Landlords are increasingly tailoring houses in multiple occupation (HMO) to appeal to clearly defined tenant groups, adopting a more targeted approach to both acquisition and asset management, according to new research from Paragon Bank.
The findings show that 92% of landlords actively prepare or present their HMOs to attract a particular tenant type, with students the most commonly targeted group at 36%, followed by white collar or professional workers at 25% and young single tenants at 19%. This targeted approach is shaping both how landlords upgrade existing properties and the types of HMOs they look to acquire.
A quarter of landlords now prioritise ensuite bedrooms when identifying HMO investment opportunities, while 19% favour locations close to work hubs or transport links. Larger bedroom sizes, cited by 19%, and improved energy efficiency, cited by 23%, also feature prominently in acquisition decisions.
Investment activity reflects this positioning:
- 62% of landlords have improved an HMO within the last six months
- A further 24% have done so within the past year
- 58% are undertaking upgrades beyond minimum legal requirements
- Half are carrying out regulatory or compliance-focused improvements
Tenant expectations continue to shape property specifications too, with demand rising for faster broadband, cited by 40% of landlords, ensuite facilities at 39% and inclusive bills at 33%.
"These findings show how the HMO market is continuing to evolve, with landlords taking a more targeted and strategic approach to their investments," said Louisa Sedgwick, managing director of mortgages at Paragon Bank (pictured).
"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.
"For brokers, 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."
