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Buy-to-let growth slows in first half

The growth in buy-to-let lending slowed in the first half of this year as lenders react to tighter market conditions according to the Council of Mortgage Lenders.

Advances rose by 3 per cent to £12bn in the first half from £11.6bn in the second half of 2003 and £7.6bn for the first half of 2003.

The number of loans rose by 6 per cent to 119,000 from 113,000 over the previous halfyear. But growth was slower than over the preceding six-month period when both the number and value of buy-to-let mortgages grew by more than 50 per cent.

At the end of June, there were 473,000 buy-to-let mortgages outstanding, worth £46.8bn compared with 417,500 worth £39bn in the second half of 2003.

The CML says there are still incentives for landlords to remain in the buy-to-let market due to new household formations and delayed moves from first-time buyers.

Although BTL has grown strongly in the past six years, the CML says it represents less than 6 per cent of overall lending. As in the mainstream mortgage market, BTL has been boosted by remortgaging, which accounted for 35 per cent of gross advances in the first half of this year.

The average maximum loan remains unchanged at 80 per cent of the value of a property. On average, lenders required rental income to be 30 per cent higher than monthly repayments.

CML director general Michael Coogan says: “The figures indicate that investors are taking a sens-ible approach and adjusting to tighter market con- ditions following recent interest rate rises.

“They need to continue to consider carefully the outlook for rental yields and property prices, and take into account taxation, maintenance costs and the possibility of void periods.”


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