Aspiring portfolio landlords are increasingly shifting their focus towards more intricate rental ventures, as highlighted by recent research from buy-to-let (BTL) mortgage experts at Paragon Bank.

The study, which surveyed 500 landlords owning three or fewer rental properties, revealed that while a mere 8% of these landlords are currently invested in houses in multiple occupation (HMOs), the landscape is set to change. This figure is predicted to more than double, with 17% planning to acquire HMOs in the future.

Similarly, a growing trend was observed in investments in multi-unit blocks (MUBs). Presently, 14% of landlords have invested in MUBs, but that number is expected to surge to 26% when it comes to future property purchases.

Terraced homes are also seeing a spike in interest. At the moment, 26% of landlords have these properties in their portfolios, but that share is forecasted to rise sharply to 37%.

Other types of properties are also attracting attention. Detached homes, for instance, are set to see an uptick, climbing from 36% ownership to 40%. Bungalows, traditionally a more niche choice, are predicted to see a notable leap in popularity, with ownership expected to grow from 11% to 24%.

On the flip side, the appetite for flats and semi-detached homes appears to be waning slightly. Currently, 42% of landlords hold flats, a figure expected to remain unchanged in future acquisitions. However, the share of semi-detached homes is set to dip modestly, falling from 36% to 34%.

Russell Anderson, commercial director at Paragon Bank Mortgages, remarked: "The majority of landlords start building their portfolios with more simple buy-to-let propositions, such as self-contained flats or terraced houses."

He continued, “These properties have been the staple of the private rented sector for many years and will continue to be.”

However, he noted a shift, adding, “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."

Anderson concluded with an outlook on the market, stating, “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.”