Buy-to-let lending rises

Thursday, 12 November 2009 12:00

Buy-to-let lending has grown over the last three months - the first rise in two years, according to the Council of Mortgage Lenders (CML).

Lending in the third quarter jumped ten per cent from the previous three months, to £2.1 billion, while the number of loans also increased, from 21,600 to 23,700.

The CML's director general, Michael Coogan, said: "Buy-to-let lenders are among those facing some of the biggest challenges in raising mortgage funding, so the improved figures are all the more welcome.

"With funding for social housing under pressure, the private rented sector has a strong future."

Buying a home to rent out as an investment became popular during the house price boom.

But the figures from the CML also show how hard the sector was hit by the recession, when many lenders pulled out of the market completely.

In the third quarter, there were 1,600 buy-to-let possessions, up from 1,400 in the second quarter and 800 last year.

The overall rate of repossessions in the market is 0.11 per cent - but this rises to 0.14 per cent for buy-to-let.

Buy-to-let represents 11 per cent of all mortgages, according to the CML, but 13.7 per cent of repossessions.

Chris Norris, policy manager for the National Landlords Association (NLA), pointed out the figures also indicated a sharp decline in receivers appointed, of around 800.

"So I am seeing this as a net reduction in serious arrears," he said.

"Members are still telling us there is a shortage in buy-to-let products but demand is strong," he added.

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