Rental property cash purchases rise in London: Hamptons

Data collected by Hamptons International shows that the proportion of landlords who purchased property with cash in London rose 15 per cent between 2017 and 2018 – from 33 per cent to 48 per cent.

In contrast, the quantity of landlords using cash to purchase a property nationwide fell from 55 per cent in 2017 to 54 per cent in 2018.

The figures show that London and Wales were the only regions to post a rise in landlords paying with cash within this time frame – rising 2 per cent between 2017 and 2018.

In 2018, the East of England posted the highest number of landlords using a mortgage, at 54 per cent. The North of England recorded the lowest number, at 37 per cent.

Hamptons states that harsher stress testing on buy-to-let mortgages and the tapering of interest tax relief are some of the reasons why there has been a decline in landlords using a mortgage.

Additional data provided by Hamptons shows that rental prices in Great Britain rose 1.1 per cent in the year to February 2019 – from £954 to £965. This was driven by a 2.4 per cent year-on-year rise in London rents.

Hamptons International head of research Aneisha Beveridge comments: “London saw a big rise in the proportion of landlords buying homes with cash in 2018. This comes against a backdrop of fewer homes purchased by investors in the capital last year.

“Much of the cash has come from landlords remortgaging to take equity out of homes they already own.

“By purchasing with cash, these landlords are avoiding the tax burden associated with the tapering of mortgage interest tax relief.

“Rental growth in London reached the highest level in the last 12-months.”

L&C Mortgages associate director of communications David Hollingworth says: “The tougher lending criteria now in place will see landlords buying in London particularly affected by the more challenging rental requirements.

“That will certainly be a contributory factor, along with the changes to tax relief in seeing the number of landlord purchases drop in the capital.

“Cash buyers will be unaffected by these changes and would appear to have shown a continued appetite to invest in London property against a quieter market overall.

“Elsewhere it seems that the status quo has largely been maintained, although the incidence of cash purchases was already higher.”

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