While some experienced landlords are cashing in as they see current market condition as the perfect time to sell, others view this at the ideal time to re-enter the market, while there has been a notable increase in first-time landlords, according to Hamptons.

Small and first-time landlords, typically those who rely on mortgage finance to fund their purchases, have been actively taking advantage of the current stamp holiday, as reflected by a fall in cash buyers.

The latest research from Hamptons shows that the stamp duty holiday contributed to the drop in cash buyers.

Data from the company reveals that just over half – 52% – of landlords purchased property with cash in 2020, the lowest figure on record.

Back in 2017 62% of landlord purchases were in cash, a figure which fell to 60% in 2018, 58% in 2019 and 52% in 2021.

As a consequence of the stamp duty holiday, which came into effect on 8 July, the last six months of 2020 saw the proportion of cash buying landlords fall to 50% – a record low – as new investors took advantage of the holiday savings.

Across 2020 as a whole, cash landlords spent a total of £11.7bn on new buy-to-let purchases, £1.5bn less than in 2019 and down from a record £19.8bn in 2015.  To put this figure into context, first-time buyers bought £65bn worth of property last year, according to Hamptons.

BTL landlords buying in Great Britain’s least expensive regions remained most likely to fund property purchases in cash during 2020.

Almost two-thirds – 65% – of buy-to-let purchases in Wales were in cash. They were followed by investors from the North West (64%) and the North East (61%).

The proportion of landlord cash purchases fell in 10 out of 11 regions in Great Britain between 2019 and 2020.

In contrast, investors in the most expensive regions of the country were most likely to rely on mortgage finance. Just 39% of London landlords and 45% of those in the South East paid cash for their buy-to-let last year.

Aneisha Beveridge, head of research at Hamptons, said: “While investor purchases remain low compared with pre-2016 levels, the stamp duty holiday has tempted more small and first-time landlords back into buy-to-let, reversing a shift towards portfolio investors.

“Most of these new entrants are relying on a mortgage to fund their purchase, despite the changes to mortgage interest tax relief eating into the profitability of the sector for some.

“Since 2016 the rental sector has been buffeted by tax and regulatory changes, resulting in 250,000 fewer rental homes in England since the sector’s peak in 2017. But record-low interest rates on cash in the bank combined with the lure of a stamp duty holiday has enticed a new generation of investor, many of whom had no previous landlord experience.”