Millennials and Generation Z are expected to account for almost two-thirds of UK landlords within the next decade, according to research from specialist buy-to-let lender Rely.

The study found that Millennials are forecast to represent 44% of landlords within 10 years, while Generation Z will account for 18%, giving the two groups a combined 62% share.

By comparison, Baby Boomers and Generation X currently account for 54% of landlords, but their combined share is expected to fall to 37% over the same period.

The Next Gen Landlords research, conducted by Rely with demographic consultancy Trajectory, also points to changes in how people enter the buy-to-let market, the size of their initial portfolios and how long they intend to hold property.

INHERITANCE TO PLAY GREATER ROLE

Inheritance is expected to become an increasingly important route into the private rented sector. Some 36% of aspiring next-generation landlords expect to inherit property that they can rent out, compared with 27% of existing landlords.

A further 21% expect to inherit capital that they will use to purchase a rental property.

Rely said this could change the type of support required from mortgage brokers, with clients who enter the market through inheritance potentially requiring broader financial planning alongside advice on property finance.

The research also suggests that the next generation of landlords will begin with smaller portfolios and add properties more gradually than their predecessors.

They are expected to hold their investments for longer, with succession planning playing a greater role. Half of future landlords intend to pass their property to family members when they eventually leave the market, compared with 42% of current landlords.

Rely said this could increase the importance of long-term relationships between landlords, brokers and lenders, as well as advice covering different ownership structures, including personal ownership and limited companies.

LANDLORD BASE BECOMING MORE DIVERSE

The research also forecasts changes in the demographic make-up of the landlord population. Ethnic minority representation is expected to rise from 11% to 23%, while the proportion of female landlords is forecast to increase from 36% to 42%.

Tenant relationships are another consideration identified by the study. Some 82% of current landlords described their relationships with tenants as positive, while 55% said they were spending more time thinking about the tenant experience.

Jon Hall (pictured), group chief commercial officer at OSB Group, said: “The landlords entering the market over the next decade won’t necessarily look like the ones brokers have worked with over the last 20 years.

“More will be coming into the sector through inheritance, many will start with smaller portfolios, and they’ll often be looking at property as a long-term family asset rather than simply an investment.

“That changes the conversations brokers should be having with clients. Advice will increasingly be about understanding someone’s individual circumstances and helping them make the right decisions from day one, whether that’s financing an inherited property, buying a first investment property or planning how to grow a portfolio over time.

“As those journeys become more personal, the value of specialist advice only grows. Technology has an important role to play in making lending quicker and easier, but it can’t replace the judgement, experience and conversations that help brokers navigate more complex cases, it needs to complement it.

“The lenders and brokers that will succeed in this next chapter won’t simply have the fastest processes. They’ll be the ones that combine great technology with the expertise and relationships that brokers and landlords rely on when it really matters.”