The average age of those buying a new buy-to-let (BTL) property has fallen from 46.4 in 2014 to 42.9 in 2023, reversing the stereotype of an ageing landlord population.
According to Paragon’s research, which surveyed 500 landlords with up to three properties with a desire to grow, those in their 30s made up 21% of total purchases in 2014, going up to 31% in 2023.
Those aged between 18 and 24 made up a tenth of BTL house purchases in 2023, a rise from 6% in 2014.
Landlords in their 50s made up 20% of BTL purchases in 2023, a fall from 29% in 2019, and those aged 60 or over make up 7% currently, down from one in 10 in 2014.
Those aged 40 are the largest group, making up a third of BTL purchases last year, which compares to 34% in 2014.
The report found that around three-quarters of BTL property purchases last year were made by those aged 49 or younger, compared to six in 10 a decade ago.
Paragon said that landlords who developed their portfolios around 30 years ago are “in retirement or nearing retirement age, so a new breed of landlord will be required to step up and provide rental homes of the future”.
Tenant demand, retirement planning and house price growth key factors for landlords
Aspiring portfolio landlords pointed to long-term tenant demand, retirement and house price growth as “key drivers of growth” for those looking to grow.
Approximately 60% of landlords said that long-term demand for rental property was a key factor, followed by 54% saying it was part of their retirement plan and 47% pointing to long-term house price increases.
Around 40% said that they had a “general ambition” to build a property portfolio, and a third said they preferred property to other investment assets. Another third said they wanted to start a business to pass down to their children.
Looking ahead, around 55% of aspirational portfolio landlords wanted to make a portfolio over the next decade as they see it as a “long-term investment to build wealth”.
A similar number said that it will supplement their monthly income or that it was a long-term investment as a pension provision.
Only 36% said that they would turn it into the main source of income and 23% said that it was a long-term investment, but they aimed to sell the whole portfolio off.
Complex property types to grow in popularity in future
Landlords expressed a desire to invest in more complex property types in the future, such as houses in multiple occupation (HMOs) and multi-unit blocks (MUBs).
For instance, around 8% of those surveyed invest in HMOs at the moment, but this went up to 18% when asked about what they want to invest in going forward.
On the MUB side, around 14% currently have an MUB in their portfolio, but this rose to 26% who will consider this property type in the future.
Terraced housing is also an area of investment, rising from 26% currently to 37% in the future.
Around eight in 10 said they would target property in need of maintenance, with 44% saying they preferred properties needing minor refurbishment and 35% looking at properties needing significant work.
Louisa Sedgwick, Paragon Bank’s managing director of mortgages, said: “The rental market is set for continued growth, driven by projected population increases of around 10% over the next decade. This favourable market outlook is underpinning the investment decisions of aspiring landlords.
“The research also demonstrates a clear focus on long-term planning, with over half of landlords building portfolios to support their retirement. This indicates a strong commitment to the rental sector and is essential for the overall health of the private rented market.
“The rental market is attracting a growing number of landlords who are inspired by their friends and family or who have discovered the benefits of property ownership through other circumstances. These aspiring landlords are committed to providing rental homes for the future and require a supportive regulatory and fiscal environment to continue their investment activities.”
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
