From first-time buyers to seasoned investors, the UK property market is made up of a wide range of buyers. Each exhibits a unique set of characteristics and motivations.
In the current climate – one defined by economic and political turbulence – it is essential that lenders and brokers are able to tailor support to different types of borrowers.
Without that support, buyers are less likely to be able to successfully navigate the new era of higher interest rates and market turbulence.
Such is the variety of buyers, delivering a bespoke service can be challenging. Doing so first requires an understanding of the different needs that different demographics of borrower typically have.
Understanding a typical British homebuyer
As a specialist lender, the focus of this article will lean more towards different types of investors and landlords within the UK property market. However, it would be remiss of me not to first include an overview of homebuyer profiles.
According to recent figures from Avant Homes, one in two (50 per cent) UK adults own their own home.
In England, Statista data shows that 35.5 per cent of homeowners are aged 65 or over. Those aged between 55 to 64 own 19.6 per cent, followed by 45 to 54 (19 per cent), 35 to 44 (15.2 per cent), 25 to 34 (10.1 per cent), and 16 to 24 (0.5 per cent).
Of all UK homeowners, 28 per cent own their homes outright and 22 per cent have a mortgage, according to Avant Homes data.
For the most part, residential mortgages are more straightforward than specialist finance loans for investors and landlords.
Homebuyers’ needs are often relatively simple; they require support finding the best rate, and then in navigating procedural aspects of purchasing, such as mortgage applications and legal steps.
However, they do not usually require help with more technical complexities, as they will be using the property as their primary residence.
As such, brokers will seldom need to provide support when it comes to an investment plan, exit strategy or tenant management, for example.
Furthermore, mainstream buyers – particularly those between 30 and 50, who make a sizeable proportion of homebuyers – typically have stable incomes, good credit scores and meet common deposit requirements. This makes it easier for brokers to place cases with mainstream mortgage providers.
Tailoring support to the various types of investors
But private homeowners represent just one segment of British homebuyers.
While it is difficult to ascertain an exact figure for how many investors are currently operating in the UK, we do know that – in regards to the buy-to-let sector – the number of unincorporated landlords rose to 2.82mn in 2021-22, HMRC data shows, while a record 50,000 landlords started BTL companies in 2023, according to data from estate agency Hamptons.
Therefore, as these cases tend to be more complex than those of typical homebuyers, it is vital that brokers are aware of the differences between each type of investor if they are to provide the right kind of support.
