The rental market is evolving, and buy-to-let investors should be alert to the changes in the market to ensure that they can adapt and change with the market trends. Gen Z is a distinct and unique generation that are emerging as the dominant renters in the market, and buy-to-let investors must be vigilant to their wants and needs to succeed in the market. In this article, we will explore what property Gen Z want and how buy-to-let investors can adapt to that to ensure that they can maximise their investment.
Who Are Generation Z
Generation Z, or Gen Z for short, refers to anyone born between 1997 and 2012, meaning they are in their late teens to their mid-20s. This generation has grown up in an era marked by widespread access to the internet and rapid technological advancements, shaping their values, habits, and worldview. They are the first generation to grow up with significant influence from the internet, making them more digitally literate than their millennial counterparts.
This has influenced their view on property and how they navigate their lives. Gen Z are more likely to work from home and are more environmentally conscious than previous generations. Financially, Gen Z faces unique challenges, often dealing with the lingering effects of economic uncertainty, such as the impact of student debt and the rising cost of living. As a result, they are more financially cautious and may struggle more compared to previous generations. Additionally, Gen Z is highly influenced by digital media, with social media playing a major role in shaping their decisions, from consumer choices to personal and professional aspirations.
What do Gen Z prioritise in property?
Gen Z make up 36% of the UK’s rental sector. This means what they prioritise when choosing somewhere to live is important for buy-to-let investors to know.
Convenient Locations
Gen Z is increasingly preferring proximity to local amenities, work and leisure facilities when choosing where to live. The location of a property plays a significant role in tenant satisfaction, and this is especially true for Gen Z. In addition to convenience, they value vibrant, multicultural, and inclusive neighbourhoods that offer a dynamic living experience.
A prime example of such an area is Liverpool’s Baltic Triangle, which has become a desirable location for young adults. The Baltic Triangle combines accessibility, cultural diversity, and a thriving community, making it a popular location for young adults.
Energy efficient homes
Gen Z is more environmentally conscious than previous generations, having grown up in the context of the climate crisis. They are aware of the need for sustainability and actively seek eco-friendly features in their living spaces. This includes properties with recycling programs, energy efficient appliances, and high EPC ratings (A,B, or C grades). These features not only align with their values but also help reduce their living costs, as energy-efficient homes are better at retaining heat and minimising energy consumption. As a result, Gen Z is increasingly prioritising sustainability both for its environmental benefits and its potential to lower long-term expenses.
Click here to read more about the benefits of eco-friendly homes for buy to let investors
Affordability
Gen Z are increasingly opting for more budget friendly property options, particularly in the context of the cost-of-living crisis and student debt. Many Gen Z tenants are now choosing shared accommodations or smaller living spaces to keep costs more manageable. Co-living spaces have gained significant popularity among Gen Z renters, offering a cost-effective and social living arrangement. For buy-to-let investors, this shift presents an excellent opportunity to invest in co-living properties, catering to Gen Z’s preferences for affordability, community, and flexibility.
Flexibility
Gen Z tend to favour a more flexible approach to housing, reflecting their desire for mobility and adaptability. Gen Z are becoming more interested in flexible leases and short-term rentals, allowing them to travel or relocate for job opportunities without being locked into contracts.
The flexibility also extends to the layout of their living spaces, liking apartments and houses with rooms that can serve multiple functions. Open floor plans are particularly appealing as they provide the freedom to rearrange furniture and create spaces that fit their changing needs and lifestyles.
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Technological Integration
Gen Z places high value on technological integration in their homes, having grown up in a digitally driven environment. As a tech-savvy generation, they prioritise smart home features that enhance convenience, efficiency, and security. Smart technologies like smart thermostats, keyless entry systems, and energy monitoring tools are increasingly important. Over 35% of Gen Z buyers report that these tech-driven features play a significant role in their property selection process, reflecting their preferences for homes that align with their digital lifestyles.
How do they differ from previous generations
Previous generations benefited from a more favourable market environment, with lower prices and interest rates that made homeownership more attainable. In contrast, Gen Z faces record-high housing prices, which makes buying a home less accessible. While there is debate about how many Gen Zers can afford to purchase property compared to older generations, the reality is that rising costs and soaring mortgage rates—now double what they were for previous generations—have made homeownership increasingly difficult. As a result, renting has become the more common choice for many in this generation, with over one in four Gen Zers currently renting their homes.
Gen Z’s housing challenges mirror those faced by Millennials, who also contended with a shrinking housing market, with more than 40% renting by age 30. Gen Z is experiencing a similar trend, signalling a growing demand for rental properties. This shift presents a valuable opportunity for buy-to-let investors to adjust their strategies and cater to the increasing number of Gen Z renters, providing the flexible, affordable housing options they seek.
Great Locations for Gen Z tenants
These are some key locations that buy-to-let investors should consider when choosing to invest in due to their Gen Z tenant demographic population.
Manchester
Manchester’s vibrant student population of 123,950, combined with a high number of young working professionals, makes it no surprise that 18-24-year-olds represent 15% of the city’s population—a 6% increase over the past five years. The city’s strong salary potential and its reputation as a leading student hub are key factors attracting a large influx of Gen Z residents. With numerous employment opportunities for new graduates and early-career professionals, Manchester has become an appealing destination for young people just entering the workforce. As a result, the city has earned the title of the best city to work in for Gen Z, cementing its status as a top choice for this generation.
The Northern Quarter
The Northern Quarter stands out as a prime location, renowned for its vibrant atmosphere and eclectic charm. Popular with both students and working professionals, the area is celebrated for its thriving arts scene and diverse range of independent businesses, including unique cafes, bars, and restaurants. Situated in the heart of the city, the Northern Quarter offers residents convenient access to all that Manchester has to offer, making it an ideal choice for tenants seeking both culture and connectivity.
Check out our exclusive off-market Northern Quarter property promising yields up to 14%.
Salford Quays
Salford Quays and MediaCityUK have undergone significant regeneration, transforming the area into a thriving hub for media, technology, and creative professionals. With major employers like the BBC and ITV, the area has become a prime location for property investment, particularly for Gen Z tenants seeking career opportunities in dynamic industries.
The area’s proximity to Manchester city centre and its role as a base for influential employers ensure a steady influx of tenants, especially young professionals, ambitious executives, and creative Gen Z individuals who are drawn to its blend of career prospects and vibrant urban living.
Nestled along the picturesque Manchester Ship Canal, Salford Quays offers stunning waterfront views, along with a variety of dining, shopping, and leisure options. Cultural landmarks such as MediaCityUK, The Lowry arts complex, and the Imperial War Museum North enhance the area’s appeal, attracting both residents and visitors and further solidifying its cultural and economic significance for Gen Z renters.
Click here to read our article exploring what Salford Quays has to offer
Conclusion
As buy-to-let investors, adapting to the preferences of Gen Z is essential for attracting and retaining tenants in today’s competitive market. By aligning with the values and needs of this generation, investors can ensure their properties remain desirable and relevant. Embracing these trends not only enhances the appeal of rental properties but also helps build a positive reputation among younger tenants, ultimately meeting the evolving demands of the modern rental market.
If you’re interested in exploring the variety of investment options that Advantage has to offer, contact us and we can arrange a free consultation with one of our award-winning property investment consultants.