Buy-to-let landlords use cash as rates rise

A RECORD proportion of buy-to-let landlords are buying in cash to dodge high mortgage rates.

Six out of 10 investors (61pc) who bought properties in the South this year paid cash, up from a low of 47pc in 2022, according to Hamptons estate agents.

This is the highest level since records began in 2009.

London has experienced the biggest rise in cash buyto-let investors, with a 23pc increase in the past year.

Two thirds (67pc) of landlords in the capital are paying in cash this year, up from 43pc in 2022.

The switch to buying in cash is expected to save landlords £62m in mortgage interest payments this year alone, the estate agent said. Aneisha Beveridge, of Hamptons, said investors were adapting to a climate of higher interest rates. “While existing investors are paying down debt, new investors, particularly those wanting to buy in the lowest yielding parts of the country, are choosing cash to ensure the sums stack up,” she said.

She said even landlords who were able to buy outright used to opt for mortgage deals below 2pc so they could spread their cash as far as it could go, often across several properties. But now, investors are having to dig deeper into their savings.

Buying in cash allows landlords to boost returns and avoid lenders’ stress tests, which are making it harder to get a mortgage.