Aspiring portfolio landlords are increasingly targeting more complex rental propositions, according to research from buy-to-let (BTL) mortgage specialist Paragon Bank.
A survey of 500 landlords with three or fewer rental properties found that, while only 8% currently invest in houses in multiple occupation (HMOs), this number was expected to rise to 17% for future acquisitions.
Similarly, the share of landlords investing in multi-unit blocks (MUBs) was set to grow from 14% to 26% for future acquisitions.
There was also a notable increase in interest for terraced homes, with current ownership at 26% and projected to climb to 37%.
Other property types landlords planned to pursue included detached homes, increasing from 36% now to 40% in the future, and bungalows, expected to rise from 11% to 24%.
In contrast, ownership of flats and semi-detached homes was expected to slightly decline.
Currently, 42% of landlords own flats, with the same percentage planning to buy them in the future.
Semi-detached homes were set to decrease from 36% ownership to 34%.
Russell Anderson, commercial director at Paragon Bank Mortgages, said: “The majority of landlords start building their portfolios with more simple buy-to-let propositions, such as self-contained flats or terraced houses.
“These properties have been the staple of the private rented sector for many years and will continue to be.
“However, as they build experience and, for many, letting becomes a business, we see portfolio landlords typically moving into more complex buy-to-let through higher yielding HMOs and MUBs.
“With the demand for rented property significantly outweighing supply, the need for HMO style property is growing and we expect this to be a strong market segment for years to come.”
