More HMO landlords expect to spend upwards of £10,000 on property improvements over the next 12 months than any other amount, research from Paragon Bank has found.

The findings indicate that many HMO landlords are established operators with a long-term commitment to the private rented sector. Three quarters have let property for at least 10 years, while more than half cited long-term investment as one of their main reasons for becoming an HMO provider.

Four in five landlords said they intended to increase or maintain the size of their property portfolios during the next 12 months.

Some 62% had improved a property within the previous six months, with a further 24% having completed work during the past year. Looking ahead, 54% said they were extremely likely to make further improvements in the coming 12 months, while 18% were already upgrading properties.

When asked about their expected expenditure, 28% said they planned to spend more than £10,000, making this the most common response. A further 15% expected to spend between £5,001 and £10,000.

The proposed work ranges from decoration and improvements to kitchens and bathrooms to regulatory and compliance upgrades. Landlords are also investing in alarms, fire doors and energy efficiency measures.

The investment comes as HMO operators contend with higher running costs, regulatory changes, licensing requirements and elevated interest rates.

Paragon’s research found that 82% of landlords believed HMOs offered better rental yields than other residential letting properties, while 79% said they generated better profitable returns.

The bank’s lending data showed that HMOs produced an average yield of 8.90% in the second quarter of 2026, the highest recorded by Paragon for any property type.

Louisa Sedgwick, 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.”