Landlords of Houses in Multiple Occupation (HMOs) are planning substantial investments in their properties, driven by increasing compliance requirements and running costs. A survey by Paragon Bank indicates that 28% of HMO landlords expect to spend more than £10,000 on upgrades over the next year. Another 15% have allocated between £5,001 and £10,000 for improvements.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, noted that these findings suggest many HMO providers are experienced operators with a long-term view of the sector. She added that landlords are continuing to invest as standards, costs, and regulations evolve, with planned expenditure focused on maintaining quality and supporting compliance.
Around 62% of HMO landlords surveyed reported having completed improvements within the last six months, with an additional 24% having done so between six months and a year ago. Over half, 54%, stated they were extremely likely to invest in further improvements in the coming year, and 18% already have work underway. Projects include decorating, kitchen and bathroom upgrades, and the installation of fire alarms, fire doors, and energy efficiency measures.
Paragon Bank's buy-to-let lending data shows that HMOs achieved an average yield of 8.9% in the second quarter of the year, which the lender states is its highest recorded for any property type. The survey also found that 82% of landlords believe HMOs offer better rent yields than other residential properties.