Its official….landlords are getting younger!

There comes a time in your life when everyone seems to appear young to you. From the bank manager who looks like he’s just out of school and the accountant fresh out of university to the solicitor who looks as baby faced and youthful as you could imagine. The reality, as us ‘middle agers’ know, is that these young professionals aren’t actually getting younger – its just we’re getting older and the gap between a well qualified 30 something to our own age now, is getting ever wider.

But it seems that in some walks of life, the professional role IS actually being held by someone younger than in previous years – and one such example is landlords.

I’ve noticed when filming for Hammer that, (now 18 years on) our contributors are first time buyers more often than when we filmed our first episodes. And I am sometimes cringingly reminded by these budding property investors that they were still in nappies when we first came onto television screens to break the mystery of buying property at auction. Back then, it’s fair to say that most people venturing into what seemed to be a bit of an underworld, were mainly existing property developers – or first time auction purchasers only tempted into the room because they wanted to buy their next door house and it just so happened that it was being sold this way. But now, partly I’d like to think, by the programme’s enduring appeal – in particular amongst the student community – we are seeing far more sub 30 year old purchasers.

And as I’ve always said, the auction rooms are a bit of a barometer on what’s happening in the UK property market as a whole and this shift to younger investors is being seen through estate agent eyes too.

The stamp duty holiday announced by Chancellor Rishi Sunak last July has been partly responsible for a new generation of first-time investors to move into the Buy to Let market where rental supply was declining. The diminishing availability of rental accommodation (which has accelerated rent levels outside of London to a five-year high) is being balanced by a surge in demand for buy-to-lets from new landlords.

The tax break, which ends on the 31st of March (unless it is extended for existing progressing sales) has given a temporary boost to buy-to-let sales and according to The Daily Telegraph, “cleared a financial roadblock” for small-scale landlords, enabling them to take a record market share.

Traditionally, the more mature landlord investor base is dominated by cash buyers, often with an inheritance windfall, or simply because they can’t find similar returns in alternative cash investments. But this group’s market share has fallen from 58% in 2019 to around 50% in the last half of 2020, a drop of 12%.

Various tax and regulatory changes first introduced back in 2016, including the 3% stamp duty surcharge on investment properties, has forced many established landlords to think again – to either sell-up altogether or to sell off some of their portfolios. Yet more recently an influx of new younger small scale landlords, many dipping their toes in the market for the first time, is bolstering supply again and taking their place.

Aneisha Beveridge, of Hamptons, recently told the The Daily Telegraph:
“The stamp duty holiday has tempted more small and first-time landlords back into buy-to-let, reversing a shift towards portfolio investors.”

“Record low interest rates on cash in the bank combined with the lure of a stamp duty holiday has enticed a new generation of investor, many of whom had no previous landlord experience,” Ms Beveridge says.

According to her, there are now 250,000 fewer rental homes in England than there were in 2017 and the proportion of landlord cash purchases fell in 10 out of 11 regions in Britain between 2019 and 2020. This data points to Buy to Lets now being funded by mortgages – which is what you would expect younger investors to use.

So, the Millennial Landlord looks to become a more common occurrence and I would certainly encourage young people to get on the ladder as soon as they can. And this shift from making your first purchase your home, to your first buy to let is something I’ve talked about before. Buying a property in a more affordable area makes good sense. It may not allow young people to vacate the family home or stop paying rent on their primary residence just yet, but it does get them into the property market – even if prices in their home region are prohibitively high.  Young people also often have the time and energy to renovate unruly homes and learn some skills in the process.

Currently, until 31st March this year, completions on property sales, will save up to £15,000 as the nil-rate band was extended in England and Northern Ireland from £125,000 to £500,000. The tax saving is across the board in residential purchases, except that the 3 per cent surcharge still applies for all second homes and buy-to-lets.