Houses in Multiple Occupation are moving up the value chain as tenants demand better amenities, research by Paragon Bank has suggested.

Paragon’s survey of HMO landlords found acknowledgement that tenants expecting en-suite bathrooms, larger rooms, high speed broadband and quality furnishings.

Half of those surveyed (48 per cent) said they had experienced growing demand for high end HMOs and 45 per cent saying this had come in part from a growing number of young professionals choosing to live in HMOs.

A quarter of landlords asked (23 per cent) said they believed HMOs were now an appealing proposition for older and more affluent tenants.

The majority identified higher speed broadband as a more important demand, while a significant proportion of tenants were seeking larger rooms (39 per cent), en-suite bathrooms (53 per cent), better quality furnishings (39 per cent) working from home potential.

‘HMOs used to be dogged by a reputation for poor quality housing, but that perception is shifting as landlords upgrade stock and meet the changing demand from tenants’, said Paragon Bank director of mortgages Richard Rowntree.

‘Tenants will no longer accept poor quality; they want broadband, bathrooms and better-quality furnishings.

‘We saw strong growth in demand from landlords to acquire HMOs during the pandemic. This may reflect the wider shortage in rental property, with tenants opting for a room in a shared home because one or two-bedroom properties are in short supply. Tenants also like the flexibility and social nature of HMOs, particularly if they are renting with friends’.

Meanwhile just under half of landlords (47 per cent) with an HMO agreeing that they offered better rental yields than other residential rental property. Some 4 per cent of landlords, reported net yields of over 10 per cent, while 64 per cent reported yields of 8 per cent or over.