Graham Davidson

Millennials and buy to let – the rise of the young investors

Graham Davidson
|
4th September 2017
Graham Davidson

In the UK, there’s no doubt property has been one of the key drivers for secondary income over the years.

Since buy to let mortgages were first introduced back in 1996, investing in property has become much more accessible to the masses and we’ve seen an influx of landlords across the UK investing in buy to let, with as many as one in five properties in the market now being investor owned.

But what do we know about the demographic of the average investor? It may come as a surprise to some but research from Sequre’s clients has found that around 15% of all investors are between the ages of 21 – 30.

With the younger generation now more switched on than ever when it comes to buy to let, it’s worth noting what the benefits are for getting onto the property investment ladder early:

1) Pension

It might not be at the forefront of your mind in your twenties, but income for retirement should be a priority for the younger generation sooner rather than later. With poor performing annuities not offering a decent income, millennials need to be preparing for the future now. Property could be the perfect solution as not only does it historically perform better with prices rising in excess of 200% over the last two decades, but we know bricks and mortar will always be a necessity for the economy, so it’s likely to still be the strongest investment option in 40 years’ time, as well as in the near future.  

2) Long Term Investment

If we have learnt anything over the last few years, it’s that property isn’t going anywhere; but for those who choose to only invest in property as a “get-rich-quick” method, it can backfire. Property prices will rise but the property cycle means that there can be times where house prices dip and then rise again - if you’re looking to invest over several years, then it’s highly likely you’ll make a significant amount on your investment over time from both rental income and capital appreciation.

3) Overall Stronger Returns

We all know it pays to be smart with investments. It’s been previously discussed why going for a hands-off investment is much more beneficial in the long term and where the best locations are in the UK for investment. With buy to let, it’s a simple case of the more you put in, the more you get out. The longer you have your property for, the more it will go up in value over time and the more you will make, so younger investors are generally at an advantage here.

4) Tangible Asset for the Future

Unlike a lot of other investment options, property has a unique quality in the fact that it is tangible – you can touch it, see it and feel it. This alone generally means you have more options with how you choose to use it, which is why it is usually more attractive to the younger generation than perhaps stocks and bonds. It can be sold, passed on to loved ones, kept to increase in value or leveraged in order to purchase more properties to build a portfolio. Investing at a younger age simply gives individuals options for the future. It’s not uncommon for younger investors to purchase property in their thirties with no set intentions on how to spend the returns – they can simply be saved as a nest egg for later on down the line.

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