Inheritance boom to create a new generation of Britain’s landlords

John Minnis Estate Agents says Britain's coming inheritance boom could produce a new generation of landlords. Hundreds of thousands of people are already receiving inheritances of £50,000 or more, and the overall value of intergenerational transfers is expected to double over the next 20 years.

Research from the Resolution Foundation shows that 2.1 million adults received an inheritance over the two years from 2018 to 2020, up from 1.7 million in 2008-10. Over the same period, the share receiving £50,000 or more rose from 25% to 32%, which means roughly 670,000 people received at least £50,000 in 2018-20. Other research has estimated that the total value of intergenerational transfers will double over the next two decades as older generations pass on their wealth.

John Minnis Estate Agents doesn't expect inheritance to turn automatically into property investment, but believes the amount of wealth changing hands creates the conditions for a new type of landlord.

There is already evidence that people don't always become landlords by setting out to build a buy-to-let portfolio. HMRC's latest landlord research found that 40% of landlords originally bought their property to live in or received it as an inheritance or gift. The other 60% bought specifically as an investment.

Founder John Minnis said: "We're entering a period where property wealth accumulated over decades is going to move between generations on a much greater scale.

"For someone who already owns their own home, receiving £50,000, £100,000 or more can create a completely different set of financial choices.

"They might reduce their mortgage, invest in stocks and shares, keep the money in savings or spend some of it. But purchasing a rental property could also enter the conversation."

Given the scale of these transfers, John Minnis predicts that inheritance-backed and "accidental" landlords could make up a larger part of Britain's rental market over the next decade.

That doesn't mean 670,000 people will become landlords. The figure shows the size of the pool of people receiving substantial sums, while the HMRC data shows that inheritance and gifts are already one route into property ownership and letting.

If 1% of the roughly 670,000 people who received £50,000 or more in 2018-20 used it to buy a rental property, that would mean around 6,700 potential investors. At 5% it would be about 33,600, and at 10% about 67,000. These are illustrations, not forecasts, but they show how even a small share of inheritance recipients choosing property could add up to a sizeable new group of landlords.

John Minnis added: "The really interesting point is that we don't need a huge proportion of inheritance recipients to become landlords for this to have an impact on the rental market.

"If even a relatively small percentage of people receiving substantial inheritances decide to put some of that capital into rental property, you could see thousands of new investors entering the market over time."

Recent research by John Minnis Estate Agents also suggests that "tomorrow's landlord" is likely to enter the market earlier in life and to see property as part of a wider investment portfolio, not just a retirement asset. These investors are more willing to buy outside their local area, looking at cities and regions with strong rental demand, regeneration and long-term growth prospects. Many are building portfolios across different locations and property types instead of buying a single buy-to-let.

For more on what future landlords look like, visit: https://www.johnminnis.co.uk/article/the-modern-landlord-who-will-own-tomorrows-re/1361/