Cash landlords at highest levels in 10 years

Cash landlords at highest levels in 10 years
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.

The proportion of landlords paying in cash for a property reached 61% in January 2017, the highest since records began in 2007.

Landlords who have chosen to buy since the introduction of the 3% stamp duty surcharge in April 2016, have relied more heavily than ever on cash to fund their purchases. Over the last decade the proportion of landlords buying with cash has steadily increased. In 2007 just 41% of landlords bought a home without a mortgage, a figure which peaked at 58% by 2010 before dropping back.

Landlords buying homes in the North of England are most likely to use cash to fund their purchase. 70% of landlord purchases in the North West of England are in cash, a larger proportion than anywhere else. In similar fashion to those who buy a home with cash to live in themselves, London landlords are most likely to use mortgage finance. As house prices in the capital have risen, there has been a correspondingly sharp fall in the number of landlords not using a mortgage.

Cash purchases drive the top and bottom of the rental market with the most and least expensive homes most likely to be bought with cash. Over the last year almost two thirds of homes (65%) costing less than £125,000 were paid for in cash.They were closely followed by the 64% of landlords who paid in cash for homes costing £1,000,000 or more. Around a quarter (24%) of all landlord cash purchases were funded by the sale of another property elsewhere.  

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.  This January saw 36% of landlords increase the rent when signing a new tenancy, up from 27% last year. Rental growth has been led by areas outside London, with rents in the capital 2.7% lower than they were last year. The three regions with the fastest growing rents were Wales (up 8.8%), the South East (up 8.2%) and the East of England (up 7.8%).


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 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.”

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Tony Gimple
Tony Gimple 09 Dec 2017

Linking professionalism to limited company borrowing is a flawed concept. Despite S24 etc., limited companies are the most tax inefficient way of running a property business and leave borrowers seriously...

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

It's normal. If you plan to buy a house in one of the most beautiful spots in the country you should pay a high price.

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

I think that the situation will be the same at December.

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Scott Garnet
Scott Garnet 06 Nov 2017

If you have a patio or a porch it is important to make sure that any connecting doors are secured. Good advice for sliding glass doors is replacing the panels with storm resistant glass and getting heavier...

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richardrawlings
richardrawlings 01 Nov 2017

What has not been mentioned here is the effect of not only higher interest payments, but also that these payments are less likely to be offsettable as a business cost due to the scaling back of mortgage...

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Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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