New research from Rely, the specialist buy to let lender from OSB Group, points to a structural shift in the UK’s landlord population that will reshape the buy to let finance market over the coming decade.

The ‘Next Gen Landlords’ research identifies a new type of buy to let borrower emerging, one with a different entry route, a different financial profile, and a longer-term ownership mindset than the generation they are replacing.

Today, Baby Boomers and Generation X account for 54% of landlords.

Within a decade, that falls to 37%, as Millennials rise to 44% of the market and Gen Z reaches 18%. The sector itself, housing around one in five UK households, remains stable. What changes is the profile of the people running it.

The incoming cohort is also more diverse with ethnic minority representation among landlords set to more than double from 11% to 23%, and the proportion of female landlords rising from 36% to 42%. Brokers who have historically served a relatively homogeneous client profile will need to broaden their approach to support a more diverse range of clients.

Inheritance becomes the defining entry route

For the intermediary market, the most consequential shift is in how the next generation will enter the market. More than a third (36%) of aspiring next gen landlords expect to inherit property they can rent out, with a further 21% expecting to inherit capital they will use to purchase a rental property. 

For brokers, this signals a shift in the advice journey; clients arriving via inheritance are as likely to need holistic financial planning guidance as they are a lending product from the outset.

Smaller portfolios, longer mindsets

The next gen landlord is expected to enter with a smaller initial portfolio than the landlords they are replacing, building incrementally over time rather than acquiring quickly. Alongside this, hold periods are expected to be longer, with succession a key consideration from early in their ownership journey.

Some 50% of future landlords plan to pass their property to family when they eventually exit, up from 42% of today’s landlords. The buy to let relationship with this cohort is therefore not a transactional one.

They are long-term participants in the sector with a clear intent to keep property within the family, making the quality of advice and lender support they receive at the point of entry formative for the entire relationship.

New considerations for brokers 

The emerging picture is of a buy to let client who is younger, more likely to have entered through inheritance, starting smaller and thinking longer. For brokers, this has practical implications: case complexity will increase as inheritance and borrowing are combined; the importance of whole-of-life client relationships grows; and the ability to advise across different ownership structures, personal names, limited companies, mixed portfolios, becomes more valuable.

The data also suggests this generation is motivated by more than financial returns. 82% of current landlords describe their tenant relationships as positive, and 55% are already spending more time thinking about the tenant experience.

The next gen landlord is not motivated by yield alone, they want to operate well, and they will want lenders and advisers who understand that. 

Jon Hall, Group Chief Commercial Officer, OSB Group, says: “The landlords entering the market over the next decade won’t necessarily look like the ones brokers have worked with over the last twenty years.

“More will be coming into the sector through inheritance, many will start with smaller portfolios, and they’ll often be looking at property as a long-term family asset rather than simply an investment.

“That changes the conversations brokers should be having with clients. Advice will increasingly be about understanding someone’s individual circumstances and helping them make the right decisions from day one, whether that’s financing an inherited property, buying a first investment property or planning how to grow a portfolio over time.

“As those journeys become more personal, the value of specialist advice only grows.

“Technology has an important role to play in making lending quicker and easier, but it can’t replace the judgement, experience and conversations that help brokers navigate more complex cases, it needs to complement it. 

“The lenders and brokers that will succeed in this next chapter won’t simply have the fastest processes. They’ll be the ones that combine great technology with the expertise and relationships that brokers and landlords rely on when it really matters.”

You can down load the Next Gen Landlords research here.