Guide to buy-to-let properties for Millennial tenants

Guide to buy-to-let properties for Millennial tenants

What Millennials are looking for when renting property

Born between 1981-2000, millennials are one of the most significant groups of renters. With millennials in the UK set to become the largest consumer group over the next decade, their impact on the rental market will continue to grow.

Sometimes dubbed ‘generation rent’, The Resolution Foundation estimates millennials could spend up to £53,000 on rent by the time they turn 30.  42% of millennials are likely to become home owners by the same age, leaving 58% renting for longer.

A report by Knight Frank shows one in four households in the UK (5.8 million) will live in private rented accommodation by 2021. Up to 30% of these are renting while saving for a deposit, and 21% are renting to live in an area where they can’t afford to buy – two reasons which indicate millennials are likely to remain an important part of the rental market for many years to come.

Younger and older millennials have different housing needs so when thinking about purchasing a buy-to-let property, it’s worth considering the type of renter it may most appeal to.

Younger millennials

Straight out of university, perhaps in a new town with a new job, young professionals tend to have one thing in common when looking for a property – budget.

Younger millennials may be happy sharing with groups of friends, perhaps renting a larger house or flat like they might have at university. Most local authorities will require landlords renting to more than a couple of non-related tenants to apply for a multiple occupancy license. However, some lenders including Skipton International do not support mortgages for houses in multiple occupancy.

When renting to younger millennials it’s worth looking at properties with robust fixtures and fittings, a living space hub where tenants can hang out with friends, and more than one bathroom. Good public transport links are more important than car parking spaces, and while tenants might like the idea of a nice garden for summer, consider who will maintain it.

Younger millennials value the flexibility of renting as they may move fairly regularly between houses and groups of friends as they intersperse working and travelling.

Older millennials

A few years into their careers, perhaps in a relationship, older millennials are more likely to be looking for a property they can rent by themselves or with a close friend or partner. One or two bedroom flats, in well-maintained buildings fit the bill– offering tenants a secure, pleasant environment to create a home.

Two bedrooms flats with two bathrooms will have extra appeal for sharers, giving each their own privacy. A modern eat-in kitchen, or sitting room with dining space will also appeal as older millennials start entertaining more at home. Depending on location, a parking space could be a good selling-point, while a balcony, terrace, or communal roof-top space is also desirable.

Appeal of commuter towns

In terms of location, the south east remains popular, however, despite rents in the capital rising by 34% over the past decade, central London is not necessarily a hot spot for rental success.

Research by Savills shows net annual departures by people in their 30s leaving London are up 68% in five years, to 34,500 a year. Many of these will be leaving to buy elsewhere in the UK, but some will be moving outside London to rent more affordably in commuter towns while they save to buy. People in their 20s are now the only age group with net internal movement towards London.

Indeed, analysis of ONS figures by PwC shows average house prices in commuter towns have grown by 4% more than those in central London over the past two years, with prices in commutable towns such as Braintree, Brentwood, Colchester and Basildon expected to rise by 10% in 2017 compared to 4% in central London.

Whether you are consciously looking for a rental property that will appeal to millennials, or to any other sort of tenant, high quality one or two bedroom apartments, in urban areas, close to amenities and transport, should still have a wide appeal.