Cash buying landlords on the rise in London

Stricter buy-to-let mortgage rules cause a surge of landlords buying with cash, but only in the capital

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The changes to mortgage tax relief are yielding results, particularly in London. The capital is seeing a surge in buy-to-let landlords paying with cash, often by remortgaging other assets. 

London is the epicentre of the cash-buying phenomenon, and no surprise: the capital is the country's lowest-yielding zone for landlords who typically have much more expensive mortgages than elsewhere in the UK. 

Landlords in the North were also more likely to pay in cash – 63 per cent, according to data from Hamptons International. The East of the UK, by contrast, is the region where landlords are most likely to take out a mortgage. 

Commenting, Aneisha Beveridge, head of research at Hamptons International, says, '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. Meanwhile, across Great Britain, there was a slight fall in the proportion of homes bought by cash landlords.

'Much of this cash has come from landlords re-mortgaging 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 accelerated in Great Britain in February, spurred on by a 2.4 per cent annual rise in London rents. Rental growth in London reached the highest level in the last 12 months, meanwhile three other regions recorded rent falls.'

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