Landlords are prioritising ensuite bedrooms and green credentials when hunting out investments or making improvements to HMOs.
Paragon Bank says the majority (92%) increasingly tailor HMOs to appeal to particular tenants, with students the most commonly targeted group (36%), followed by white collar or professional workers (25%) and young single tenants (19%).
This targeted approach is influencing both how landlords upgrade existing properties and the types of HMOs they are looking to buy. A quarter (25%) now prioritise ensuite bedrooms when identifying investment opportunities, while 19% favour locations close to work hubs or transport links. Larger bedroom sizes (19%) and improved energy efficiency (23%) are also on their wish-list.
Investment activity reflects this, reports Paragon, with 62% of landlords having improved an HMO within the last six months and a further 24% in the past year.
Clearly
Louisa Sedgwick, managing director of mortgages, says many landlords are now clearly identifying the tenant groups they want to attract and shaping their properties accordingly, which influences decisions about layout, location and amenities.
“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,” adds Sedgwick.
Despite the rise in Article 4 Directions, Property Buyers Today reports that there are an estimated 472,823 HMOs in England, up 2% to 462,307 from the previous year.
Markets
The highest concentrations are largely found in some of the least affordable housing markets. Oxford, which tops the ranking with 4.5% of homes classified as HMOs, had an average house price of around £475,000 (one of the most expensive outside London), and a monthly rent of up to £1,958. Cambridge (3.9%) and Exeter (3.6%) make up the top three regions with the largest share of HMOs outside London.
Nuneaton and Bedworth Council is the latest in a long line of authorities that has put HMO spread in its sights. Councillors have pledged to investigate the concentration and impact of HMOs which could include an Article 4 Direction.