The most recent data analysis conducted by MPowered Mortgages has highlighted the several distinct advantages of cash buying a property. Not only is it more cost-effective to acquire a property, but there are also several benefits that enable the buyer to extract more favourable terms during the negotiation process.
Given the highly competitive nature of the UK property market, every advantage a buyer can wield is crucial. It is therefore useful to highlight what these advantages involve and why one may consider cash buying rather than taking out a mortgage.
What Are the Benefits?
Despite five-year fixed mortgage rates dropping to an average of 4.61%, down from 5.63% a year ago, mortgage schemes continue to cause issues when it comes to desirability.
As a Yopa Spokesperson outlines, ‘mortgages have become increasingly more expensive since interest rates started to climb […] not only is it far tougher for those looking to purchase with the aid of a mortgage, but as a result, cash buyers are in a far stronger position within the market making them the first choice for many sellers.’
Here lies the immediate advantage of cash buying a property: a seller is much more likely to prioritise negotiating with a cash buyer than a mortgage buyer. There are two main reasons for this.
The first is the speed of the transaction process. On average, the time for a mortgage buyer to acquire property between accepting the offer and the completion of a sale is 152 days. Conversely, a cash buyer is in a position to bypass and manoeuvre around the barriers that typically slow down the transaction process.
The second reason is the increasing desirability of cash payment in light of the falling rates of cash buying in the market. According to the Land Registry data, cash buyers comprised 22.4% of transactions in September 2024, a figure representing a fall from 28.6% in 2022. A cash buyer will therefore appear more visibly on the seller’s radar.
Consequently, these two advantages immediately distinguish a cash buyer from other competitors looking to acquire the same property. Stuart Cheetham, chief executive of MPowered Mortgages, points out these are the reasons ‘why buyers who have their finances fully in place when making an offer are vastly more attractive to sellers than those who don’t.’
How Does Cash Buying Impact Property Prices?
Because of these key desirable traits a cash buyer wields in the property market, a cash buyer is in a much stronger negotiation posture in order to lower the initial asking price.
On average, a cash buyer typically pays £28,189 less on a property, which amounts to achieving a 9.3% discount. By bypassing the financial obligations of a mortgage, a cash buyer will pay 13% less in their overall expenditure than buyers taking out a mortgage.
These benefits are enormous. With the notable exception of London resulting in a cash buyer spending more money against the initial asking price at £15,344 (-3%), a cash buyer in most parts of the country can achieve property purchases at a lowered asking price.
Here is a list of the average discount a cash buyer can achieve in key regions of the UK compared to a mortgage buyer: North West at £31,827 (13.4%), Scotland at £26,475 (12.8%), North East at £22,122 (12.4%), East Anglia at £27,480 (7.8%), Yorkshire and Humber at £17,032 (7.7%), West Midlands at £19,415 (7.4%), South East at £28,138 (6.4%), East Midlands at £16,270 (6.4%), Wales at £11,162 (5%), and South West at £12,219 (3.8%).
Cheetham stresses that ‘buyers who have their finance fully in place when making an offer are vastly more proceedable – i.e. attractive to sellers – than those who don’t. Sellers will often accept a lower offer in return for the extra certainty these buyers represent,’ adding that ‘this speed and certainty gives them a decisive advantage during the buying process.’
Should You Consider Cash Buying?
Ultimately, the benefits of cash buying a property put a buyer at a clear advantage, as a cash buyer offers a seller an exciting opportunity to engage in the negotiation process. Industry experts attribute these three traits to cash buyers: security, speed, and scarcity.
Having the funds already available is an immediate benefit a seller will look for in a buyer – for this enables the transaction process to be conducted in a much quicker and tidier fashion. The fewer obstacles slowing down the transaction process, the better: sellers and buyers welcome this efficiency.
Given that the overall market is dominated by mortgage buyers, a cash buyer will stand out against the grain as an attractive customer. Such benefits place a cash buyer in a better negotiation position to knock down the initial asking price in most regions.
Cash buying is a great way to save a lot of money in the short and long term; it is absolutely a worthwhile option to consider.
