According to property firm Knight Knox, the average age of all British landlords has decreased overall. In 2018, people under 44 accounted for 29% of all landlords. Now, those aged under 40 accounts for 47% of all landlords. These figures show that there has been a significant change in the property ladder over the past three years. More and more younger people are finding value in the long-term strategy of buy-to-let (BTL) investments. This injection of youth is an excellent sign for the industry.
On the flip side, older landlords are moving away from BTL investing. In 2018, according to the study, exactly 50% of landlords were aged over 55. But in today’s market, this percentage has declined by almost half to 26% aged 51 or over — a massive decrease.
In part, this may be down to first-time buyers. Last year’s stamp duty holiday increase can be seen by many as a way to capitalise while BTL rental supply declined. The jump from £125,000 to £500,000 in tax-free rates is a huge pull for many investors, especially first-time buyers.
The tax break, which has been extended through to 30th June, has given a temporary boost to BTL sales. The capital they stand to gain is a great way of getting started in the business. As we all know, once you get off the mark, the only way is up. That first experience being positive is vital.
As the research indicates, the youngest landlords – those aged between 18 and 30 – are making more money from rental income than older landlords. They average £25,481 a year, according to the 500 private landlords surveyed. Not only that, but there are now 250,000 fewer rental homes in England than in 2017, and cash purchases fell in 10 out of 11 regions between 2019 and 2020. That suggests BTLs are being funded by mortgages – a first-time investor technique.
Unsurprisingly, these younger landlords are increasingly optimistic about their future in the industry. Around 54% of under 30s said they were ‘very confident’ about market predictions for the following year. On the other hand, just 15% of over 51s said the same. The under 30s also said they were planning on purchasing another property within the next year or so.
What is the reasoning behind this? Several things related to Chancellor George Osborne’s 2016 regulatory changes would appear to be the answer. The phased-in tapering of mortgage interest relief, 3% stamp duty surcharge, and the wear and tear allowance abolition. These three aspects gave landlords a number of reasons to sell up properties or sell off their portfolios while they had the chance to, knowing they would be affected by the changes.
Moving from here on out, we should expect some of these figures to stagnate. The end to the stamp duty holiday is the main reason. But after that, who knows what may happen. For those wanting to build up their portfolio, though, now is the best time to do so. Capitalising at the right moment and gaining that necessary experience can immensely benefit the rest of your career. Don’t do so, and you may live to regret that decision further down the line.
Originally Appeared Here