Market professionalisation driving interest in HMOs and limited company structures

Ongoing landlord professionalisation, houses in multiple occupation (HMO) evolution, and the rise of limited company structures have been cited as some of the major trends for this year and into 2027 at the BTL panel at the 2026 FP show.

The panel was moderated by Nicola Firth, founder and CEO at Knowledge Bank. The discussion surrounded lender appetite and criteria, as well as the latest developments in the BTL space amid a rising interest rate environment.

In a poll, where the audience was asked where they saw the strongest growth in BTL enquiries, they cited HMOs, followed by limited companies.

Evolution of HMOs

The panellists acknowledged that HMOs are a growth area and are undergoing an “evolution”, with properties increasingly being adapted to cater for the professional rental market.

“HMOs are definitely growing and up north we’re finding the North West is comparative with the South at the moment. Across the country, it’s changing demographic,” said Frankie Kitchen, business development manager at United Trust Bank.

He added: “As landlords are becoming more professional, rather than accidental and amateur, it’s where the margin is.”

Hayley Evans, key relationship manager at OBS Group,  referred to standard HMOs being adapted and reconfigured to appeal to more professional and mature renters.

She explained that those first-time buyers in rented accommodation for longer periods of time and typically in their mid-30s, did not want “the typical HMO shared bathroom”.

Moises Cruickshank, CEO at Keystone Property Finance, said that HMOs “fit into the fact that affordability for first-time buyers is difficult” and observed that landlords are increasingly providing en-suite bathrooms and kitchenettes, for example.

Professional landlords in, accidentals out

Bethan Cooke, director at Pegasus Insight, observed that there are now fewer landlords operating in the HMO space, but those that do tend to be more professional.

She said: “Landlords are starting to specialise in that market, while accidentals are staying with the traditional BTL properties,” meaning there are fewer landlords but potentially more business.

Bethan noted that “accidental” landlords are exiting the market as they try to offload “difficult” properties with more regulation and legislation attached.

Panellists also pointed to an ageing landlord population, with succession and tax planning considerations as being behind the growing interest in, and use of, limited company structures.

Bethan noted there had been “huge growth” in the limited company market following the Budget in 2016, which introduced changes to taxes.

She added that in a “consolidation market”, limited structure companies are less likely to be divested by landlords due to their tax efficiencies.

Harry Galvin, regional account manager for London at West One, said the vast majority of the enquiries the firm receives tend to be about limited company structures.

2027 trends and shifts

Looking ahead to the trends that will define 2027, Bethan told the audience: “I think it’s going to be the more professional landlords, the more highly leveraged, so your portfolio borrowers that are going to be most active.”

She added that there would be more activity from older borrowers, due to an ageing landlord population.

“It’s going to be more remortgaging and purchase transfer activity than new purchase activity that we’re going to be seeing.”