7^th Apr 2019

More BTL investors based in the capital have preferred to buy London properties with hard earned cash from 33% in 2017 which rose to 48% in 2018; the highest increase (15%) in the last seven years.

Further afield BTL investors in the North of England are more likely to 'splash the cash' as 63% did so in 2018.

The stricter stress testing for BTL mortgages, the phasing in of the reductions in interest tax relief and wear and tear deductions has clearly put a dampener on landlords applying for mortgages. This was particularly true for London investors as during last year there was an increase of landlords preferring to buy properties with cash, and in many cases this was done by re-mortgaging.

Aneisha Beveridge, Head of Research at the UK estate agent chain, said: "London experienced 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."

She continued: "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."

So far this year the average monthly rent increased to £965 in February, with rental growth being doubled between January and February - 0.6% in January to 1.1% in February.

The capital's rents were mainly responsible for the increase as it increased by 2.4% year on year.

However other regions across the UK suffered year on year falls, the South East with -0.6%, South West -0.4%, Scotland -1.2% and Wales -0.2%.

Beveridge finished by saying: "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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