HMO landlords double down despite £10,000 improvement costs
When asked how much they expect to spend on improvements over the next year, 28% of house in multiple occupation (HMO) landlords said more than £10,000, making it the most common response, according to research from Paragon Bank.
A further 15% expected to spend between £5,001 and £10,000.
The work being undertaken spans both presentation and long-term property standards. Landlords are increasingly investing in regulatory or compliance upgrades, safety improvements such as alarms and fire doors, and energy-efficiency works.
Landlords hold firm on portfolio ambitions
Landlords were committed to their portfolio plans, with 80% saying they intend to either increase or maintain their overall property portfolio over the next 12 months.
Accordingly, investment activity was strong, with 62% of HMO landlords having improved a property within the last six months and a further 24% doing so within the past year.
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Looking ahead, 54% said they were extremely likely to carry out further improvements in the next 12 months, while 18% are already in the process of upgrading properties.
HMOs continued to be seen as a highly profitable investment, as 82% of landlords said they provide better rental yields than other residential lettings and 79% reporting stronger returns.
Paragon Bank said its lending data attested to this, which found that HMOs generated an average yield of 8.9% in Q2 2026, outperforming all other property types.
Louisa Sedgwick (pictured), managing director of mortgages at Paragon Bank, 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.
“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.
“For brokers, this creates opportunities to support landlords who are reviewing their portfolios, funding improvement works or looking to structure borrowing around more specialist property types. Understanding the reasons behind that investment, whether linked to asset quality, regulatory requirements or long-term returns, is increasingly important when advising clients in the HMO market.”
