The demand for student accommodation is driving a surge in houses in multiple occupation (HMOs), making them one of the most attractive property investments in 2025. Research from Simply Business highlights that cities with large student populations, such as Leicester, Birmingham, Manchester, and Nottingham, are experiencing strong rental demand. As a result, HMOs are proving to be a lucrative option for landlords looking to capitalise on this growing market.

By analysing over 100,000 landlord insurance policies, Simply Business has identified the UK’s top buy-to-let hotspots, with Leicester ranking amongst the highest due to its thriving student market and strong rental yields.

Why Leicester is a Prime Location for HMOs

HMOs in student cities like Leicester offer a profitable alternative thanks to high tenant demand and strong rental returns.

Leicester benefits from:

  • Two major universities (University of Leicester and De Montfort University), ensuring a steady stream of student tenants.
  • A strong rental market, with demand consistently exceeding supply in key areas near the city centre.
  • Lower property prices compared to London, making it easier for landlords to enter the market while still benefiting from high rental yields.

Rental demand remains high, particularly in areas popular with students and young professionals. Landlords who adapt to these market shifts can secure steady rental income and capital growth, reinforcing their role in the UK housing market.

Leicester Amongst the UK’s Top Buy-to-Let Hotspots

The study also highlights the cities with the highest increase in new landlord insurance policies between 2023 and 2024, signalling strong buy-to-let potential:

  1. London: 13%
  2. Leicester: 12%
  3. Birmingham: 12%
  4. Leeds: 11%
  5. Manchester: 10%
  6. Nottingham: 10%
  7. Bristol: 9%
  8. Edinburgh: 9%
  9. Liverpool: 8%
  10. Glasgow: 7%

With a 12% rise in new landlord policies, Leicester has established itself as one of the leading destinations for HMO investors. The city’s affordability, combined with strong student demand, makes it a prime market for landlords seeking long-term stability and solid returns.

Leicester’s Thriving Rental Market

Leicester’s rental market has shown consistent growth and resilience, with student demand ensuring high occupancy rates. Some of the most sought-after areas for HMOs include:

West End (Narborough Road & Braunstone Gate) – A thriving area close to De Montfort University with a vibrant social scene.

Clarendon Park – A favourite amongst University of Leicester students due to its proximity to campus.

Highfields & Evington – An affordable option for landlords, offering strong rental yields.

City Centre – Popular amongst students and young professionals who want easy access to amenities.

Unlike London, where property prices are significantly higher, Leicester provides landlords with a more accessible entry point while still benefiting from strong rental demand and capital appreciation.

What This Means for Landlords in 2025

Landlords who can adapt to the evolving market will continue to find opportunities in cities like Leicester. While challenges such as rising costs and new regulations persist, student HMOs remain one of the most profitable investments due to their high occupancy rates and consistent demand.

With Leicester’s growing student population, affordable property prices, and strong rental market, it remains one of the UK’s top locations for HMO investment in 2025.

For landlords looking for high yields, long-term stability, and a resilient rental market, Leicester offers one of the most promising opportunities in the UK.

If you are looking to invest in the student property market, contact our dedicated team on 0116 275 8888.