Landlords can profit as only 1 in 10 Millennials is getting a mortgage

Landlords can profit as only 1 in 10 Millennials is getting a mortgage

Looking at the UK property market today it's often difficult to find something positive to say about it. Sales are sluggish, house prices are unpredictable and many have had to accept that buying a home is simply not going to be possible. In fact, last month, research carried out by the Nottingham Building Society found that just one in 10 Millennials is planning to take out a mortgage over the course of the next year. However, while it might seem to be all doom and gloom there is something of a silver lining for landlords in terms of the potential size of Generation Rent.

What does the research say?

The Nottingham Building Society looked at YouGov Profiles data to get some insight into the attitudes of 20 - 37 year olds with respect to the economy, housing and buying a first home. House prices in the UK have now hit an average of more than £220,000. According to the Office for National Statistics the average salary is £36,611. As most mortgage lenders will only offer a loan that is a maximum of four times salary it's not difficult to see why buying is so out of reach for so many. The research compiled by Nottingham Building Society identified that a third of Millennials claim to be saving for a property but only 11% are likely to be in a position to buy over the next year.

What does this mean for lettings?

The most obvious advantage of fewer people buying is that the pool of potential tenants available to landlords increases. Although some changes to tax relief and lettings fees have potentially made life less profitable for some landlords recently, the demand for rented property remains high, which means it's still a very positive investment to make. Figures from PWC predict that an additional 1.8 million households are likely to become private renters by 2025. That would be a total of 7.2 million households, one in four in the UK. However, it's not just Millennials who are more committed to renting than buying but the over 60s too. Research from the Centre for Ageing Better found that the number of over-60s renting privately increased from 254,000 in 2007 to 414,000 in 2017. By 2040 it believes that around a third of people over 60 could be renting from private landlords.

Could you become a landlord?

If you have ever considered becoming a landlord, with the potential market for tenants increasing by the year, now is a good time to do it. In order to maximise rental yields you'll need to consider factors such as the following:

• Property management - a good agent can provide seamless management if you don't have the time to be hands on
• Optimising property potential - for example, a mix of long-term tenancies and short term lets ensure your property is always earning
• Regulation and compliance - tenancy agreements, acceptable fees, meeting legal safety requirements, these are just some of the necessary details for landlords. Again, a good managing agent can handle most of this for you.

We are letting agents in Hackney with a wealth of experience in management and supporting new landlords looking to build a profitable business from property. If you are interested in renting out your home, get in touch to discuss your options.