North West’s economic engine, with 1.4 million jobs in Greater Manchester. Key sectors include:
- Finance and business: Major banks and consultancies have a presence.
- Media and tech: MediaCityUK hosts the BBC and ITV, while tech firms like Boohoo and The Hut Group thrive.
- Education: Universities employ thousands and drive research.
- Life sciences: Manchester is a hub for health innovation.
- Construction: Ongoing regeneration fuels job growth, with a 50.6% increase projected in this sector.
Most HMO tenants are young proffessionals or students aged 18-35. They’re drawn to Manchester for its job market, cultural scene, and connectivity. The city’s low median age (31) compared to the North West (40) reflects its youthful demographic, ideal for HMO rentals. Areas like the Northern Quarter, Ancoats, and Salford Quays are popular for their proximity to workplaces and nightlife.
The Student Market: A Key Driver for HMOs
Manchester’s student population is a major factor in HMO demand. The city’s four universities—University of Manchester, Manchester Metropolitan University, University of Salford, and University of Bolton—host over 100,000 students. The University of Manchester alone has around 40,000 students, making it one of the UK’s largest. Greater Manchester has 350,000 students within an hour’s drive, creating a huge rental market.
Students prefer areas like Fallowfield, known for its vibrant student community and proximity to universities. It’s the top HMO hotspot, with high yields due to consistent demand. Other popular areas include Rusholme, close to the University of Manchester, and Hulme, near the city centre. Students hang out in the Northern Quarter for its bars and cafes, Oxford Road for live music, and Fallowfield for its student-friendly pubs like Squirrels.
Despite a recent drop in Fallowfield’s student numbers (down 20% from 2016-2022), the University of Manchester is investing £1.2 billion in new halls, adding 3,300 bedrooms by 2027. This could ease pressure on private HMOs but won’t eliminate demand, as many students prefer the flexibility of shared houses.
Hospitals: Another Source of HMO Tenants
Manchester’s hospitals employ thousands, many of whom seek HMO rentals due to shift work and temporary contracts. Key hospitals include:
- Manchester Royal Infirmary (Oxford Road): Part of Manchester University NHS Foundation Trust, it employs over 12,000 staff.
- Wythenshawe Hospital (South Manchester): Another major trust hospital with around 6,000 staff.
- Salford Royal Hospital: A leading teaching hospital with 9,000 staff.
- North Manchester General Hospital: Undergoing a £600 million rebuild, it employs around 4,000 staff.
These hospitals, plus smaller facilities, create a steady demand for rentals in areas like Rusholme, Fallowfield, and Salford, where medical staff can commute easily. Young professionals in healthcare, often aged 18-35, are ideal HMO tenants.
Local Development Plan: Manchester’s Future
Manchester City Council’s development plan focuses on sustainable growth. The Manchester Local Plan 2040 aims to deliver 36,000 new homes by 2040, with 10,000 affordable units. The plan prioritises brownfield sites in the city centre and regeneration zones to meet housing demand. Key goals include:
- Expanding public transport, like the Bee Network, integrating buses, trams, and rail by 2030.
- Creating new public spaces, such as a 6.5-acre park at Mayfield and an expanded Albert Square.
- Adding 65,000 jobs in the city centre by 2040, boosting employment to 315,000.
The Greater Manchester Growth and Prevention Delivery Plan will invest £10 billion over 10 years across housing, transport, and innovation. This will enhance connectivity and make peripheral areas more attractive for HMO development.
Regeneration: Transforming the City
Manchester’s regeneration is a game-changer for investors. Key projects include:
- Victoria North: A £4 billion scheme in Collyhurst, delivering 15,000 homes, schools, and commercial spaces. It’s a hotspot for future HMO demand.
- Northern Gateway: North of the city centre, this project will create vibrant residential and commercial areas.
- MediaCityUK: In Salford, it’s a tech and media hub, attracting young professionals.
- Ancoats and New Islington: Now trendy neighbourhoods, they’ve seen property values soar by 11.7% through 2027, the highest in the UK.
These projects increase property values and rental demand, especially in areas like Salford, Hulme, and Ardwick. However, they also highlight a challenge: gentrification. Rising rents and displacement in working-class areas like Collyhurst could shift HMO demand to outer zones.
Article 4 Restrictions: What They Mean for Investors
Article 4 restrictions are a critical factor in Manchester’s HMO market. Introduced over 10 years ago, they require planning permission to convert properties into small HMOs (3-6 occupants) in many areas. Affected zones include:
- Walkden, Swinton, Monton, Eccles, City Centre, Trafford, Stretford, Sale, Didsbury, Levenshulme, Cheetham Hill, and areas up to the M60, excluding most of Prestwich and Failsworth.
These restrictions cover much of central and southern Manchester, limiting new HMO conversions. As a result, existing licensed HMOs are highly sought after, commanding premium prices and rents. Areas outside Article 4 zones, like Failsworth, Ashton-under-Lyne, Droylsden, Denton, and Stockport, have seen the most growth in HMO developments. These locations offer more flexibility for conversions and are increasingly popular due to Manchester’s economic spillover into former mining towns.
For investors, Article 4 means:
- Higher returns on existing HMOs: Limited supply drives up rents and valuations.
- Opportunities in outer areas: Non-restricted zones like Failsworth and Stockport are easier to enter.
- Due diligence is key: Check licensing and compliance, as councils enforce strict safety standards for HMOs.
Why Invest in Manchester HMOs?
Manchester ticks all the boxes for HMO investors. Here’s why:
- Strong demand: A growing population, young demographic, and large student base ensure high occupancy.
- High yields: Yields of 4.5% to 6.5% beat the national average, especially in Fallowfield and Salford.
- Economic growth: A diverse job market and £10 billion in planned investment keep the city thriving.
- Regeneration: Projects like Victoria North and MediaCityUK boost property values.
- Article 4 advantage: Restrictions create a premium market for licensed HMOs.
Young tenants aged 18-35 love Manchester for its affordability, nightlife, and job opportunities. Students and professionals flock to areas like Fallowfield, Rusholme, and Salford for there connectivity and vibe. Hospitals and universities add a steady tenant pool, while regeneration opens new investment zones.
Tips for HMO Investors
- Target the right areas: Focus on Fallowfield, Salford, or emerging zones like Ashton-under-Lyne and Denton.
- Check Article 4 status: Avoid restricted areas unless buying a licensed HMO.
- Prioritise transport links: Tenants value proximity to Metrolink stops or bus routes.
- Refurbish smartly: Adding rooms or upgrading can boost yields, but budget for compliance costs.
- Work with experts: At hmosales.com, we have over 15 years of industry experience. We offer off-market HMO properties, tailored to your goals.
Final Thoughts
Manchester’s HMO market is a goldmine for savvy investors. Its population growth, economic strength, and tight housing supply create a perfect storm for high-yield rentals. Article 4 restrictions have made licensed HMOs a premium asset, while regeneration and development plans signal long-term growth. Whether you are targeting students in Fallowfield or professionals in Salford, Manchester offers diverse opportunities.
Contact us at www.hmosales.comto explore our off-market HMO deals and start building your portfolio in this dynamic city.
