Latest statistics reveal a new tenant type buy-to-let landlords could target…

 

While you might predominantly associate the private rented sector with the younger generation, this research shows why it’s important to keep an open mind.

Buy-to-let landlords and property investors, particularly those with rental properties in city centre locations, often market their homes to attract young professional tenants.

However, the government’s latest English Housing Survey for 2018-19, which looks at people’s housing situations across the country, has revealed a sharp rise in the number of people aged 55-64 who are living in privately rented accommodation.

Over the past decade, the number of people in this age group renting privately has increased by 3%, from 7% in 2008-09 up to 10% in 2018-19. The social rented sector saw the same percentage point rise, and this has also equated to a 6% fall in that number of 55-64-year-old owner occupiers, from 79% to 73%.

There has also been a significant increase in the proportion of families with children living in privately rented homes, up from 30% in 2008-09 to 37% in this latest survey. In numbers, this represents an increase of around 765,000 households.

How these figures impact property investors

For people looking to invest in buy-to-let property, putting a focus on your target tenant is hugely important. Keeping your property occupied for as much of the year as possible is the main goal in order to achieve consistent rental yields, and targeting your tenants appropriately can help you achieve this.

While young people aged 25-34 are still the most likely age group to occupy rental homes, the English Housing Survey revealed that the proportion of this age group renting had decreased from 48% to 41% over the past decade, while more 25-34-year-olds have become owner-occupiers over this time.

Targeting a young age group is still relevant, particularly in city centre locations, where young professionals want to be close to work and transport hubs, and well located for an active social life and leisure facilities. They are also likely to value any mod-cons you place in the rental property, such as smart home technology, as well as have a preference towards furnished accommodation.

By contrast, the growing number of older renters and families indicates an increasing value in this side of the market. These tenant types will potentially be more attracted to properties located near schools, perhaps not as centrally situated, and generally larger with more bedrooms. They may also be more likely to rent an unfurnished property, so they can furnish it themselves.

Longer tenancies to avoid the void

Another benefit to targeting older tenants and families is that they may want to stay in the property for a longer length of time, gaining a sense of feeling ‘at home’, compared to younger individuals whose circumstances might change more frequently.

According to the survey, the average length of residence across the country’s privately rented properties was 4.4 years. A quarter of renters remained in the private rented sector (PRS) for 5-9 years, while almost a third (28%) were in the sector for 10 or more years. Just under half (47%) had rented for less than five years.

However, another important trend was a significant decrease in the number of private renters who lived in the sector for less than a year, from 13% to 10%. The indication that less people are using the PRS as a short “stop-gap”, in favour of staying for longer, is something for buy-to-let landlords to bear in mind when planning their next investment.

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Latest statistics reveal a new tenant type buy-to-let landlords could target…

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