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Report shows record number of landlords pay cash for property investments

Andrew Binstock

A record number of landlords are buying their property investments with cash, a new report shows. In January this year, the amount of buy-to-let investors paying cash for property reached 61%, the highest level since 2007, when records began.

Throughout the last ten years, the number of landlords paying cash for property purchases has been steadily increasing. Only 41% of landlords purchased investments without relying on mortgages in 2007 and by 2010, this figure had risen to 58%, when cash buy-to-let purchases peaked.

The statistics also show regional differences in cash buying landlords, with those buying property in the North of England being more likely to pay for their investment with cash.
The price of property was also found to be a factor that influenced cash or mortgage purchases, with properties at both the lower and the higher end of the market being more likely to be purchased without a mortgage.

The recent rise in cash buy-to-let purchases has been linked to the introduction of the 3% stamp duty surcharge, which came into effect in April 2016.

The benefits of buying property with cash

Buying a property with cash comes with a number of benefits. One of the biggest advantages of cash buying is that sellers are more likely to favour buyers who can buy a property with cash, namely because the whole sale is likely to be more straightforward and completed more quickly.
Cash buyers can also make significant savings on expenses associated with taking out a mortgage, such as application fees, bank appraisals, insurances and so forth.

Though perhaps the biggest advantage of buying a property with cash is that investors gain full, immediate equity of their home and without any loan to pay off, they won’t have to pay interest on their investment, meaning the money they earn from rent is pure profit.

Additionally, cash buyers do not have to worry about the prospect of losing their home to being unable to afford their mortgage repayments.

Buying property in auction

If you are a property investor, whether you are a cash buyer or not, purchasing property at auction comes with a number of benefits. If you are unsure of the procedure involving buying property at auction, take a look at Auction House London’s guide to buying at auction.

Meanwhile, if you are interested in buying at auction, you may want to come to one of Auction House London’s upcoming property auctions. You can check out the lots available at our upcoming auction here.

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