Countrywide claims that the proportion of landlords paying in cash for a property reached 61 per cent in January, the highest since records began a decade ago.
Landlords who have chosen to buy since the introduction of the three per cent stamp duty surcharge in April of last year 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 per cent of landlords bought a home without a mortgage, a figure which peaked at 58 per cent by 2010 before dropping back.
Landlords buying homes in the North of England are most likely to use cash to fund their purchase; some 70 per cent 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 in particular, Countrywide says, with the most and least expensive homes most likely to be bought with cash.
Over the last year almost two thirds of homes 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 of all landlord cash purchases were funded by the sale of another property elsewhere.
“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” explains Johnny Morris, research director at Countrywide.
“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” he adds.