Cash Buyers Make Majority of Buy to Let Investment Purchases

A record number of landlord purchases in the last year were made by cash buyers, according to new research from Countrywide.

Over the past 12 months, 65 per cent of all buy to let investment purchases were paid for by landlords in cash. This surpassed the previous high of 60 per cent, set in 2011. The latest figure marks the largest amount of those opting to purchase in cash since Countrywide’s records began in 2007, a year during which 60 per cent of buy to let purchases were paid for with a mortgage.

This year’s buy to let purchases from cash buyers accounted for £21billion in sales. This is up £0.2billion on 2016’s figures, and marks a 32 per cent increase in comparison to 2007 when landlords spent £15.9 billion in cash. The majority of this cash has come from landlords remortgaging to take equity out of properties that they already own.

There were notable regional trends to the cash purchasing patterns, with landlords buying in the North of England and Scotland most likely to buy in cash. A sizeable 78 per cent of privately rented homes bought in the North East over the last 12 months were paid for in cash. This equates to cash landlords spending £3.17 for each £1 spent by landlords using a mortgage to purchase property.

London landlords are most likely to use a mortgage. The capital was the only UK region within which mortgage landlords outspent those who used cash, at £1 per each 67p.

Countrywide’s research director, Johnny Morris, said: ‘Landlords have increased their housing wealth considerably over the last 10 years. This means cash purchases are steadily becoming a bigger part of the market. But a landlord buying with cash will often have a mortgage either on their personal home or other properties in their portfolio. Rising prices have allowed landlords to take equity out of both their personal or other rental homes to expand their portfolios.’

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