Buy-to-let lending rises to £4.2 billion
The buy-to-let sector continues to grow, with mortgages accounting for 13% of total mortgage lending in the UK.
Figures from the Council of Mortgage Lenders reveal that 33,500 buy-to-let mortgages were approved in the first three months of 2013, totaling £4.2 billion of lending, up from £3.7 billion for the same period last year.
There are now around 1.46 million buy-to-let mortgages in the UK.
Paul Smee, director general at the CML, believes the continued buoyancy of the rental market means that "lenders are actively looking at how they can best evolve their future lending" to help landlords as longer-term renting becomes the norm.
Kristjan Byfield, director at lettings agency Base Property Specialist, agrees that the "rise of the long-term tenant is making the market much more stable for landlords", which makes for a competitive marketplace where landlords need to stand out.
But low wage growth and an increase in competition means landlords must be realistic with their pricing, he adds.
Hearthstone Investments calls the latest figures "highly encouraging", but Ben Madden, managing director of letting agency Thorgills, thinks it is no surprise that buy-to-let has "become the engine room of the property market".
He points out that with interest rates on savings accounts at rock bottom and average rents in the capital 10% higher than they were just a year ago, the idea has ‘an irresistible economic lure’.
However, Christopher Down, chief executive at Hearthstone, says that despite the positive indicators lending conditions are still tough and will continue to act as a barrier to some potential landlords.
This article was written for our sister website Money Observer
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.