Generational shift as millennials make up half of new buy-to-let investors in England and Wales

Millennials now account for half of new buy-to-let investors in England and Wales, signalling a generational shift in landlords, while rents have dipped, according to a report. It is a surprise finding, as many millennials – people born between 1981 and 1996 – have struggled to afford a housing purchase, which means they are less likely than older generations to own their home. Even so, some have clearly fared better, and millennials are leading the charge in buy-to-let investment, according to analysis of Companies House data by the estate agent Hamptons. For the first time, millennials made up 50% of all new shareholders in buy-to-let companies set up so far this year. Five years ago, they made up 40% of buy-to-let shareholders. So far this year, three-quarters of shareholders in new companies were under 50 – up from 68% a decade ago. While tax rises and tighter regulations have prompted some landlords to sell up, the influx of younger investors has helped sustain landlord purchases. The share of homes bought by a landlord across England and Wales remained unchanged from the same time last year, despite an increase in the second home stamp duty surcharge. Landlords now pay a 5% surcharge as of April, up from 3% previously. Across the country, landlords accounted for 11.3% of property purchases in the third quarter, a small uptick from 11.2% a year earlier. Hamptons estimates that millennial landlords will create 33,395 new buy-to-let companies this year – more than twice the number incorporated in 2020. These purchases are increasingly concentrated outside the south of England, previously a property hotspot. Together, London, the south-east, south-west and east of England accounted for 34% of investor purchases across England Wales in the July-to-September quarter. In 2016, these regions accounted for 50% of purchases. Investors are increasingly trying to buy in the north of England, where yields are higher and cheaper properties mean stamp duty costs are lower. More than a quarter (28.4%) of homes sold in the north-east were bought by a landlord, compared with 8% in London. The average rent for a newly let home in Britain fell by 0.3% in the year to September – down £4 a month from £1,402 to £1,398, Hamptons said. This marks a notable shift from the 4.2% annual growth recorded a year earlier. London drove the slowdown, with monthly rents down by 2.7% or £65. In inner London, rents declined by 4.6%, bringing the average to £2,766 a month, which is £165 below the October 2024 peak. In contrast, rents for renewed contracts continued to rise, outpacing inflation, and increasing by 4.6% over the past 12 months. Buy-to-let businesses have become the largest single type of business in the UK this year – with nearly four times the number of fast-food takeaways or hairdressers. The shift reflects that baby boomers, now in their 60s and 70s, are less likely to be setting up new portfolios. Instead, they are more likely to be winding them down or passing them on to the next generation. The number of Gen Z-led companies, with people aged between 13 and 28, overtook new incorporations from baby boomers for the first time this year.