Increasing number of landlords ‘buying property with cash’ – claim

The proportion of landlords paying in cash for a property reached a ten-year high in January, according to the Countrywide Monthly Lettings Index.

Countrywide claims 61% of landlords purchased their buy-to-let property in cash during January, up from 41% and the highest since the index was started in 2007.

In 2007 just 41% of landlords bought a home without a mortgage, a figure which peaked at 58% by 2010 before dropping back, Countrywide said.

Landlords buying homes in the north of England were most likely to use cash to fund their purchase, while London landlords were most likely to use a mortgage.

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%

Overall, in January 2017 the cost of a new let was 2.6% higher than in the same month last year, the fastest January increase for two years, led by Wales the south-east and east of England.

New rents in greater London fell 2.7% and dropped 6.6% in central London.

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%

Johnny Morris, research director at Countrywide, said: “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 payments, 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.”

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One Comment

  1. JMK

    None of this is particularly surprising but what I would like to know is the number of actual purchases by landlords, which must surely have dropped.  It would also be particularly interesting to see figures for the number of overseas landlords that make up the cash purchases.  I would suspect the percentage to be high as the taste for UK residential properties seems to be significantly increasing with the Chinese and other parts of Asia.  This is largely down to the weaker pound of course, but as British landlords start to scale back or leave the market completely the foreign landlords will take up more of the sector.  I am guessing they will be harder to regulate and standards may drop.  We’ll see.

    Section 24 of the 2015 Finance Act has yet to hit British landlords but the effects are already being seen, particularly at the lower end of the tenant market.  Yet Philip Hammond believes that no landlord will see his/her tax bill increase by more than 5%!!!  Does he not understand the tax change???  Can he not see landlords increasingly refusing housing benefit tenants???  So homelessness is already rising and will rise further until some bright spark in Government sees the link, not that he has to look any further than the Irish experience with their much milder version of S24.

    Councils are beginning to wake up to what they’re going to be faced with and it will of course be exacerbated by Bob Blackman’s Homelessness Bill.  The clear winner in all of this will be Travelodge and I don’t think they’ll be letting the rooms go at £19 a night!

     

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