According to Countrywide’s monthly lettings index for January, landlords in the North West were the most likely to pay in cash, with landlords in the capital most likely to obtain a property using a mortgage.
As prices have increased over time and “a significant amount of wealth” has grown in the buy-to-let sector, more buyers are relying on cash to fund purchases, Countrywide said.
Almost two-thirds of rental homes costing less than £125,000 were paid for in cash over the last year, with 64% paying in cash for homes priced at more than £1m, demonstrating that cash purchases are driving the top and bottom of the rental market.
The price of rent on a new buy-to-let property was 2.6% more in January than the same month last year, seeing the average rent rise from £906 to £929 – the fastest January increase for two years.
On average, some 36% of landlords increased their rent in January when signing a new tenancy, up from 27% last year. However, as rental growth fell in Greater and Central London, this trend was led by regions outside of the capital, with Wales (up 8.8%), the South East (up 8.2%) and the East of England (up 7.8%), leading the charge.
Johnny Morris, research director at Countrywide, said: “On average landlords sell a home once every 17 years meaning as prices have increased, a significant amount of wealth has built up in the sector. This is now fuelling cash purchases.
“Rents are rising at twice the pace of last January and there are signs that rental growth is starting to pick up in much of the country. Ten months after the introduction of the stamp duty surcharge the number of homes on the rental market is showing signs of coming down. If this fall continues over the next few months, it is likely to support rental price growth.”