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Younger landlord investors drive market growth

The average age of landlords purchasing new buy-to-let properties has decreased significantly over the past decade, with an increasing number of thirty-somethings entering the market.

Shift in Demographics
According to Paragon Bank’s analysis of industry data, the average age of buy-to-let landlords acquiring new properties with a mortgage fell from 46.4 years in 2014 to 42.9 years last year. This shift is attributed to a growing proportion of landlords in their 30s, which rose from 21% in 2014 to 31% in 2023.

Paragon’s Next Generation Landlord Report highlights the aspirations of landlords with one to three properties who plan to expand their portfolios. The report indicates that while the proportion of landlords in their 40s has remained relatively stable, there has been a notable decrease in the number of landlords in their 50s and 60s acquiring new properties. Specifically, landlords in their 50s accounted for 29% of purchases in 2014, dropping to 20% last year, while those in their 60s fell from 10% to 6%.

Younger Landlords on the Rise
An inverse trend is seen among younger landlords aged 18 to 29, who represented 6% of purchases in 2014 and increased to 10% last year. Further research by Paragon found that aspirational future portfolio landlords are predominantly in their 30s. A survey of 500 landlords with up to three properties showed that the average age of those aspiring to expand their portfolios was 37.8 years. The largest age group was between 25 and 34 (35%), followed by those aged 35 to 44 (31%).

Paragon Bank’s Managing Director of Mortgages, Richard Rowntree, stated, “There is a perception that buy-to-let landlords are an aging group, but the majority of new purchases are concentrated in landlords who are under the age of 50. This group accounted for nearly three quarters of all buy-to-let purchases last year, highlighting that there remains strong investor appetite for rental property among younger landlords.”

Future of the Rental Market
Rowntree also noted the growing trend of landlords in their 20s and 30s purchasing properties, predicting that these individuals will become the portfolio landlords of the future. He highlighted the importance of increasing the stock of rental homes to meet the anticipated 10% population growth and significant demographic changes. “These landlords need a stable fiscal and regulatory environment to encourage continued investment into the sector,” Rowntree added.

The changing demographics of buy-to-let landlords reflect a dynamic market driven by younger investors. As these new landlords expand their portfolios, the need for a supportive regulatory framework and increased rental property stock will be crucial to meet future demand. This trend underscores the evolving landscape of the UK’s rental market and the potential for continued growth and investment in the sector.

 

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