How will demographic shifts affect landlords?

The UK housing market is in a state of flux. The home-owning population continues to age, young and middle-aged people are renting for longer and landlords are having to adjust to a raft of new regulation.

Combined with this, uncertainty around Brexit has curbed housing market growth. And since the vote in 2016, previously safe bets like London are growing slower than other areas such as Manchester, Birmingham and Cardiff.

What do all these demographic shifts mean for private landlords? In this article, we’ll break down a few of these key trends and look at how you might respond.

 

Middle-aged renters on the rise

A 27-year-old today is half as likely to be a home-owner than they were 15 years ago. House prices have doubled over the past two decades and, as a result, 28 per cent of the population aged 18-34 own just 6 per cent of the UK’s housing wealth.

Interestingly, however, 25-34 year olds are no longer the main occupiers of private rented accommodation. As young renters have slid into middle-age, 35-49 year olds have become the most widespread occupants of privately rented property. What’s more, the number of people aged 35-54 renting has increased by 15 per cent in the last three years. And the number aged 45-54 has risen by a third.

There are even signs that some renters may never get on the property ladder; 20 per cent of survey respondents over the age of 55 say they don’t believe they will ever get enough money for a deposit – or that they would qualify for a mortgage if they could.

Get a landlord insurance quote

Get a quote online in under 4 minutes

What does this mean for landlords?

20 per cent of the UK population live in privately rented accommodation. Renting is no longer a stop-gap – something that you do in your twenties while you save up for a mortgage. It could be something that you do well into your forties, or for your entire life.

While this is a matter of necessity, it has also led to a mindset shift among tenants. Renting well into middle and later life is more commonplace and more accepted. In fact, 84 per cent of UK renters are satisfied with their rented accommodation.

These older renters have very different expectations from their younger counterparts. Energy efficiency in particular is a key concern, with 42 per cent of renters saying that they factor eco-friendliness into their decision-making. For landlords, increasing your energy efficiency rating from the mandatory E to a C or higher could be a great way to appeal to these older renters. Modern, energy efficient boilers and windows may also appeal.

Rental properties also need to cater for different types of households. Families with children now make up 24 per cent of the private rented market, which is 10 per cent higher than 20 years ago. Landlords can make their properties more appealing to families by creating family-friendly garden areas and making sure that features such as fireplaces and work surfaces don’t have sharp edges.

Surprisingly, 13 per cent of renters have also said that they would be happy to pay extra for cleaning services, which would definitely appeal to time-poor parents of young children. Landlords could also promote nearby creche or childcare services in their lettings adverts.

How will demographic shifts affect landlords? | Group of people in co living.

Another interesting bi-product of the ‘generation rent’ phenomenon is the increase in popularity of co-living arrangements. Younger consumers have a more fluid sense of ownership than older generations. They’re happy to share their workspace, their car, even their clothing. And this extends to where they live.

London boasts the largest co-living space in the world, where renters have shared access to on-site restaurants, bars and a gym, all designed to appeal to millennial renters. The traditional HMO model is being reoriented around specific demographics.

Landlords who are targeting younger renters need to create shared spaces and facilities that match millennial tastes.

The same goes for baby boomers. HMO landlords need to ask themselves “what is my ideal tenant profile and what can I create that will appeal to them?”

Get a landlord insurance quote

Get a quote online in under 4 minutes

Baby boomers are selling up

The UK’s baby boomers, by contrast, account for 43 per cent of the country’s housing wealth.

Over the next 20 years, the 65+ demographic is expected to sell up and downsize. If this happens, supply will rise which will slow price growth and enable more people to get on the property ladder.

However, there are concerns over a lack of appropriate housing for older downsizing homeowners

Damp, lack of insulation, poor heating, isolation, unsafe staircases and a lack of natural light are risks that older homeowners are keen to avoid. All of which could dissuade would-be sellers from downsizing.

Coupled with this, the average age of buy-to-let landlords has fallen by 10 years since 2014. While this may be due to younger investors entering the market, it may also be a response to a raft of new government regulation which has caused many single-property landlords to exit the market.