Record number of landlords buying in cash

'On average landlords sell a home once every 17 years meaning as prices have increased, a significant amount of wealth has built up in the sector'

A record number of landlords are paying for their properties in cash, with the proportion now standing at 61%, up from just 41% in 2007.

Countrywide has picked up on the interesting trend, which has ramped up since the introduction of the 3% stamp duty surcharge last year. The highest proportions were noted at either end of the market: 64% of landlords buying a £1m+ property over the last 12 months paid in cash, just below the proportion recorded in the sub-£125k range (65%).

Nearly a quarter (24%) of all landlord cash purchases were funded by the sale of another property elsewhere, and there were some big regional contrasts.

While 70% of landlord purchases in the North West were made in cash – the highest proportion in the UK – London landlords were most likely to use mortgage finance. The research links the sharp fall in the number of landlords not using a mortgage in London with rising house prices.

Countrywide’s index recorded a 2.6% monthly rise in the cost of a new let last month, the fastest January increase for two years. 36% of landlords increased their rents when signing a new tenancy, up from 27% last year.

Areas outside London have led in terms of rental growth, with rents in the capital 2.7% lower than they were last year. The fastest growing rents were seen in Wales (up 8.8%), the South East (up 8.2%) and the East of England (up 7.8%).

Johnny Morris, Research Director at Countrywide: “On average landlords sell a home once every 17 years meaning as prices have increased, a significant amount of wealth has built up in the sector. This is now fuelling cash purchases. With the forthcoming tapering of tax relief on mortgage interest payment, landlords have less of an incentive to borrow, suggesting more cash activity in 2017.

“Rents are rising at twice the pace of last January and there are signs that rental growth is starting to pick up in much of the country. Ten months after the introduction of the stamp duty surcharge the number of homes on the rental market is showing signs of coming down. If this fall continues over the next few months, it is likely to support rental price growth.”

Proportion of landlord purchases paid for in cash

Region

Cash landlords

North West

70%

Yorkshire & Humber

68%

South West

67%

North East

67%

Wales

63%

East Midlands

62%

Scotland

60%

West Midlands

54%

South East

54%

East of England

52%

London

42%

Proportion of landlord purchases paid for in cash 

Cash landlords

Under £125,000

65%

£125,000 to £250,000

57%

£250,000 to £500,000

48%

£500,000 to £1,000,000

56%

Over £1,000,000

64%

New lets

Region

Ave Rent Jan-17

Ave Rent Dec-16

Ave Rent Jan-16

December Rent YOY

Greater London

£1,260

£1,246

£1,295

-2.7%

Central London

£2,298

£2,381

£2,461

-6.6%

East of England

£1,014

£1,014

£941

7.8%

South East

£1,186

£1,215

£1,096

8.2%

South West

£818

£793

£797

2.7%

Midlands

£673

£681

£664

1.4%

North

£667

£651

£633

5.4%

Scotland

£677

£628

£654

3.4%

Wales

£652

£700

£600

8.8%

Total

£929

£927

£906

2.6%

Relets

Region

Ave Rent Jan-17

Ave Rent Dec-16

Ave Rent Jan-16

December Rent YOY

Greater London

£1,217

£1,209

£1,161

4.9%

Central London

£2,474

£2,627

£2,392

3.5%

East of England

£916

£966

£881

4.0%

South East

£1,099

£1,112

£1,045

5.1%

South West

£781

£785

£756

3.4%

Midlands

£652

£659

£637

2.4%

North

£616

£629

£650

-5.2%

Scotland

£616

£630

£617

-0.3%

Wales

£653

£629

£638

2.4%

Total

£885

£897

£859

3.0%

Source: Countrywide