According to an article on This Is Money cash buyers for buy-to-let properties has hit an all time high. In the UK landlords buying homes for cash has increased massively with 61% of buy-to-let properties purchased mortgage-free.
In January 2017 the quantity of landlords and investors buying properties in cash has grown. During this month 61% of Britain’s buy-to-let purchases were mortgage-free according to Countrywide lettings agents.
The Northern areas had the highest amount of buy-to-let cash buyers which dominated the other regions of England, further reflecting the lower house prices in the North of England.
The index provided by Countrywide recorded the percentage of cash buyers on buy-to-let properties in 11 locations. The results showed a variety of figures, but the average for the UK overall came to 61%.
The North West experienced cash buyers making up 70% of the buy-to-let purchases in January, whilst Yorkshire and the Humber followed with a close second of 68%.
The South West and North East has the same percentage of 67%, which is a big contrast to landlords and investors in the South East who mostly rely on mortgages with only 42% of London sales being independently financed. In general, the South East saw 54% of landlords purchasing without a mortgage.
When the index started in 2007 there was a record of buy-to-let cash buyers making up only 41% of all buy-to-let property purchases. Countrywide research director, Johnny Morris stated, “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.”
The figures do not mean that landlords and investors are necessarily getting wealthier, but it may have something to do with the decline in mortgage lending for buy-to-let properties over the recent years. Mortgage lenders for buy-to-lets have put a limit on the number of buy-to-let mortgages you can have. The rates are also increasing and most lenders will ask for a 25% deposit and expect your income to be 125% of the mortgage.
There have also been recent changes in tax legislations to do with buy-to-let properties. For example, the 3% Stamp Duty Land Tax increase in April 2016 and the April 2017 tax relief on mortgage interest limitations.
As the property market continues to fluctuate and Brexit leaves the fate of the country’s economy uncertain, buy-to-let investments still seem to be a popular choice for property investors in the UK.