Buy-to-Let Lending up by a Fifth
Establishing itself as one of the fastest growing sectors in the UK property market, the buy-to-let (BTL) sector saw a robust increase in the number of investors last year. According to recently-released data from the Council of Mortgage Lenders (CML), nearly 1.5 million Britons hold buy-to-let mortgages, underlining how the interest in such property investments has surged, setting Britain’s real estate market on the way to a new buy-to-let boom.
The CML statistics showed that in the past year, BTL lending accounted for 11.5 per cent of the total mortgage market, up from 9.8 per cent in 2011. A total of £16.4 billion was lent to buy-to-let property investors, which is 19 per cent, or one fifth, higher than the £13.8 billion advanced in 2011 and represents the strongest level since 2008. The CML figures also indicated stronger growth of BTL loans towards the end the year. In the final quarter of 2012, UK lenders advanced 36,700 buy-to-let loans worth atotal of £4.6 billion -- up from 34,300 loans worth £4.2 billion in the previous quarter, and 34,200 loans worth £3.9 billion in the same period of 2011.
The total number of buy-to-let mortgages outstanding at the end of 2012 stood at 1,445,300, excluding landlords who have cleared their mortgages or who have paid in cash. The CML data further revealed that 136,900 buy-to-let mortgages were agreed last year – half of which were remortgages. This, however, is less than half the number recorded in 2007 when 346,000 mortgages were advanced amid a boom in buy-to-let property investments in the UK.
Improved Lending Conditions and Strong Tenant Demand Boost BTL Property Investments
According to analysts, Britons have been encouraged to invest in the UK buy-to-let property market by low interest rates which have reduced the cost of borrowing as well as increased tenant demand in the country. Rising rents in the past few years -- partly a result of more priced-out first-time buyers being forced to rent -- have also spurred investment interest by inflating the income landlords can earn.
CML director general Paul Smee said: "Buy-to-let is benefiting from strong tenant demand, which is likely to continue. Loan performance compares favourably with the owner-occupier sector, and the overall outlook for the buy-to-let sector is positive. Landlords who can demonstrate a strong track record are in a good position to expand their portfolios."
Stuart Law, chief executive of property investment adviser Assetz, echoed Smee’s upbeat outlook by reporting an increase in the number of Britons who turn to buy-to-let property investments. He said: “Thousands of new investors are registering with us every month. They are looking for a safe place to put their cash that will produce a healthy and reliable income, with the potential for long-term capital growth. We expect this to continue.”
While the BTL sector is becoming increasingly attractive to investors, with some expert views pointing to a buy-to-let boom this year, many analysts have noted that the private rental sector has a long way to go to reach its 2007 market peaks.