Buy-to-let lending shows signs of recovery

Buy-to-let lending is showing signs of recovery, according to figures from the Council of Mortgage Lenders.

The number of buy-to-let mortgages taken out in the second quarter was 24,900, 13% up on the figure for the previous three months (22,000) and 15% higher than the second quarter of last year (21,600).

CML director general Michael Coogan said: "The buy-to-let market has continued to grow, albeit slowly, since the credit crunch. With fewer people able to afford the entry costs to home ownership, as well as the pressure on social housing, tenant demand for private rented property will remain strong.

"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.

"Funding conditions for lenders remain tight, but there is every reason to expect the buy-to-let sector to continue to make a powerful contribution to helping meet the country's varied housing needs."

The value of BTL lending in the first quarter was £2.4bn, of which £1bn was remortgaging.

Although business is only just over a quarter of its level of three years ago, both the number and the value of BTL loans were at their highest level since the fourth quarter of 2008, apart from the fourth quarter of 2009 when demand was inflated by the end of the Stamp Duty concession.

At the end of June, there were 1.26 million BTL mortgages outstanding, worth £149bn.

By value, BTL mortgages accounted for 12% of all mortgages - the highest proportion by value, as opposed to numbers, since records began.

BTL arrears cases have improved, but repossession rates remain higher than in the owner-occupier market, where lenders are more forbearing to prevent owners losing their homes. In the BTL market, a receiver of rent may also be appointed, instead of the lender taking possession of the property.


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