Landlords target HMO investment at specific tenant groups

Students remain the main target for HMO landlords, but they are far from the only group in landlords’ sights, research reveals.

Paragon Bank found that 92% of landlords actively prepare or present their rental properties to attract a particular type of tenant.

It adds that 36% of landlords operating houses in multiple occupation target students, while 25% focus on white-collar or professional workers.

Young single tenants are the preferred group for 19%.

HMO market is evolving

Paragon’s managing director of mortgages, Louisa Sedgwick, said: “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.”

She added: “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.”

A quarter of landlords prioritise ensuite bedrooms when considering an investment, while 23% look for better energy efficiency.

Proximity to employment centres or transport links is important to 19%, with the same proportion favouring larger bedrooms.

Most improvement beyond legal minimum

Work on existing properties is widespread and 62% of landlords said they had improved an HMO during the past six months.

Another 24% had completed upgrades within the past year.

It also appears that broadband is becoming a bigger consideration, with 40% reporting increased tenant demand for faster connections.

Ensuite facilities were highlighted by 39%, followed by bills-inclusive arrangements at 33%.

The research also found that 58% of landlords had carried out improvements beyond the minimum legal standard, with half of those undertaking work linked to regulation or compliance.