Number of landlords paying in cash for a property hits a record high
Friday, 22 December, 2017
According to the latest data from the Countrywide’s monthly lettings index, the landlords in the North West UK were the most to pay in cash for properties. The percentage estimated was 61%, where the landlords selling their property entirely through cash. This is the highest record if we consider the data since 2007 until the last few years including 2017. Now, it is identified that the landlords are transacting (purchasing/selling) the property by cash dealing only. This has been in effect since the introduction of the 3% stamp duty surcharge. The cash flow was heavier since then and the proportion reached 61% in January 2017.
The property price is increasing over time and it also depends upon the area. If a buyer is looking at the area(s) where the value of the property is high, then there is also a possibility that the buy-to-let sector is growing over there. This is true; the buyers are actually looking at the areas where the opportunities are more. Thereafter, purchasing/letting a property from landlords on cash increased. The cash options do everything hand-to-hand, from purchasing to letting agreement, Countrywide said.
Almost 66% of rental homes cost up to £120,000 and were paid for in cash from the last few months. Moreover, about 2/3rd of the citizens are paying in cash for homes priced at £1 million, extending the cash purchases to a top-level in the Property Market. The price of a new buy-to-let property on rent was 3.6% more in this year than the Jan-Feb months of 2016. Also, the average rent and property on lease have increased to £959 from £906. As a result, this became the fastest increase in the prices of rent & lease, comparing the same with the last two years.
It is quite common that a purchased property is sold once in every 15 years, which means the price of the properties is gradually increasing. In practice, a significant amount of wealth has built up in this sector. However, the property transaction is now occurring through cash. By the way, landlords have increased the rent to 36% from last year’s 27% while signing the new tenancy. But, considering areas like Yorkshire, Central London and East of England, the rental growth was gradually dropped; the reason for this is still unknown. Additionally, the regions outside the capital have also reduced their rental charges i.e. Wales (down 8.8%), and South East (down 8.2%).
Due to the housing price rise in the capital, the number of mortgage borrowers is also falling. This means London landlords are least likely to buy property without a mortgage. But, it is also believed that the London landlords may use mortgage finance to do a property purchase in future. Because the new age people in the capital would look for mortgage options, they know the cash option is an old way of transaction.
Now, if we look at the Rental property price, it is rising at the double speed after the introduction of the stamp duty surcharge. There is no such sign of fall down in the property price so that a hope could generate in the rental growth. If there is a tax relief on mortgage interest payment, the chance of cash flow may be more in the forthcoming days