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Landlords buy in cash as rental prices rise

Tuesday 14 February 2017

More and more landlords are paying cash for BTL properties, new data from the Countrywide Monthly Lettings Index shows.

The index claims 61 per cent of landlords bought in cash during January, up from 41 per cent in 2007, when records were started.

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.

An astonishing 70 per cent of transactions in the North West were in cash, while the figure dropped to 42 per cent in the capital. 

Overall, in January 2017 the cost of a new let was 2.6 per cent 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 per cent to an average of £1,260 in the first month of the year, and dropped by 6.6 per cent to £2,298 in central London. 

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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