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Buy-to-let lending reaches highest level in four years

CML

Gross buy-to-let lending in 2012 reached its highest level in four years, according to the Council of Mortgage Lenders.

At £16.4bn, gross buy-to-let lending was 19 per cent higher than the £13.8bn advanced in 2011. Buy-to-let lending accounted for 11.5 per cent of total gross mortgage lending – in a market where £142bn was advanced – in 2012, up from 9.8 per cent of the £140 advanced in 2011.

On a quarterly basis there were 36,700 loans, worth £4.6bn, advanced in the fourth quarter, up from 34,300 loans worth £4.2bn in the third quarter and 34,200 loans worth £3.9bn in the fourth quarter of 2011.

In total there were 136,900 buy-to-let loans advanced during 2012. The total number of buy-to-let loans outstanding at the end of 2012 stood at 1,445,300, accounting for 13 per cent of all mortgages.

The market has shrunk considerably since peaking at £45bn in 2007 but has almost doubled since 2009. In 2008, £28.5bn was advanced to borrowers, followed by £8.5bn in 2009, £9.7bn in 2010 and £13.8bn in 2011.

In terms of loan performance, 1.14 per cent of buy-to-let loans ended the year in arrears of more than three months, compared with 2.03 per cent of owner-occupier loans. The annual repossession rate at 0.48 per cent was higher than the equivalent owner-occupier rate of 0.27 per cent.

CML director general Paul Smee says: “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. However, new potential landlords need to tread carefully before entering the buy-to-let market; considerations such as landlord licensing reinforce the need for potential landlords to gain a strong understanding of the legal and operating environment.”

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