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Cash purchases fall as more landlords rely on mortgages

span lang="EN-US">There’s been another fall in the proportion of landlords purchasing their next buy to lets in cash, according to new research by Hamptons lettings agency, which shows that the share of buy to lets bought with cash peaked at 62% in 2017, but the proportion has fallen in each subsequent year since then. 

span lang="EN-US">In 2018 it fell two percentage points to 60% and in 2019 it fell by another 2p.p. to 58%. However, the latest figures suggest that the stamp duty holiday has accelerated this trend considerably with just 52 per cent of landlords purchasing with cash in 2020, a fall of 6p.p.

span lang="EN-US">Small and first-time landlords are most likely to take advantage of the stamp duty holiday, according to Hamptons, and typically these investors tend to rely on mortgage finance to fund their purchases.

span lang="EN-US">As a consequence of the stamp duty holiday which came into effect on 8 July last year, the final six months of 2020 saw the proportion of cash buying landlords fall to just 50% - a record low - as many new investors took out mortgages to take advantage of the exemption.

span lang="EN-US">Across 2020 as a whole cash landlords spent a total of £11.7bn on new buy to let purchases - that’s £1.5bn less than in 2019 and down from a record £19.8bn in 2015.  

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