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Adapting to meet the needs of the next generation of landlords – Rowntree

by: Richard Rowntree, managing director for mortgages at Paragon Bank
  • 08/07/2024
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Adapting to meet the needs of the next generation of landlords – Rowntree
As the early adopters of buy-to-let (BTL) eye retirement, a new generation of landlords will need to meet the demand for rented housing.

Supporting the residential property investors of tomorrow offers opportunities for the industry. 

Launched in the mid-90s to support the relatively small but growing private rented sector (PRS), BTL is not too far from being 30 years old. Many of the early adopters who started to build BTL empires big and small are now approaching an age where they are slowing the expansion of their portfolios or, in the case of smaller-scale landlords particularly, exiting.

This begs the question – who will supply the rented homes of the future to cater to the millions of people who call the PRS home? 

Encouragingly, Paragon research shines a light on a cohort of landlords with aspirations to grow their three or fewer property portfolios. 

The majority – roughly eight in 10 – already rely on the services of accountants, lettings agents and financial advisers, so in meeting the demand for rented homes in future these burgeoning landlords can provide further opportunities for the industry.

For example, these landlords anticipate diversifying as they grow and gain experience. Today, 8% invest in houses in multiple occupation (HMOs) and 14% multi-unit blocks (MUBs), but that rises to 17% and 26% when asked about the property they intend to hold in future.

These relatively complex propositions come with additional considerations, so landlords will often benefit from any education brokers can provide. Similarly, of the aspiring portfolio landlords we spoke to, seven in 10 (71%) own property in personal name, so providing advice on limited companies that will become more relevant as they expand. 

 

Adapting to an ever-changing world 

The world has changed so much since the early days of BTL, and with rapidly evolving technology and growing geopolitical tensions, it feels like that rate of change is accelerating.

When we consider that industry data highlights how the average age of landlords using BTL mortgages to purchase properties has fallen over the past decade – 46.4 years old in 2014 to 42.9 in 2023, it seems fairly safe to assume that the new, younger customers will have different expectations compared to those who applied for their first mortgage while the internet was still in its infancy.

An obvious example here is technology. 

In their interactions with the companies they have used in other aspects of their lives, younger entrants to the market will be expecting an efficient digital experience, available whenever and wherever they like.

It is important that we look at ways to make technology work harder for our industry, where all of the necessary checks and balances are particularly time- and resource-consuming. 

At Paragon, we’re soon to launch the first phase of a digital transformation programme that tackles much of this heavy lifting with industry-leading efficiency.

I have no doubt that brokers will notice how this changes the way we work for the better and, knowing that others across the industry are also investing in technology, I hope that healthy competition will ultimately drive improvements to enable us to best serve the landlords of today and tomorrow.

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