Inheritance will become ‘primary route’ into landlording, says Rely
Many future landlords will have joined the private rental sector by inheriting property or capital through family transfer, a buy-to-let (BTL) lender has predicted.
Rely’s Next Generation Landlord Playbook report surveyed more than 1,500 current and aspiring landlords and found that 36% of hopeful landlords expected to inherit property they could rent out.
A further 21% said they would likely inherit money to buy a rental property, while 13% expected to inherit a property portfolio from a family member.
Some 27% said they would use savings to purchase a rental property, while 21% expected to take out a BTL mortgage.
Just 27% of today’s landlords said they became one by inheriting property, a markedly lower share than the 55% of future landlords who expected to enter the market through inheritance.
Of those looking to leave the market, 42% of existing landlords said they would transfer their business or property to family and 17% would sell to someone else.
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A quarter were unsure of their exit plan, and 5% planned to sell to investors.
A more diverse, representative landlord
The report also stated that as existing baby boomer and Gen X landlords exited the market, the new generation would “reshape the sector’s diversity, values and approach”. The report said the incoming cohort of landlords, who will be primarily millennials and Gen Z, would be more “gender-balanced, more ethnically diverse, and more representative of the UK population”.
The future landlord will also be more purpose-driven, motivated by positive tenant experiences and contributing to their communities. The report said they would also likely operate professionally from the outset.
“Overall, the PRS is evolving into a more diverse, professional, and socially conscious sector. This transformation will require adaptation from lenders, policymakers, and industry stakeholders to support new ownership pathways, financial needs, and higher expectations around tenant experience,” the report said.
It predicted that the share of female landlords would rise from 36% to 42% due to increased female financial independence.
Further, there will be a higher share of landlords from ethnic minority backgrounds, more than doubling from 11% currently to 23%.
The report said: “The increase comes from a sharp rise in Black British and Indian ethnicities amongst the future landlords market, with each group more than doubling when compared to the existing market.”
A new kind of landlord
Jon Hall (pictured), group chief commercial officer at OSB Group, Rely’s parent company, said: “The landlords entering the market over the next decade won’t necessarily look like the ones brokers have worked with over the last 20 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.”
He added: “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.”
