Landlords are increasingly adapting houses in multiple occupation to appeal to specific tenant groups, with investment decisions increasingly shaped by tenant demand and property positioning, according to new research from Paragon Bank.

The lender found that 92% of landlords actively prepare or present their HMOs to attract a particular type of tenant, highlighting a more specialised approach to both acquisitions and asset management.

Students remain the most commonly targeted tenant group, identified by 36% of landlords, followed by white-collar or professional workers at 25% and young single tenants at 19%.

The research suggests this strategy is also influencing purchasing decisions. A quarter of landlords prioritise properties with ensuite bedrooms when assessing investment opportunities, while 23% place greater emphasis on energy efficiency. Around one in five look for larger bedroom sizes or locations close to employment centres and transport links.

Landlords also continue to invest in upgrading existing stock. Almost two-thirds (62%) have improved an HMO during the past six months, while a further 24% have carried out improvements within the past year.

Changing tenant expectations are also shaping investment priorities. Faster broadband is now the most sought-after feature, cited by 40% of landlords, followed closely by ensuite facilities (39%) and bills included within the rent (33%).

Beyond attracting tenants, many landlords are investing to raise property standards. The research found that 58% have undertaken improvements beyond minimum legal requirements, while half have completed upgrades focused on meeting regulatory or compliance obligations.

Louisa Sedgwick, managing director of mortgages at Paragon Bank, 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.”