60% of buy-to-lets are bought mortgage free

New figures have now revealed that the amount of landlords buying properties in cash has reached new record levels.

Letting agent Countrywide has revealed that 61% of buy-to-let purchases in the UK last month were made without a mortgage. Overall, the highest level of cash transactions was found in England’s North, which is seen as a direct reflection of the lower prices.

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In more detail, Countrywide’s index for January showed figures of 70% in the North-West, 68% for Yorkshire and the Humber and 67% in the North East.

Further down south, however, landlords have to rely more heavily on mortgages. Overall, only 42% of house sales in London are financed with no mortgage needed.

Countrywide also said that the number of property investors buying without a mortgage has been on a steady rise over the last ten years, starting at 41% of all buy-to-lets bought when the first index was published in 2007.

Johnny Morris, the company’s research director, 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.”

This, however, doesn’t mean that landlords and property investors are just becoming wealthier and wealthier, but is rather a reflection of the general decline in mortgage lending over recent years.

Mortgage tax relief changes won’t stop landlords

Another set of figures, this time from the Council of Mortgage Lenders, revealed that buy-to-let mortgages for purchases had dropped by one third year-on-year in November 2016 whilst owner-occupier mortgage for home buyers saw a decrease of 6.4% and first-time buyer mortgages went up by 8% annually.

Lenders are now, however starting to fight back. With demand for buy-to-let mortgage falling fairly steadily over the last year, they’re now starting to look into offering mortgage deals that look more attractive in the long-term.

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