New generations of BTL investors are emerging who will likely force adaptation among advisors and lenders. Millennials, for the first time, accounted for half of all new shareholders in buy-to-let companies across England & Wales last year.
By the end of 2025, Millennial and Gen Z landlords accounted for 60% of new BTL investors in England and Wales. Increasingly, these young buyers are turning to social media for guidance on how they should invest.
There is little evidence for this trend slowing down either. Younger generations are generally much more investment savvy than their older counterparts are. Moneybox found that 47% of those born after 1996 have invested their money this past year, compared with just 17% of those in their 60s and 70s. Increasingly, young people are shunning “forever homes” in favour of building property portfolios.
This all bodes well for specialist lenders. Generally, bespoke funding providers are more open to younger borrowers and first-time buyers who may not have much experience behind them, when compared to mainstream lenders. Brokers should keep this in mind.
Still, if specialist lenders and brokers are to have a role to play in helping new generations start their property investment journeys, there needs to be a rethink on how these investments take shape.
Many industry insiders are likely predisposed to focus on large portfolios, and high property prices. Chances are though; younger buyers simply won’t have the economic clout to target the high-end corners of the market.
Millennials and Gen Z buyers are growing in influence, but their overall wealth levels still aren’t high enough to substantially move the dial. Household wealth data released in January, covering the period April 2020 to March 2022, found that median household wealth was 33 times higher among households with a head aged 65 to 74 years, compared with households in which the head was aged 16 to 24 years.
During this period, median household wealth gradually increased with age, hitting a peak of £502,500 for households with a head aged 65 to 74 years. For those aged 16 to 24, it was just £15,200.
As much as they may want to make substantial investments, young borrowers may be limited to more humble transactions. Over the coming months and years, single flat purchases, shifts to Northern England, and rising auction demand may dominate the property investment landscape.
Smaller bridging loans for more modest investments could be of particular use for the next wave of landlords. With bespoke loans starting from £100,000, Market Financial Solutions is ready to support brokers here.