Cash purchases of buy-to-let properties in the UK have climbed due to higher interest rates on mortgages, according to estate agent figures.
Nearly three in four buy-to-let properties in areas with sub 5% yields were bought mortgage-free so far this year, research from Hamptons showed, with over two-thirds of London landlords having paid in cash.
“The recent rise in cash purchases brings a close to landlords’ ability to access competitive mortgage deals,” the estate agent said.
When mortgage rates were below 2% in the last few years landlords chose to take out mortgages at the low rates even if they were able to buy homes outright, it added.
Buy-to-let mortgages tend to come with higher rates than counterparts. These have climbed from an average 3.2% in March to a November peak of 6.67%, according to Which? research.
Average buy-to-let mortgage rates over the past year - Which?
Around 59% of new UK landlords have subsequently chosen to pay with cash this year therefore, compared to 53% in 2022.
The estate agent pointed towards a north-south divide in cash purchases of buy-to-lets though, reporting a fall in the number of people choosing not to take loans from 62% to 60% in 2023.
“For the first time since our records began, a landlord buying in the south of England is more likely to be a cash buyer than an investor buying in the north where prices are lower,” it commented.