More Landlords than Ever are now Using Cash to Invest

Cash purchases made by landlords accounted for 65% of all buy-to-let investments in the last 12 months…

Landlords choosing to buy their rental properties with cash are now dominating the UK’s rental market, according to the latest lettings index from the UK’s largest estate agency group, Countrywide.

In the last 12 months, a total of billion was invested by landlords paying for properties in cash, marking a 32% increase over the last decade.

Indicating a shift in attitude in the market, 65% of all buy-to-let property purchases were made with cash in 2017, surpassing the previous peak of 60% in 2011, as well as the 40% share seen in 2007, when the agency started their records.

A driving factor behind the increase in cash purchases is, according to Countrywide, rising house prices, which are allowing investors to remortgage their current assets and invest the equity in new properties.

However, there are regional disparities. The North East contained the largest proportion of cash buyers, which accounted for 78% of all purchases made in the region in the last 12 months, while 58% of landlords in London were still using buy-to-let mortgages to purchase their investments.

In terms of rental growth, the agency reported a 1.2% increase over the last 12 months in Great Britain, when excluding London.

The growth was mainly driven by Wales and the Midlands, where rents saw an upswing of 2.6% and 2.2% year-on-year, while average rents in the capital fell once more.

Commenting on the report, the Research Director at Countrywide, 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…. Rising prices have allowed landlords to take equity out of both their personal or other rental homes to expand their portfolios.’