The New Generation of Landlords Have Arrived

By 4 min read • July 14, 2021

A quick online search will produce a whole host of tips and tricks for staying young. You may be advised to moisturise daily or load up on antioxidants to fight inflammation. However, few sites will advise you that becoming a landlord will prevent the onset of age. Yet, landlords in Britain are becoming increasingly youthful.  

According to a survey by Knight Knox, the average age of landlords in Britain has fallen substantially since 2018. Almost half (47%) of landlords are now aged 40 or under. This compares to just three years ago, when only 29% of landlords were below the age of 44. 

In part, this new youthfulness may have been caused by older landlords selling their properties and leaving the market. Changes in the tax deductibility of mortgage interest and the increasing need to operate properties through a limited company has encouraged many landlords to sell up and enjoy a quieter life. There are over a quarter of a million fewer rental properties in England than there were in 2017.  

Andy Phillips from Knight Knox highlights: “Landlords in the UK are getting younger and they’re more willing to invest in the market in order to grow their portfolios quickly. It’s really quite remarkable to find that almost half of British landlords are aged under 40 and shows that property investment isn’t exclusively for the elite.” 

“In 2018, 50 per cent of landlords were aged over 55. Our latest research shows that this has declined to just 26 per cent being aged 51 or over. The face of modern landlords in the UK is changing and it’s the younger generation which is seeing the greatest opportunity.”  

What Does This Mean for Property Investors? 

Whilst it may be an interesting titbit to say that landlords are becoming more youthful, there are wider implications for the market. Younger landlords appear to be bringing a different approach and outlook to the long-term buy-to-let market. 

Firstly, younger landlords tend to favour rental income over capital growth. Landlords between the ages of 18 and 30 earned an average of £25,481 in rental income per year – the highest average income of any age range. This may be driven in part by the need for younger landlords to utilise greater leverage. Younger landlords tend to rely more heavily on the use of mortgages to fund purchases. This can encourage younger investors to place a greater value on higher yielding properties which better cover interest payments. In fact, cash purchases fell in 10 out of 11 regions between 2019 and 2020, suggesting the increasing prevalence of mortgages.  

Secondly, younger landlords tend to have a significantly more optimistic outlook on the buy-to-let market. Around 54% of under 30’s responded that they were ‘very confident’ about market predictions for the coming year. A mere 15% of those aged over 51 responded the same. It appears that younger landlords are also willing to put their money where their mouth is, with 47% of under 30’s planning on purchasing another house within the next year. 

Finally, the tilt towards youth has impacted the average number of properties held by landlords. The number of properties the average landlord owns has fallen from 2.5 in 2018 to 2.1 in March 2021. This is understandable, older landlords tend to have larger and more established portfolios, whilst their younger counterparts may only just be starting out on their property journey. 

A Shift in Landlord Behaviour 

For the moment, it could be easy to overestimate the impact of a younger generation of landlords on the market. Whilst the absolute number of younger landlords may be increasing, more experienced landlords will continue to account for the majority of the lettings market due to their typically larger portfolio sizes. That being said, a more youthful population of landlords may expedite the evolution of landlord services. 

In general, new entrants and younger people can bring a fresh outlook and new approaches to an industry. Typically, more youthful generations tend to favour digital communication, quicker response times and more effective technological solutions. Whilst this may sound wishful, it can only add further pressure to the landlord services industry to adapt and improve. 

Whilst the landlord services market is evolving, there are still a significant number of operators who have not adapted with the times. There is a stark contrast between letting agents which include automated updates to landlords and those that do not. Those that have used technology to reduce the admin burden and improve communication and those which still rely on infrequent updates. Amongst lenders, there are still some which require posted correspondence whilst new entrants support open banking and digital portals. Ask any landlord forum and an increasing number will suggest using digital banking platforms to save time and money. In fact, if you can forgive a somewhat biased view, are there any portfolio landlords who would wish to return to filing cabinets, plastic wallets and contact books over using Landlord Vision

Granted, improvements in the landlord services industry may not come over night. Equally, the prevalence of younger landlords may not be the spark that ignites the fire of wholesale change. However, an increasingly youthful industry can only expedite such changes. They may even encourage more experienced landlords to assess their own best practices in an increasingly digital world. 

Disclaimer: This ‘Landlord Vision’ blog post is produced for general guidance only, and professional advice should be sought before any decision is made. Nothing in this post should be construed as the giving of advice. Individual circumstances can vary and therefore no responsibility can be accepted by the contributors or the publisher, Landlord Vision Ltd, for any action not taken, or any decision made to refrain from action, by any readers of this post. All rights reserved. No part of this post may be reproduced or transmitted in any form or by any means. To the fullest extent permitted by law, the contributors and Landlord Vision do not accept liability for any direct, indirect, special, consequential or other losses or damages of whatsoever kind arising from using this post.  

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