Students were most commonly targeted, at 36%. White collar or professional workers were the next-most targeted group at 25%, followed by young, single tenants at 19%.
Landlords based their investment decisions on their targeted clientele.
A quarter of landlords prioritised en suite bedrooms to improve their HMO offering.
Some 19% preferred locations close to work hubs and transport links.
Improving energy efficiency was prioritised by 23%. Landlords have been slow to improve Energy Performance Certificate (EPC) ratings on properties, as costs were a barrier to meeting the government’s 2030 deadline for all properties to meet an EPC rating of C.
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However, 58% of landlords are invested beyond minimum legal requirements and half carry out regulatory or compliance-focused improvements.
Overall, 62% of landlords have improved an HMO within the last six months and a further 24% have done so in the past year.
Louisa Sedgwick (pictured), Paragon Bank’s managing director of mortgages, 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.
“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.”
