Landlords are taking an increasingly strategic approach to houses in multiple occupation (HMOs), with the vast majority now tailoring properties to attract specific tenant groups rather than targeting the rental market as a whole.
New research from Paragon Bank found that 92% of HMO landlords actively prepare or present their properties to appeal to a defined audience. Students remain the most commonly targeted group (36%), followed by white-collar professionals (25%) and young single tenants (19%).
The findings suggest landlords are becoming more selective both in the properties they buy and the improvements they make, with investment decisions increasingly shaped by tenant expectations and local demand.
A quarter (25%) of landlords said ensuite bedrooms are now a priority when identifying HMO investment opportunities, while 23% look for properties with stronger energy efficiency credentials. Proximity to employment hubs or transport links (19%) and larger bedroom sizes (19%) also rank highly when assessing potential acquisitions.
PROPERTY INVESTMENT
Investment in existing properties remains strong, with 62% of landlords improving an HMO within the past six months and a further 24% carrying out upgrades during the previous year.
Modern amenities are also playing a growing role in attracting tenants. Faster broadband topped the list of desired features (40%), followed closely by ensuite facilities (39%) and bills included within the rent (33%).
The research found that landlords are also investing beyond basic compliance, with 58% making improvements that exceed minimum legal requirements, while half have undertaken works specifically focused on meeting regulatory standards.
EVOLVING MARKET
Louisa Sedgwick (main picture), Managing Director of Mortgages at Paragon Bank, says: “These findings show how the HMO market is continuing to evolve, with landlords taking a more targeted and strategic approach to their investments.
“Many are now clearly identifying the tenant groups they want to attract and shaping their properties accordingly, which is influencing decisions around layout, location and the amenities being offered.
“This highlights how varied HMO propositions can be, with borrowing requirements increasingly shaped by property specification, refurbishment plans and the rental positioning landlords are aiming to achieve.
“This creates opportunities to engage with clients at both the acquisition and refinancing stages, particularly where landlords are repositioning properties or building portfolios focused on defined tenant segments. Lenders with experience in more complex propositions, including HMOs, are well placed to support these requirements.”
