Paragon Bank has revealed that long-term tenant demand and a desire to supplement retirement income are the primary drivers for aspiring landlords seeking to build property portfolios.
The bank’s latest study, The Next Generation Landlord Report, surveyed 500 landlords with up to three properties and ambitions to build larger portfolios.
The findings highlighted a growing trend among landlords who are actively seeking to increase their rental income and build long-term wealth.
The report found that six in 10 landlords cited the ongoing demand for rental properties as a key factor in their decision to grow their portfolios.
In addition, over half of landlords (54%) were looking to add properties to their portfolios as a means of supplementing their retirement income.
Nearly half of respondents (47%) believed that long-term house price growth is a significant driver for their investment decisions, while over a third of landlords (34%) preferred property as an investment asset over other options.
Louisa Sedgwick, Paragon Bank’s managing director of mortgages, said:Â “The rental market is set for continued growth, driven by projected population increases of around 10% over the next decade.
“This favourable market outlook is underpinning the investment decisions of aspiring landlords.
“The research also demonstrates a clear focus on long-term planning, with over half of landlords building portfolios to support their retirement.
“This indicates a strong commitment to the rental sector and is essential for the overall health of the private rented market.”
The report also shed a light on the factors that influence landlords’ decisions to enter the rental market.
Friends and family played a significant role for many, with 43% citing them as a primary motivation.
Additionally, a large proportion of landlords (39%) started renting out their first property by accident, often after purchasing a second home or inheriting property.
When asked why they chose property over other investments, landlords emphasised its tangible nature (67%), wealth-building potential (54%), and the ability to pass it on as an inheritance (53%).
Sedgwick concluded: “The rental market is attracting a growing number of landlords who are inspired by their friends and family or who have discovered the benefits of property ownership through other circumstances.
“These aspiring landlords are committed to providing rental homes for the future and require a supportive regulatory and fiscal environment to continue their investment activities.”
