Intergenerational wealth transfers are expected to double , with 40% of landlords already entering the market through inheritance, gifts or existing homes, with a new wave of landlords expecting to emerge.
John Minnis estate agents say that Britain’s looming inheritance boom could create a new generation of landlords, with hundreds of thousands of people already receiving inheritances worth £50,000 or more and the overall value of intergenerational transfers expected to double over the next two decades.
New research from the Resolution Foundation shows that 2.1 million adults received an inheritance over a two-year period in 2018-20, up from 1.7 million in 2008-10.
Crucially, 32% of recipients received £50,000 or more, meaning roughly 670,000 people received an inheritance of at least £50,000 across the two-year period.
The value of inheritances is also increasing, with the data highlighting that the number and value of inheritances have grown substantially, while other research has estimated that the total value of intergenerational transfers is set to double over the next 20 years as wealth held by older generations passes to younger ones.
John Minnis Estate Agents believes that while inheritance will not automatically translate into property investment, the scale of wealth being transferred creates the conditions for a new type of landlord to emerge.
And there is already evidence that becoming a landlord does not always start with someone deliberately 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 through inheritance or as a gift, compared with 60% who bought property specifically as an investment.
John Minnis, founder of John Minnis estate agents predicts that inheritance could become a new route into landlordism.
He says:
“We’re entering a period where property wealth accumulated over decades is going to move between generations on a much greater scale,” says John Minnis.
“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.”
Based on the scale of wealth transfers, John Minnis predicts that inheritance-backed and “accidental” landlords could become a more prominent part of Britain’s rental market over the next decade.
John Minnis, Founder of John Minnis Estate Agents
This does not mean that 670,000 people will become landlords, instead the figure demonstrates the size of the potential pool of people receiving substantial capital, while the existing HMRC data shows that inheritance and gifts are already one of the routes through which people become property owners and landlords.
If only 1% of the roughly 670,000 people who received £50,000+ inheritances in the 2018-20 period were to use that wealth to acquire a rental property, that would represent around 6,700 potential investors.
At 5%, the figure would rise to approximately 33,600.
At 10%, it would be approximately 67,000.
These are illustrative scenarios, not forecasts of actual landlord numbers, but they demonstrate how even a small proportion of inheritance recipients choosing property investment could create a meaningful new cohort of landlords.
John adds:
“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,” says John Minnis, Founder of John Minnis Estate Agents.
“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.
The scale of the potential opportunity becomes clearer when the inheritance data is examined more closely.
Resolution Foundation research found that the number of adults receiving an inheritance over a two-year period increased from 1.7 million to 2.1 million between 2008-10 and 2018-20.
At the same time, the proportion receiving £50,000 or more increased from 25% to 32%.
Research recently conducted by John Minnis also highlights that ‘tomorrow’s landlord’ is increasingly likely to enter the market earlier in life, viewing property as part of a wider investment portfolio rather than simply a retirement asset. They are more willing to invest beyond their local area, targeting cities and regions with strong rental demand, regeneration opportunities and long-term growth prospects. Rather than purchasing a single buy-to-let property, many are taking a strategic approach to building diversified portfolios across different locations and property types.