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Buy-to-let lending is showing signs of recovery

Posted on 2010-09-28

The number of buy-to-let mortgages taken out in the second quarter of 2010 was 24,900. This is a 13% increase when compared first quarter of 2010, and a 15% increase when compared to Q2 2009.

According to the Council of Mortgage Lenders (CML), at the end of June, there were 1.26 million buy-to-let mortgages outstanding which are worth £149 billion and now account for 12% of all mortgages.

The figures show that both buy-to-let loan numbers and values reached their highest level since the fourth quarter of 2008.

The CML figures showed that there were 18,500 people in arrears of at least 1.5% of their outstanding mortgage. This number has dropped slightly when compared to end of 2009. However, the number of properties repossessed has increased when compared to Q1 2010.

Commenting on the news HomeLet Managing Director, John Boyle said: 

“The private rented sector is an integral part of the housing supply chain. It's important that more landlords invest in the sector to help sustain the balance between the supply and demand of lettings stock. The demand for high quality rented property has continued to grow in 2010 and will continue to do so in the near future.”

“The figures show that arrears have decreased slightly, there are several reasons why landlords are behind on repayments, but the most common factor is rent arrears. Sadly rent arrears will always be an issue the sector faces. Landlords need to be aware of the protection that's available to them though insurance products such as HomeLet Rent Guarantee. I strongly recommend that any landlord asks their letting agent about Rent Guarantee.”

“The CML figures show that the average buy-to-let mortgage arrears is 1.5% of the remaining loan value which can add up to thousands of pounds. Everyday we help landlords by paying their missed rent whilst taking care of the eviction process. Every year we pay out over £3 million in lost rent and legal costs, money many landlords simply can't afford to lose.”

The CML Director General Michael Coogan predicted tenant demand for private rented property would remain strong as there are fewer people who can afford the entry costs to home-ownership. Commenting on the figures he said:

“Finance for private landlords, whether institutional or individual, is crucial if the UK is to have enough homes to meet the needs of the population.” Though funding conditions for lenders remain tight, Coogan expects buy-to-let sector to continue to make a powerful contribution.

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