Research and reports
The number of people buying a property without a mortgage has reached an eight year high, according to new research.
Analysis from estate agency Hamptons shows that nearly 40 per cent of sales agreed earlier this year came from cash buyers.
What does this tell us about the property market? And what does it mean if you’re planning on expanding your property portfolio or selling up? Read on to find out the latest insight for landlords.
Hamptons figures in January 2023 show that 39 per cent of all sales agreed were to a mortgage-free buyer.
This is the largest monthly share going to cash buyers since December 2014 when the share of people mortgage-free hit 41 per cent.
Looking at previous years, cash buyers only accounted for 29.3 per cent of purchases in January 2022, and 29.2 per cent in January 2021.
It’s likely that high interest rates are driving more people to use cash rather than taking out a less favourable loan.
A cash buyer is someone who chooses to buy a property without needing to take out a mortgage. For example if they have the money from selling another, more expensive property, or have the funds available so as not to need a mortgage.
Benefits of being a cash buyer include:
And if you’re considering selling up, cash buyers can be an attractive option as completion can be much quicker. Hamptons reports that sales can complete on average 20 days faster than those with a mortgage.
It’s also common that a cash buyer isn’t part of a chain, simplifying the transaction and reducing any risk that the purchase might fall through.
Read more: How to get a buy-to-let mortgage.
We’ve previously reported on rising mortgage costs and what this means for landlords. While mortgage rates are predicted to decline somewhat this year, cash is still likely to dominate at least some areas of the property market.
Prime markets are often most likely to see cash buyers as these represent the upper end of the market.
Hamptons reports that mortgage-free buyers made up a 50 per cent share of purchases in Prime Central London in January 2023.
There's also been a decline in first-time buyers as people struggle to get on the housing ladder following the pandemic, which could mean a greater share is made up of cash-ready investors.
What do you think about the rise of cash buyers? Let us know your experience in the comments.
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2023 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.