Younger people (25–34-year-olds) are investing in property at record levels and are opting to invest in property for rental over purchasing their own residential homes.
We see that an increasing number of young people are investing their earnings, working capital and inheritance in property more than ever before due to an ‘increased awareness of wealth-building’ and ‘wealth management.’
Thanks to high deposit requirements and mortgage rates, many young people now view property investment as a much more viable financial strategy than homeownership. They recognise that investing in real estate not only offers potential appreciation over time but also provides a source of passive income through rentals.
This approach allows them to enter the property market earlier, leveraging their investments to eventually acquire their own homes with greater financial confidence.
Decreasing age of landlords
This is supported by a report from Paragon Bank which indicates a decrease in the average age of buy-to-let landlords, driven by growth in the proportion of landlords in their 30s. In 2023, 31% of new buy-to-let mortgages were acquired by those in their 30s, compared to 21% in 2014. Landlords aged 18-29 also saw an increase in their share of purchases.
Research from September 2024 showed over 3,000 buy-to-let landlords were under 21, and a further 63,000 were aged 21-30, suggesting a growing interest in property investment among the very young. Millennials (31-40) also constitute an increasingly large percentage of investment property owners.
Investing in second properties
Another notable trend amongst young people in the real estate market is a recent increase in those investing in a second property for renting or wealth building purposes. While traditionally this age group has been associated with first-time home purchases, the decision to purchase an additional property is now gaining popularity.
With the growing demand for rental properties, especially in urban areas, many young investors see the potential to generate passive income by renting out their second property. The rental market has become more lucrative in recent years, providing a steady cash flow and helping to offset mortgage costs.
The combination of low-interest rates, increased access to financial resources, and the growing desire for long-term wealth has converged at a time when the housing market offers promising returns for investors. Additionally, many young adults are facing challenges entering the traditional housing market due to soaring home prices, prompting them to pivot to investment properties as a more feasible alternative.
A continuing trend
As more young adults in the 25-34 age range look to build wealth, diversify their assets, and secure financial freedom, the investment in second properties is emerging as a key strategy. With the right market conditions, access to information, and financing options, this trend is expected to continue as the next generation of investors takes a more proactive approach to real estate.
But where should they invest? Younger and first-time property investors take advantage of regions with affordability challenges where there are either lower property prices or strong rental demand to secure long-term financial stability. Our research, completed as part of our most recent property investment guide, shows that Scotland, Northern Ireland, The Midlands and South-East London are amongst the most popular places to invest due to high rental demand and attract young buyers seeking strong returns.
This article is taken from Landlord Today