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Buy-to-let lending up by a third

11th May 2012

There has been a surge in the number of loans approved by mortgage providers for those purchasing buy-to-let properties, the latest figures from the Council of Mortgage Lenders (CML) reveal.

The news could see growing demand for landlord buildings insurance as buy-to-let investors look to protect their new assets.

According to the CML, new buy-to-let lending in the first quarter of this year totalled £3.7 billion, spread across 32,300 loans. The total value of loans was almost a third (32 per cent) higher than in the first quarter of 2011.

And while buy-to-let lending volumes are significantly lower compared to pre-recession levels, the market is showing signs of growing strength and is improving at a faster rate than the owner occupier mortgage sector.

Commenting on the figure, CML director general Paul Smee said: "Even though buy-to-let lending is running at only around a third of its peak levels, the sector is continuing its gradual expansion.

"It has become an important part of the overall landscape of housing provision in the UK."

The buy-to-let sector continued to increase its share of the mortgage market in the first quarter of the year, and now represents an estimated 12.8 per cent of the total value of outstanding mortgages in the UK, up from 12.2 per cent at the end of the first quarter of 2011.

Furthermore, the number of landlords falling into arrears with their mortgage repayments fell from around 2.2 per cent in the first quarter in 2011 to 1.7 per cent this year.

This compares with an arrears rate of around two per cent for owner occupier mortgages.

Speaking to the Press Association, Paul Diggle, a property economist at Capital Economics, speculated that things are only likely to get better in the buy-to-let market.

"We suspect that the growth of the buy-to-let sector relative to the overall mortgage market is a theme that has further to run ... With all the evidence suggesting that landlords are having little difficulty letting properties to frustrated would-be buyers, that share is only likely to grow," he said.

Posted by Simon Hayes

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