The proportion of landlords using cash to pay for a property hit 61% in January 2017, which was the highest since records began in 2007.
Investors choosing to purchase since the introduction of the 3% Stamp Duty surcharge in April 2016 have used more cash transactions to fund their buys.
In the last decade, the proportion of landlords purchasing with cash has increased steadily. In 2007, only 41% of landlords purchased a home without a mortgage.
By region, landlords in the North of England were most likely to use cash in order to fund their purchases. 70% of those investors in the North West used cash to fund their transactions-the greatest proportion seen in the country.
London landlords however are more likely to use mortgage finance. With property prices in the capital rising, there has been a considerable fall in the number of landlords not using a mortgage.
In fact cash purchases drive both the top and bottom of the rental market, with the most and least expensive properties more likely to be purchased with cash. In the last year, 65% of homes with a value of less than £125,000 were paid for using cash. 64% of landlords paid in cash for properties totalling £1m or more.
During January 2017, the cost of a new let was 2.6% greater than in the same month last year-the quickest January increase for two years. 36% of landlords increased rent when signing a new tenancy, a rise from the 27% seen last year.
Rental growth has been driven by regions outside of London-rents in the capital being 2.7% lower than last year.
The three regions seeing the quickest growing rents were Wales (8.8%), the South East (8.2%) and the East of England (7.8%).
Johnny Morris, Research Director at Countrywide, noted: ‘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. With the forthcoming tapering of tax relief on mortgage interest payment, landlords have less of an incentive to borrow, suggesting more cash activity in 2017.
‘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,’ he added.