With more people choosing to rent than ever before – due to the high deposits needed to get on the property market – and demand for rental properties forcing prices to record levels, the buy-to-let market has witnessed a broader spectrum of landlords entering the market for the first time.
But it appears that this flurry of new landlords is occurring for opposing reasons.
According to Graham Kinnear, managing director at Landlord Assist, current market conditions have led to an influx of reluctant landlords flooding the market because they are unable to sell their properties and see renting as a sensible solution whilst, at the same time, others are looking to capitalise on low interest rates.
Subsequently this has led to a broader age profile of buy-to-let landlords and has changed the face of the market.
He said: “We are seeing more and more landlords nearing retirement age, so-called ‘grandlords’, entering the market with the intention of supplementing their state pension. Property is seen as a great hedge against inflation and many hope that it will provide them with a regular income and a great way to top up their retirement pot.
“In the late nineties and noughties we saw young people in their late twenties and early thirties determined to build property portfolios as an investment to provide a lump sum upon sale. Whilst we still act for a large number of landlords who fall into this category we are seeing slightly older people getting into the market, perhaps, with a more common aim to be to get five houses bought and paid off in time for retirement.”
Stephen Parry, commercial director at Landlord Assist said: “Landlords of all ages appear to be placing less focus on the capital growth prospects and more interest in the income ability of a property investment. This may be as a result of the lessons learned through the downturn or it may be that they are thinking ahead and viewing rental income as a pension provision instead.
“In addition to this we are also seeing landlords who are managing their properties as a type of trust to help secure their childrens’ future.”
Kinnear said the emergence of new landlords in the market has not only helped to address the UK housing shortage but also changed the perceived negative image which has historically tarnished landlords.
“The image of the private landlord has changed so much from the poor image and reputation it used to suffer from. Renting has become more appealing and socially acceptable as a result of the recession and the changing landscape of the sector has helped the role of landlords to be recognised as a business model too.
“There is wide-scale confidence in buy-to-let at the minute, and with the promise of low interest rates for the foreseeable future and the acute housing shortage in the UK, we expect the sector to remain attractive for some time yet.”