In times of high-interest rates and higher mortgages, cash is king for the London’s buy-to-let investors.
According to a new report from Hamptons International, more than two-thirds of London BTL buyers are paying without a mortgage altogether, coerced by sharp increases in the cost of home loans, particularly for rate-sensitive interest-only contracts.
While the cash trend is prevalent in many parts of the country, London’s low-yielding rental sector has seen the biggest jump in cash investors in 2023.
“Investors are having to dig deeper into their savings to ensure the sums stack up on any new buy-to-lets,” Hamptons’ Beveridge added. “This is set to shrink the total mortgage bill for buy-to-let in 2023.”
So far this year, 12.1% of homes sold in Great Britain were purchased by a buy-to-let landlord, the same level as in 2022, yet 61% of investor purchases in the four Southern regions (London, South East, South West and East of England) were made in cash, up from 47% in 2022.
In the North, cash purchases fell from 62% in 2022 to 60% in 2023, making it the first time on Hamptons’ records that a landlord in the South is more likely to be a cash buyer than in the North.
“Overall, we estimate that this shift towards cash ownership will save new landlords across Great Britain around £61.9mln in mortgage interest payments this year,” said Hamptons’ report.