HMO landlords are planning £10,000 upgrades

HMO landlords are preparing to spend thousands of pounds on improvements as compliance requirements and running costs increase.

Paragon Bank found that 28% of HMO landlords plan to spend more than £10,000 on their properties over the next 12 months.

Another 15% have budgeted between £5,001 and £10,000, while three-quarters of those surveyed have been letting homes for at least a decade.

Experienced landlords invest

The bank’s managing director of mortgages, Louisa Sedgwick, said: “These findings show that many HMO home providers are experienced operators who continue to take a long-term view of the sector.

“HMOs can be more complex to manage than standard buy-to-let properties, but they remain attractive to landlords who understand the market and have the expertise to operate successfully within it.”

She added: “What stands out is that landlords are continuing to invest as standards, costs and regulation evolve.

“The level of planned expenditure suggests that many are focused on maintaining quality, supporting compliance and ensuring their properties remain well positioned over the long term.”

Improvement work continues

Around 62% of HMO landlords told the survey they have carried out improvements within the past six months.

Another 24% have completed work between six months and a year ago.

More than half of HMO landlords, 54%, said they were extremely likely to invest in further improvements over the coming year, while 18% already have work under way.

Projects range from decorating and upgrading kitchens or bathrooms to installing fire alarms, fire doors and energy efficiency measures.

At the same time, 80% intend to expand or maintain their portfolios during the next 12 months.

HMO yields reach 8.90%

Paragon’s buy to let lending data shows that HMOs produced an average yield of 8.9% in the second quarter of the year.

That is, the lender says, the highest it has recorded for any property type.

Its survey also found that 82% of landlords believe HMOs offer better rent yields than other residential properties, while 79% said they deliver more profitable returns.