With rental yields hitting a 13-year high<\/a> for UK buy-to-let, the sector continues to secure strong returns for landlords. In particular, those with lower levels of borrowing will have felt the gains to a greater extent as average mortgage rates remain higher than pre-2022.<\/p>\n In times of higher mortgage rates, those who can afford to buy without a mortgage can not only save money through avoiding borrowing costs and fees, but tend to be able to secure a discount on the purchase price. For the seller, cash buyers can offer a faster, more hassle-free sale than mortgaged ones, making them more likely to accept a lower price.<\/p>\n Research earlier this year<\/a> by MPowered Mortgages found that cash buyers were paying an average of \u00a328,189 less than a mortgaged buyer on the equivalent property \u2013 shaving 9.3% off the price. In the North West, this discount increased to a huge 13.4%, while in other parts of the country there was less disparity.<\/p>\n In buy-to-let<\/a>, there tends to be more cash buyers than in the wider housing market, as landlords can not only get better deals on the property, but there is also more of a focus on maximising overall returns, with additional expenditure such as mortgage borrowing being avoided where possible.<\/p>\n Housing market activity overall has been “resilient” according to the latest house price index report from Nationwide<\/a>, including a “noticeable pick up” in the second half of last year in terms of transaction levels. So far this year, all aspects of the market have been moving in a more positive direction.<\/p>\n The report also notes that cash transactions were “particularly robust”, with activity for cash buyers sitting 2% higher than pre-pandemic levels. Again, this is most likely linked to the fact that borrowing costs are several percentage points higher than pre-2020, pushing more buyers to opt for mortgage-free purchases.<\/p>\n The past 12 months has also seen a gradual increase in the number of buy-to-let purchases involving a mortgage, according to Nationwide, indicating a more buoyant and optimistic market thanks to a strong rental market coupled with falling mortgage rates.<\/p>\n At the same time, the report said: “It is important to note that some cash purchases are also undertaken by landlords and that activity in this space appears to have remained more buoyant.”<\/p>\n There are pros and cons to investing in buy-to-let property<\/a> using cash only, versus taking out a buy-to-let mortgage against the property. Choosing the best option will depend on your individual circumstances and long-term goals, and landlords are advised to speak to a professional before making a decision.<\/p>\n As mentioned above, cash buyers can often secure a discount on a property compared with when buying with a mortgage, which can provide an instant boost to potential return on investment.<\/p>\n Taking out a mortgage also adds to the cost, with buy-to-let mortgages tending to require a greater deposit than standard residential ones, alongside any additional mortgage fees. With no monthly borrowing costs, a greater chunk of the gross annual rental yield can be kept as profit.<\/p>\n However, for some landlords, investing using a buy-to-let mortgage can enable them to diversify their portfolio – rather than injecting \u00a3100,000 into one cheaper property, borrowing could enable the landlord to invest in two properties, spreading the risk and securing a dual income stream.<\/p>\n Recent research from Moneyfactscompare has also revealed that buy-to-let mortgage availability<\/a> is currently at a record-high, with a total of 3,560 products on the market. This boost in choice creates more flexibility for landlords seeking buy-to-let mortgages, making it easier to find a product tailored to their circumstances.<\/p>\n Mortgage rates also remain cheaper than they were a year ago, with most forecasts pointing to rates coming down over the course of this year. This is expected to entice a greater number of landlord borrowers to the market – while cash buyers are still likely to invest thanks to the strength of the UK rental market.<\/p>\n","protected":false},"excerpt":{"rendered":" Cash buyers have been securing greater discounts in the UK property market, and this has coincided with a rise in mortgage-free landlords. With rental yields hitting a 13-year high for UK buy-to-let, the sector continues to secure strong returns for landlords. In particular, those with lower levels of borrowing will have felt the gains to… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":19306,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[2,26,6],"tags":[22,291],"class_list":["post-6104463","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buy-to-let-landlords","category-tax-mortgages-money","category-uk-housing-market","tag-buy-to-let","tag-cash-buyers"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6104463","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/comments?post=6104463"}],"version-history":[{"count":6,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6104463\/revisions"}],"predecessor-version":[{"id":6104469,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6104463\/revisions\/6104469"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media\/19306"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media?parent=6104463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/categories?post=6104463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/tags?post=6104463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Cash buyers market “robust”<\/h3>\n
Buy-to-let: cash vs mortgage<\/h3>\n