Younger investors driving growth in the buy to let market

Landlords in their 30s are fuelling growth in the buy to let market as an analysis of industry data shows a big drop in the average age of BTL investors buying new properties with mortgages.

According to a report by Paragon Bank, the average investor age dropped from 46.4 years in 2014 to 42.9 years in 2023.

It says this shift is largely driven by a surge in purchases by younger demographics with landlords in their 30s accounting for just 21% of purchases in 2014, but that figure jumped to 31% last year.

‘Perception that BTL landlords are an aging group’

Paragon’s managing director of mortgages, Richard Rowntree, said: “There is a perception that buy to let landlords are an ageing group, but the majority of new purchases are concentrated in landlords who are under the age of 50.

“This group accounted for nearly three quarters of all buy to let purchases last year, highlighting that there remains strong investor appetite for rental property among younger landlords.”

He added: “There has also been a strong increase in the proportion of landlords in their 20s and 30s purchasing property and these landlords will be the portfolio landlords of the future.

“With forecast growth in the population of 10% and significant demographic changes, it’s vital we increase the stock of rental homes to keep pace with demand.

“These landlords need a stable fiscal and regulatory environment to encourage continued investment into the sector.”

Smaller portfolio landlords looking to expand

The bank’s ‘Next Generation Landlord Report’ also delves into the aspirations of smaller portfolio landlords looking to expand their holdings.

While the proportion of landlords in their 40s acquiring new properties remained relatively steady, there was a noticeable decline in purchases by those in their 50s and 60s.

The number of buy to let purchases by landlords in their 50s dropped from 29% in 2014 to 20% in 2023.

Similarly, investors in their 60s saw their share of purchases fall from 10% to just 6%.

Landlords aged 18 to 29 accounted for 6% of purchases in 2014, rising to 10% last year.

A survey of 500 landlords with up to three properties and aspirations of expanding their portfolios revealed an average age of 37.8 years.

The largest demographic within this group was those aged between 25 and 34 (35%), followed by 35 to 44 year olds (31%).