Aspiring portfolio landlords are targeting more complex rental propositions as they build their property businesses, research from buy-to-let mortgage specialist Paragon Bank has found.

A survey of 500 landlords who currently have three or fewer rental properties, but with ambitions to build a portfolio, found this group is increasingly targeting multi-unit blocks (MUB) and Houses in Multiple Occupation (HMO).

Today, only 8% of these landlords invest in HMOs but that rises to 17% when thinking about future property acquisitions.

Similarly, 14% of landlords invest in MUBs currently and, in future, that is expected to grow to 26%.

The findings are included in Paragon’s Next Generation Landlord Report, which examines who these landlords are and their aspirations.

Elsewhere, there is a large jump in the proportion who are targeting terraced housing, the staple of the rental market, rising from 26% currently to 37% in future. Other properties landlords expect to buy in the future include detached homes (36% own today vs 40% who intend to buy in future) and bungalows (11% today and 24% in future).

Conversely, flats and semi-detached houses recorded a slight fall, with 42% of this cohort of landlord currently owning flats and 42% intending to buy in the future, with semi-detached homes dropping from 36% to 34%.

Russell Anderson, Paragon Bank Mortgages Commercial Director, says: “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.”

Click to see the report Next Generation Landlord Report.