Rise in buy-to-let mortgage lending

The number of properties bought with buy-to-let mortgages increased by around 84,000 last year, according to latest data from the Council of Mortgage Lenders.


During the fourth quarter of 2011, a total of 34,800 BTL mortgages (of which 15,600 were remortgages) were advanced, with a total value of £4bn.

This was virtually identical to the volume of business in the third quarter (34,300 loans worth £4bn) but up on the fourth quarter of 2010 (26,300 loans worth £2.9bn).


Compared with the height of the market in the third quarter of 2007, when quarterly lending totalled over 93,000 loans worth £12.7bn, the BTL market continues to operate at relatively subdued levels, but, says the CML, it is clearly continuing to recover from its low point in 2009.


BTL mortgages account for nearly 13% of the total outstanding value of mortgages in the UK.


The CML also reports that arrears performance of BTL loans is better than the owner-occupier market, but that the repossession rate is higher.

It says this is no surprise. For obvious reasons, lenders make particularly strenuous efforts to show forbearance over sometimes very extended periods to home owners to try to help them keep their homes wherever realistically possible.

However, there is a less marked imperative in the BTL sector, where provided the landlord has a bona fide BTL mortgage and the tenancy is recognised by the lender, the tenant’s rights are unchanged even if their landlord does default.


CML director general Paul Smee said: “Buy-to-let lending continues to perform well. Demand for rented property remains high, so the rationale for buy-to-let remains strong, and there is little reason to foresee any change to this positive outlook for the sector.


“These figures do not suggest that buy-to-let is crowding out first-time buyers – more that it is performing a really important role within the overall housing market.

“The benefits of the availability of good-quality private rented housing should not be overlooked, especially as there are many households which need the flexibility and mobility that the private rented sector is well placed to provide.”