The UK rental market has traditionally been the territory of older men – those in their 50s and 60s at the end of their professional careers, turning to rental income for their later-life sustenance. But that is changing. The 2010s have witnessed an influx of younger rental investors taking their chance on a portfolio.
Why? Liquid Expat have some theories…
Stricter rules are dissuading veteran landlords
The news has been rife with ‘clampdowns’ on landlord activity. The abolition of mortgage tax relief. The reform of wear and tear rules. Tweaks like this have chipped away at the huge, unimpeded profitability that we were used to 20 or 30 years ago.
If a landlord has entered the market today with knowledge or direct experience of what it once was, they may feel they are getting stung for more outgoings than necessary.
According to the Council of Mortgage Lender’s (CML) 2016 survey, 60% of British landlords are over 55, but younger people seem to have a greater amount of buy-to-let (BTL) mortgages. In the same report, the CML states that investors with a BTL loan are more likely to have “larger or more valuable portfolios” than those that don’t. It’s clear that the under-55s are making smarter decisions with where they invest and how they care for the rental site. Perhaps older landlords, who are not as familiar with doing as much to run a high-earning business, have become complacent.
Homes offer better yields than saving accounts
With the shortage of affordable housing in the UK, rental prospects are seen as more of a norm than they used to be.
Yet yields exceeding 10% for each property aren’t, by the standards of previous decades, how the landscape has come to be viewed. Back in the 80s, 90s and 2000s, landlords were accustomed to greater returns on their investment. Today a region is seen as particularly healthy if it breaks the 6-7% mark. TotallyMoney’s BTL data map shows that the North West is still the geographical leader, with cities like Manchester attaining a peak yield of 8% in some areas.
This is crucial when we look at the rates for savings accounts – a five-year ISA from Nationwide, for instance, has a mere 2% interest, which is classed as competitive. Property yields of 6% or more appear much better when stacked alongside these financial packages. On top of that, the under-35s have seen their relatives lose pensions, bonds and stock securities after the 2008 crash. BTL investments are easier to rely on, since the asset will always be there, regardless of temporary fluctuations in the market as a whole.
Whether you’re interested in a single property, or an expansive portfolio, it is heartening to see young, savvy landlords making their presence felt on the British BTL scene. Liquid Expat Mortgages can help your ambitions bear fruit. We direct clients to the lenders they can trust for foreign rental opportunities – it all starts with a call or a message to our specialised support team.